Market Snapshot
Markets pressed to new highs even as a U.S. government shutdown halted key economic reports, clouding the Fed’s visibility. The S&P 500 tagged 6,800 with the VIX elevated, while gold and bitcoin rallied alongside softer Treasury yields around 4.10%. August CPI at ~2.9% reinforced disinflation before the data gap, and Europe’s major indices flirted with records. With banks kicking off earnings next week, guidance will be critical to sustain momentum.
Shutdown Freezes Key U.S. Data Releases
Data gaps raise Fed policy risk and near-term growth drag.
The shutdown that began October 2 paused jobs and upcoming inflation releases, taking key agencies offline. The Fed now must lean on private, high-frequency indicators and financial conditions to set policy. Prolonged disruption can delay payments and contracting, creating a temporary growth drag.
Shutdown duration is the pivotal macro variable.
S&P 500 Tags 6,800; Volatility Stays Elevated
New highs with a higher VIX flag a fragile, momentum-led advance.
The S&P 500 hit 6,800 intraday and closed ~6,769 as the Nasdaq 100 briefly topped 25,000; volumes accelerated into strength. Leadership remains concentrated in tech/AI, leaving valuation and breadth in focus. Banks report next week, providing the first test of whether guidance can support multiple expansion.
Earnings credibility must validate multiples to sustain the rally.
Bitcoin Nears Record, Tracks Macro Easing Hopes
Crypto is rallying as both a risk proxy and policy-uncertainty hedge.
Bitcoin extended a five-day surge toward its prior peak near $124,000; Ethereum traded around $4,500. The move coincided with softer yields and firm gold, reflecting both liquidity sensitivity and hedging demand. Rate-cut odds and dollar direction remain the dominant near-term drivers.
Macro—especially rates and the USD—likely dictates the next leg.
Gold Tests Record on Safe-Haven Bid
Lower real-rate expectations and hedging demand keep support firm.
Gold approached $3,885/oz, up 46% year over year, marking a seventh straight weekly advance. Safe-haven flows and expectations for multiple Fed cuts underpin the trend. A decisive break above the prior high could attract systematic and trend-following buyers.
A breakout may extend the hedge-complex rally.
Jobs Cool, Unemployment Steady at 4.3%
Cooling demand with sticky wages complicates the Fed’s calculus during the blackout.
August nonfarm payrolls rose just 22,000, unemployment held at 4.3%, and average hourly earnings climbed 3.7% y/y. Long-term unemployment increased by 385,000 over the year; federal employment is down 97,000 from January’s peak. With new data delayed, this backward-looking print will carry outsized weight.
Labor softening tilts risk toward additional easing later this year.
Quick Hits
- Fed communication: NY Fed’s Williams stressed transparency and anchoring expectations as policy proceeds with limited data.
- Europe at records: STOXX 600 hit ~568.5 intraday; DAX and CAC neared highs on AI strength and Fed-cut hopes.
- Earnings setup: Big banks kick off Q3 next week; consensus sees ~7.9% S&P 500 EPS growth with unusually strong guidance.
- Treasuries: 10-year yield eased to ~4.10% on rising rate-cut expectations and safe-haven demand.
- Inflation: August CPI ran ~2.9% y/y, reinforcing disinflation heading into the shutdown-driven data gap.
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