The benchmark 10-year Treasury yield slipped four basis points to 4.08%, with money markets now pricing in roughly a 70% chance of a December rate cut. While the dollar managed to stabilize after a five day decline, gold retreated modestly as traders reassessed risk sentiment heading into a pivotal phase for U.S. monetary policy.
Labor Market Loses Momentum : Confidence Wavers
According to ADP Research, U.S. companies trimmed an average of 11,250 jobs per week in the four weeks ended October 25, underscoring a gradual weakening in labor demand. ADP’s latest monthly report also showed private payrolls rising just 42,000 in October, following two consecutive monthly declines.
The data, which investors have relied on amid the U.S. government shutdown, added to growing concerns about hiring momentum. Challenger, Gray & Christmas Inc. reported that job cut announcements in October surged to their highest level in more than 20 years, signaling a potential cooling of corporate sentiment.
For traders, these developments matter: a softer labor market strengthens the case for Fed rate cuts but also hints at an economy that may be losing steam faster than expected. The balance between policy easing and growth risk will shape trading opportunities across FX, metals, and equity markets in the coming sessions.
Washington’s Gridlock Nears an End
The 41-day U.S. government shutdown the longest on record is expected to conclude as soon as Wednesday after the Senate approved a temporary funding measure that would keep most federal operations running through January 30, and some agencies funded through September 30.
The House is set to vote on the measure today before sending it to President Donald Trump, who has already voiced support. Once approved, the reopening will restore access to key official indicators such as nonfarm payrolls, CPI, and retail sales critical tools for gauging the Fed’s next move.
As data flow resumes, markets could face a volatile recalibration. Investors are likely to adjust positions quickly, pricing in either confirmation or contradiction of the weaker trends shown in private reports.
Fed Outlook : A December Cut in Focus
Economists surveyed expect the Federal Reserve to lower rates by 25 basis points at its December 9-10 meeting, should upcoming data validate the slowdown in jobs and inflation. However, the path forward remains uncertain. Chair Jerome Powell has reiterated that a rate cut “is not a certainty,” echoing caution from other Fed officials who want to see clearer evidence of economic deceleration.
For now, risk sentiment remains delicately balanced. Equities have held their ground, supported by easing rate expectations and hopes that monetary policy will soon pivot toward growth support. Still, traders are wary of overcommitting before the full picture of U.S. economic health emerges post shutdown.
Trading Implications : Positioning Ahead of Data Resumption
1. U.S. Dollar (USD):
The greenback’s short term bounce may face resistance if upcoming data confirm labor softness. Expect volatility as traders reassess the Fed’s path with downside risks if rate cut bets firm up further.
2. Gold (XAU):
After recent pullbacks, gold remains sensitive to shifts in real yields. Any confirmation of economic weakness or dovish Fed commentary could revive upward momentum toward key resistance levels.
The U.S. economy is showing early cracks, and the Fed may soon be forced to respond. With the government reopening, traders are on the cusp of a data driven reset that could set the tone for year end positioning. Stay alert, the next wave of numbers will determine whether the market’s optimism can hold.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.