By Michael MacKenzie
(Bloomberg) — Bond traders are bracing for a deluge of data that will solidify expectations for how quickly the Federal Reserve will continue the interest-rate cuts that have driven U.S. Treasuries to the biggest gains since 2020.
The end of the government shutdown means that agencies will start releasing key reports that were held back since the start of October, including the September employment report on Thursday.
The lack of government data during the closure made it difficult to gauge the direction of the economy. Data from private data sources, like the payroll company ADP, however, continued to underscore the weakening in the job market that drove the Fed to lower its benchmark rate at the September and October meetings, ending what had been a nine-month pause.
But there’s a risk that the government’s figures may surprise to the upside by showing that businesses have been adding jobs at a stronger-than-expected pace. There’s also a chance that the data may be incomplete — or distorted — by the shutdown.
With policy-makers still mindful of elevated inflation, that could cause them to hold rates steady at the Dec. 10 meeting or push back on the market’s expectations for 2026.
“As the economic data starts to trickle in, it is possible that the labour market shows more stability,” said Priya Misra, a portfolio manager at JPMorgan Investment Management. “Then the market might further take down odds of a December cut and volatility may rise.”
She said they see a buying opportunity in a rise in 10-year yields to 4.25%. Yields were two basis points lower at 4.13% at 3:44 a.m. in New York.
Treasuries rallied strongly this year as a slowdown in employment and President Donald Trump’s trade war sowed uncertainty in an economy that in recent years consistently surprised forecasters with its strength. After traders ratcheted up rate-cut bets and yields slid, Treasuries delivered a roughly 6% return this year.
But Fed Chair Jerome Powell has indicated the central bank’s recent moves were largely protective measures to ensure that its restrictive policy doesn’t stall growth, rather than an effort to jump-start the economy.
Last week, futures traders pushed the odds of a quarter-point rate cut in December below 50% as some Fed officials indicated that such a move is far from a sure thing. That near-term uncertainty has driven up a gauge of expected bond-market volatility, which had been hovering around a four-year low.
“There is some growing concern, although not a huge issue yet, that the Fed won’t cut rates in December based on the timeliness and quality of the economic data,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. He said that, coupled with the pullback in yields, “keeps us biased toward a neutral exposure in U.S. Treasuries.”
What Bloomberg Strategists say…
Investors are nervous about faltering US economic growth. You can see it in 10-year bond yields hovering just over 4% despite 3% inflation. For bond investors this could be as good as it gets though. The two biggest drags on growth — high tariffs and a US government shutdown — could soon be resolved.
— Edward Harrison, Macro Strategist, Markets Live
The exact timing of some of the delayed releases, as well as the November jobs report that would usually come during the first week of next month, has yet to be clarified. The Labor Department said last week that it may take some time to finalize the release dates.
Money managers are mindful of positive economic shifts that could push up yields, including a Supreme Court ruling striking down Trump’s tariffs.
Yet they broadly expect the Fed to continue to keep a bias toward easing policy even if it pause next month, which would likely prevent yields from rising too far off of recent levels. And market sentiment has been relatively bullish toward Treasuries as data points to cooling growth.
Some recent trades in Treasury options targeted a slide in 10-year yields below 4%. JPMorgan Chase & Co.’s Treasury client survey for the week ending Nov. 10 showed the largest net longs since April 7. Investor demand for last week’s new 10- and 30-year bonds was also in line with recent averages.
“It would take a reemergence of strong growth and labour data to push two- and 10-year yields out of recent ranges,” said George Catrambone, head of fixed income at DWS Americas. “There isn’t an obvious reason to expect a strong rebound in the labour market.”
What to Watch:
- Economic data: (Timing of releases delayed during shutdown remains in flux)
- Nov. 17: Empire manufacturing
- Nov. 18: ADP weekly employment preliminary estimate; import and export price index; New York Fed services business activity; industrial production; manufacturing production; capacity utilization; NAHB housing market index; total and net long term TIC flows
- Nov. 19: MBA mortgage applications; housing starts; building permits
- Nov. 20: September employment report; Initial jobless claims; Philadelphia Fed business outlook; leading index; existing home sales; Kansas City Fed manufacturing activity
- Nov. 21: Bloomberg Nov. US economic survey; S&P Global US manufacturing, services and composite PMIs; U. of Mich. sentiment and inflation expectations; Kansas City Fed services activity
- Fed calendar:
- Nov. 17: New York Fed President John Williams; Minneapolis Fed President Neel Kashkari
- Nov. 18: Richmond Fed President Tom Barkin; Dallas Fed President Lorie Logan
- Nov. 19: Barkin; FOMC meeting minutes from October; Williams
- Nov. 20: Cleveland Fed President Beth Hammack; Chicago Fed President Austan Goolsbee; Philadelphia Fed President Anna Paulson
- Nov. 21: Williams; Logan
- Auction calendar:
- Nov. 17: 13- and 26-week bills
- Nov. 18: 6-week bills
- Nov. 19: 17-week bills; 20-year bonds
- Nov. 20: 4- and 8-week bills; 10-year Treasury inflation protected securities
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Last modified: November 17, 2025