Next week, investors will closely monitor whether uncertainty surrounding the reopening of the U.S. federal government will be resolved, along with the release of the Federal Reserve’s meeting minutes.
Last week, global markets were rattled by concerns over a U.S. government shutdown. However, despite the shutdown, signs of weakness in the labor market bolstered dovish expectations for the Fed, keeping risk appetite relatively high.
The failure of Democrats and Republicans to reach an agreement on a budget to fund the federal government led to a shutdown beginning October 1. As a result, the Bureau of Labor Statistics (BLS) did not release weekly jobless claims on Thursday, nor the September nonfarm payrolls report on Friday.
The shutdown, caused by insufficient federal funding, has disrupted the flow of economic data published by government agencies. This has reduced visibility into the Fed’s policy outlook, as the central bank relies heavily on data-driven decision-making.
Analysts noted that despite these developments, money markets continue to price in further rate cuts at the Fed’s upcoming meetings this month and in December, with at least two more cuts expected in 2026.
U.S. Treasury Secretary Scott Bessent warned that economic growth could be harmed by the shutdown.
IMF spokesperson Julie Kozack emphasized that the impact of the shutdown will depend on its duration and scope, adding, “We hope a compromise can be reached to ensure the federal government remains fully funded.”
White House spokesperson Karoline Leavitt underscored the growing economic costs, stating, “Policymakers, markets, and even the Fed are flying blind at a critical juncture, as BLS and BEA data releases remain suspended until the government reopens.”
On Thursday, both Democratic and Republican-backed temporary budget proposals aimed at ending the shutdown failed to secure enough votes in the Senate. As a result, whether the government will reopen remains the key focus for the coming week.
Meanwhile, remarks from Fed officials will also be closely watched. Fed Vice Chair Philip Jefferson said the central bank has enough information to fulfill its mandate. Dallas Fed President Lorie Logan urged caution on rate cuts, stressing the importance of a data-driven approach. Chicago Fed President Austan Goolsbee acknowledged that the lack of official employment data complicates matters, but said the Fed would proceed with the information it has if the shutdown drags on.
Against this backdrop, U.S. bond markets saw strong demand last week, with the 10-year Treasury yield ending at 4.12%.
In commodities, gold extended its weekly winning streak to a seventh week. On Thursday, it hit an all-time high of $3,896.93 per ounce before closing the week 3.4% higher at $3,887. Silver also rallied, climbing to $48.37 per ounce—its highest since April 2011—and ending the week up 4.2% at $47.99.
Oil prices, on the other hand, remained under pressure despite U.S. efforts to curb purchases of Russian crude. Expectations of ample supply pushed Brent crude down 6.4% on the week, closing at $64.30 a barrel.
The U.S. dollar index slipped 0.4% over the week, ending at 97.7.
Source: Bloomberght/ Prepared by: İlayda Gök