TLDR
Todays macro drivers were falling odds of a December Fed rate cut, lingering data gaps after the US shutdown, and tariff?cut talk on food imports that reshaped inflation views.
- Rate?cut doubts grew after hawkish Fed signals, sending risk assets lower today.
- The shutdowns data blackout means October jobs and inflation may not be released, increasing uncertainty for policy and markets this week.
- The White House floated tariff cuts on food imports, nudging inflation expectations and positioning ahead of future CPI prints today.
Deep Dive
1. Fed Cut Odds Fading
Markets repriced the path of policy, with multiple reports highlighting fading odds of a December rate cut and broad risk?off flows.
- US futures and equities fell as rate?cut doubts creep in, signaling tighter financial conditions bias today.
- Earlier coverage showed rising yields as Fed hopes melt, reinforcing risk aversion across assets this week.
A lower probability of near?term easing typically weighs on equities and crypto while supporting USD and yields.
2. Shutdown Data Blackout
Even with the government reopened, the White House signaled key October economic reports may not be published, leaving the Fed with less timely inputs.
- Officials warned October jobs and inflation data will likely never be released due to halted collection, impairing the policy outlook this week.
- The uncertainty around missing data raises model error for policymakers and traders, increasing volatility around upcoming meetings today.
With fewer hard data points, markets may overreact to secondary indicators and Fed speeches; expect choppier price discovery.
3. Tariff Cuts on Food Imports
Policy chatter about reducing tariffs on items like coffee, bananas, and beef aims to temper grocery inflation.
- Reports noted the administration is preparing tariff cuts and trade frameworks with Latin American partners to ease food price pressures today.
- This positions inflation expectations ahead of future CPI prints, potentially influencing rate?cut probabilities today.
If enacted, tariff relief could marginally cool headline inflation, but timing and scale matter for the Feds reaction function.
4. Crypto Read?Through
Risk aversion spilled into crypto, with ETF outflows adding pressure to prices.
- Bitcoin ETF outflows approached $870 million on Thursday, reinforcing a risk?off tone into todays session today.
Macro tightening plus outflows equals thinner bids; watch volumes and depth before making decisions.
Conclusion
The macro tone today skewed risk?off as rate?cut odds fell, the shutdowns data gaps persisted, and tariff?cut talk reshaped inflation narratives. For crypto, the combination of tighter policy expectations and ETF outflows amplified downside pressure. Monitoring upcoming Fed communication and any concrete tariff actions will be key to gauging the next move.
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