"The Dow Jones (US30) recorded its fourth consecutive decline, reflecting the growing caution across financial markets as the U.S. government remains partially shut down and a series of key economic data releases have been delayed. This disruption has made investors more defensive, as crucial reports such as Nonfarm Payrolls (NFP), CPI, and GDP have yet to be published. The absence of clear economic signals has left both investors and the Federal Reserve (Fed) relying on soft indicators and financial market movements to gauge economic conditions."
"Following its 25-basis-point rate cut in September, the Fed has adopted a cautious tone, signalling its readiness to ease further should the labour market deteriorate rapidly or if the government shutdown meaningfully hampers economic activity. However, the lack of official data may lead the Fed to pause its assessment in the short term, rather than proceeding with another rate cut at the upcoming October-November meeting."
"The budget impasse in Washington has not only paralyzed parts of the public sector but could also undermine consumer and business confidence in October. Although the shutdown is expected to be temporary, a prolonged stalemate could spill over into the services sector, slowing Q4 GDP growth. In that case, the Fed would face a delicate balance between maintaining financial stability and supporting growth-potentially paving the way for a new rate-cut cycle toward year-end."
The Dow Jones fell for a fourth straight session as a partial U.S. government shutdown and delayed NFP, CPI, and GDP releases reduced market clarity. Investors adopted defensive positions while both market participants and the Fed relied on soft indicators to assess conditions. Expectations for a more dovish Fed increased, yet uncertainty persists without hard data. After a 25-basis-point September cut, the Fed signalled readiness to ease if the labour market worsens or the shutdown deepens, but the current data gap may prompt a short-term pause. Fiscal risk could weaken confidence and slow Q4 growth, while geopolitical developments provided limited optimism.
Read at London Business News | Londonlovesbusiness.com
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