Lawmakers Poised to End Government Shutdown

Yields decline ahead of House vote to end government shutdown. Treasury yields edged lower ahead of tonight’s House vote to end the government shutdown, where a simple majority is needed to pass the funding bill. The government re-opening should put the spotlight back on the December FOMC meeting, as some delayed economic data is expected to be released shortly after. The 2-year yield closed 2 bps lower at 3.57% and the 10-year yield closed 5 bps lower at 4.07%. Meanwhile, equities were mixed today, with the DJI hitting a new all-time high of 48,432 and the NASDAQ down 0.26% after some tech mega caps fell.

Fed’s Collins, Bostic offer hawkish comments. Boston Fed President Susan Collins and Atlanta Fed President Raphael Bostic argued today that the Fed should hold rates steady due to inflationary pressures. Collins labeled the 25 bp October rate cut “prudent” to support the weakening labor market, but has shifted her focus to inflation. She said, “It will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment.” Bostic echoed her tone, saying “the clearer and urgent risk is still price stability.” Bostic also shared that he plans on retiring from the Fed when his term ends this coming February.

Some economic data to potentially go unreleased as government reopens. White House Press Secretary Karoline Leavitt today said that the Trump Administration expects some data releases to go unpublished even after the US government shutdown ends. During the shutdown, the Bureau of Labor Statistics and other key data agencies have stopped collecting and producing data, and while some data can be retroactively collected and released upon reopening, other prints may be skipped altogether. Notably, October CPI and jobs data are especially likely to go unpublished due to the underlying data collections methods they rely on. The BLS has not yet announced a post-shutdown schedule for what data will be released or when, though one path forward could involve combining two months of releases to help get the agency back on track. Markets will eagerly await any insight into possible prints ahead of the next FOMC meeting, which begins December 9. However, progress is contingent on the shutdown ending, with the House of Representatives voting on a funding bill later this evening.