The Federal Reserve’s decision on October rate could trigger unexpected shocks in US stocks and Bitcoin, when unresolved federal government’s closure of the risk of the prospects.
Government’s shutdown delays key data prior to the FOMC meeting
A partial shutdown of federal government began on October 1st, closing many non-essential services, including Bureau of Labor Statistics (BLS). This shutdown has indefinitely delayed the report on jobs in September – a crucial meter for labor health is expected early this month.
This data shower comes only weeks before the Federal Open Market Committee’s (FOMC) 28 – 29 October, where Fed’s next interest decision will be announced.
Despite this disturbance, the optimism of the market remains increased.
According to Goldprice.org, gold prices closed at $ 3,886 per Ounce on Friday and won over 48% years to date.
Gold’s 2025-rally reflects major central banks’ purchases after nations and a strong ETF demand from private investors, driven by inflation-concerned concerns in the midst of President Trump’s trade war, records US national debt levels and efforts from some country-Især BRICS members to reduce the dependence on US dollar assets since the Russia-Ukraine-Confirm.
According to writing, Bitcoin, according to Coindesk data, was about $ 123,196, not far from the all-time high price of $ 125,506, observed earlier in the day, driven by strong institutional interest and crypto ETF flow.
Meanwhile, Dow Jones closed the industrial average and S&P 500 week at record highs of 46,758.28 and 6,715.79 respectively, reflecting the confidence in a smooth fed political transition.
Today, Bitcoin, Gold and S&P 500 are on or near record highs, probably due to expectations of further efforts this year and next and investors who want to uncover against the sustained and rising inflation that appears to exist throughout the world.
Market Consensus Prices A 25 Basic-Point Feded Cutting
Futures and prediction markets overwhelming price in a 25 basic point interest rate cut at the FOMC meeting.
From October 5, the CME group’s FedWatch tool sets the odds of 96.2% for a 25-base point cut and 3.8% without change.
As for decentralized prediction platform, the polymarket predicts a 3% chance of an increase of 50+ BPS, a 90% chance of an increase of 25 bps and an 8% chance of no change.
Why fat pausing rate -De cuts may not be as unlikely as dealers expect
The ongoing shutdown of the federal government hides a significant risk. With the US Bureau of Labor Statistics (BLS) staff who are furrowed, vital work reports remain unpublished, refusing FED -updated pay and employment data that are important to evaluate the density of the market in the midst of sustained inflation.
Fed faces the unusually difficult challenge of taking a rate decision without decisive financial input – essentially flying blind.
This lack of timely data is raising the very real possibility that some FOMC members may go in to keep the current pace of speed cuts instead of continuing as expected.
Without clear visibility in the recent lane of the Labor Market, the risk of premature relief that could destabilize inflation expectations is high. Former Federal Reserve actions during periods of data part have often leaned against caution to avoid erroneous errors.
At the same time, several factors elaborate on this uncertainty.
The government’s shutdown in itself creates downward risks through imprisoned federal workers and potential permanent job losses, which can aggravate economic growth, but whose size remains unclear.
Meanwhile, many investors have placed portfolios of further cuts, which means a surprise break could disrupt markets and trigger volatility that FOMC prefers to avoid.
Balancing these concerns is probably weighing a modest cut at 25 basic points to maintain market confidence and uncovering against financial risks. Still, the break remains a plausible result considering these unprecedented challenges, emphasizing that the market’s expectations for a cut, though strong, are not guaranteed.
Private and regional data provides partial insight in the middle of shutdown
Between now and the FOMC meeting, several regional data releases in the private sector and the Federal Reserve will provide partial financial signals despite the shutdown.
If these indicators show cooling of inflation and moderating growth, Fed-President Jerome Powell could continue with the widely expected clip at 25 basic point. Stronger signals of inflation persistence or growth resistance may be able to push fat against a break, contradict market prices and increase volatility.
If the shutdown ends with, for example, in mid-October, the delayed official September job report could be released prior to the FOMC meeting, providing a clearer data image and potentially validation of the market’s expectations.
Why a 50-Based Cutting is very unlikely
The markets have largely excluded a 50 base point rate cut because inflation remains over Fed’s 2% target, especially in services where wage pressure dwells.
Half a point cutting would risk signaling for early relief and could destabilize the labor market and inflation adventures.
Powell’s public statements emphasize caution and data addiction, making a more moderate 25 base point cut the cautious path.
How investors can protect against a fat pause scenario
Given the potential of a political break that is not fully priced by markets, investors – especially in crypto – should consider uncovering risk:
- Set options on Bitcoin and larger stock index offer a relatively inexpensive way to protect against steep downward swings.
- Reduction of high leverage or position size in unstable assets to mitigate drag.
- Increasing exposure to safe ports such as gold or government bonds can provide portfolio ballasts in the middle of the market’s stress.
- Using volatility ETFs or means to win from sudden volatility tips.
Institutional investors routinely use such strategies; Retail investors have a growing number of cheap tools to similarly prepare for tail risks.
Conclusion: Markets are facing uncertain path into the next FOMC meeting
The FOMC meeting on October 28-22 is about to shape as a central test for markets.
The ongoing shutdown of the government has hidden important working data, creating a risky blind spot in the investor and decision -making expectations.
While the markets overwhelming prices a 25 base point interest section, a fed break or delay driven by data uncertainty may trigger sharp corrections in stocks and crypto. Investors should monitor private economic indicators and regional inflation data over October and consider pragmatic coverage to protect against surprise volatility.
A balanced risk position is important to navigate this uncertain macroeconomic landscape.
