The September non-farm payrolls data will be delayed until further notice as the US government shutdown continues to grip markets for the time being. The economic impact of the shutdown in itself is largely inconsequential, at least for now, with market players mostly just noting this as more of an operational risk.
But as mentioned before, the major theme in markets now is that the onus is on US economic data to prove market pricing wrong on the Fed outlook. And so with the absence of these major data releases, there won't be all too much to work with and things will end being more of a dud in the week(s) ahead.
As things stand, traders are still very much convinced of a 25 bps rate cut by the Fed for the end of this month. But as evident from the reaction to Fed Logan's remarks yesterday here, any slight change to that outlook could really stir up some significant moves in markets.
The dollar bounced back yesterday with the likes of gold and silver slumping back after another attempt to scale higher on the week. Now, not all of that can be attributed to Logan and the bond market clearly dictates that with 10-year yields still keeping near 4.10% today.
In short, it feels like we've reached a certain ceiling on dovish Fed pricing ahead of the upcoming FOMC meeting. With the absence of the non-farm payrolls and CPI data, any other relevant metrics i.e. private data surveys and Fedspeak will take on extra importance and sensitivity.
That includes for later today, with the ISM services PMI due as well as some speaking engagements for the Fed's Williams, Goolsbee, Miran, Logan, and Jefferson.
