Government shutdown delays data for Fed's October rate decision
A partial U.S. government shutdown starting October 1 has delayed key economic reports, including the September jobs data, complicating the Federal Reserve's upcoming interest rate decision. Markets overwhelmingly expect a 25 basis-point cut at the October 28-29 FOMC meeting, but uncertainty could lead to a surprise pause. High valuations in stocks and cryptocurrency heighten risks of market volatility.
The partial U.S. government shutdown began on October 1, 2025, affecting non-essential services and furloughing employees at the Bureau of Labor Statistics. This has indefinitely delayed the release of the September jobs report, a critical indicator of labor market health typically issued early in the month. The data freeze arrives just weeks before the Federal Open Market Committee's (FOMC) meeting on October 28-29, where the Fed will announce its next interest rate move.
Despite the disruptions, market sentiment remains optimistic. As of October 5, futures markets via the CME Group's FedWatch Tool indicate a 96.2% probability of a 25 basis-point rate cut and only 3.8% chance of no change. Decentralized platform Polymarket shows a 90% chance of a 25 basis-point cut, an 8% chance of no change, and a 3% chance of a 50-plus basis-point increase. Bitcoin was trading around $123,196, close to its all-time high of $125,506 earlier that day, while gold closed at $3,886 per ounce, up over 48% year-to-date. The Dow Jones Industrial Average and S&P 500 ended the week at record highs of 46,758.28 and 6,715.79, respectively.
The lack of updated wage and employment data poses challenges for the Fed, potentially leading some FOMC members to advocate pausing rate cuts to avoid premature easing amid persistent inflation above the 2% target. The shutdown itself introduces economic risks through furloughed workers and possible job losses, though their scale is unclear. Private-sector and regional data releases before the meeting could offer partial insights; if they signal cooling inflation, a 25 basis-point cut seems likely, but stronger inflation signs might prompt caution.
A 50 basis-point cut appears highly unlikely, as it could signal overly aggressive easing and unsettle inflationary expectations. Fed Chair Jerome Powell has stressed data dependency and caution in public statements. Investors in crypto and stocks, trading at elevated levels, face downside risks from a policy surprise, with suggestions to hedge via put options, reduced leverage, or safe havens like gold.