Afraid of the Dark: Sentiment Falters as Record-Long Shutdown Continues

This week, we explore the economic impact of the ongoing government shutdown, now in its 38th day, and its effect on labor market data and investor sentiment. Our experts discuss alternative employment indicators, strong Q3 earnings, and the influence of AI on market performance. They also examine the Federal Reserve’s cautious stance on inflation and interest rate cuts amid data uncertainty. Finally, the conversation touches on the Supreme Court’s review of Trump-era tariffs and its potential implications for market volatility.

Speakers:

Brian Pietrangelo, Managing Director of Investment Strategy

Cynthia Honcharenko, Director of Fixed Income Portfolio Management

Rajeev Sharma, Head of Fixed Income

Stephen Hoedt, Head of Equities

02:09 – We analyze available data to fill in the gaps left by unpublished reports due to the ongoing government shutdown. We discuss labor statistics around unemployment, layoffs and job growth and vacancies.

04:55 – The prolonged shutdown is dampening sentiment and creating uncertainty due to missing federal economic data.

07:47 – In equities, we highlight upward momentum in the stock market amid strong earnings reports, while cautioning about speculative froth and a market pullback.

11:45 – We explain the Fed’s dual mandate, inflation concerns, and how mixed signals are affecting bond yields and rate cut expectations.

16:31 – We consider the legal review of Trump-era tariffs and how a ruling could impact Treasury issuance and market volatility.

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