U.S. Government Reopens — Traders Shift Focus to Fed and Data Revival

Gold extended its rally for a fifth consecutive session on Wednesday, buoyed by growing anticipation that the Fed will continue easing policy once official economic figures resume. The lack of visibility on U.S. labor and inflation data during the shutdown has only deepened uncertainty, leaving investors reliant on speculation rather than confirmation. With the data blackout finally lifting, traders are preparing for a potentially volatile readjustment in positions.

Data Vacuum Ends, Market Eyes Repricing Risk

The prolonged absence of vital economic indicators such as unemployment figures and October’s CPI has created an unusual information void for both policymakers and traders. While the White House has indicated some reports may never be published, investors are already pricing in the end of the shutdown as the starting point for renewed data flow and possibly a major repricing across asset classes.

“The real test begins now,”. As the fog lifts, we’ll see whether investors were positioned correctly or if the market needs a sharp reset.

Equities have held firm, supported by optimism over policy continuity and the prospect of rate cuts, while bonds remain bid as traders hedge against any downside surprises in the upcoming releases.

Fed Watch, Diverging Views on Next Move

The focus now shifts squarely to the Federal Reserve’s December meeting, with traders pricing a high probability of another rate cut following the recent easing cycle. Market sentiment remains anchored around the belief that the Fed will prioritize growth support, particularly as delayed data may reveal further cracks in labor demand and consumption.

However, not all Fed officials share the same conviction. Boston Fed President Susan Collins, a voting member this year, said she still favors holding rates steady for now, warning that further cuts could slow progress on inflation moderation. She described the current policy stance  with the federal funds rate at 3.75% to 4%  as “mildly restrictive,” appropriate given inflation remains above the Fed’s 2% target.

Her comments signal the Fed remains divided: while some members are leaning dovish amid cooling growth, others prefer patience until data clarity improves. The tone of upcoming speeches and Fedspeak will be critical in shaping market confidence ahead of December’s decision.

Gold Shines as Rate Cut Bets Strengthen

Gold’s five day winning streak underscores the market’s growing conviction that easier policy is on the horizon. The metal has gained traction as traders seek hedges against policy uncertainty and a weaker dollar narrative that could reemerge once the Fed resumes its data-dependent guidance.

At the same time, the broader risk-on tone suggests that markets are balancing between optimism and caution  betting on policy support while remaining alert to the risk of an overextended rally should the data surprise to the upside.

Trading Implications, Positioning After the Reopening

1. U.S. Dollar (USD):
Expect short term volatility as data flow resumes. If inflation and labor figures confirm economic cooling, the dollar could face renewed downside pressure.

2. Gold (XAU):
Bullish momentum remains intact, supported by rate cut expectations. Traders should monitor resistance zones closely as the metal tests higher levels.

3. Bonds:
Treasuries are likely to remain well-supported ahead of December’s FOMC. A dovish Fed tone could drive yields lower, favoring duration trades.

4. Equities:
Risk assets may continue higher under a soft-landing narrative, though traders should stay alert to any unexpected strength in data that could delay further Fed easing.

The end of the U.S. shutdown marks a crucial turning point for global markets. As economic data returns, traders will finally get the clarity needed to validate  or challenge  months of speculative positioning. The next few weeks will reveal whether the market’s optimism aligns with economic reality.