Fed’s October Rate Decision Faces Data Gaps and Market Uncertainty Amid U.S. Shutdown

The Federal Reserve’s upcoming October rate decision could ignite unexpected market turbulence across U.S. equities and cryptocurrencies, as the ongoing federal government shutdown clouds the economic outlook. The partial shutdown, which began on October 1, has suspended key data releases from the Bureau of Labor Statistics (BLS), including the crucial September jobs report. This delay leaves the Fed without up-to-date labor data ahead of its October 28–29 FOMC meeting, forcing policymakers to decide on rate cuts with limited visibility.

Despite the uncertainty, investor sentiment remains upbeat. Gold surged to $3,886 per ounce — up 48% year-to-date — driven by inflation fears, strong central bank purchases, and continued de-dollarization efforts by BRICS nations. Bitcoin trades near record highs around $123,000, supported by institutional demand and ETF inflows. Similarly, the Dow Jones and S&P 500 both closed at all-time highs, reflecting faith in the Fed’s ability to guide a soft landing.

Markets overwhelmingly expect a 25 basis-point rate cut, with the CME FedWatch Tool showing a 96.2% probability. However, some analysts warn the Fed could pause cuts due to the lack of timely economic data, as acting without insight into job and wage trends risks fueling inflation. Historically, during data disruptions, the Fed has leaned toward caution to avoid over-stimulating the economy.

Private indicators and regional Fed surveys may provide partial insights in the coming weeks. Should these show softening growth or cooling inflation, a 25 bps cut remains likely. Conversely, stronger inflation signals or a prolonged shutdown could push the Fed to hold rates steady. Investors are advised to hedge against volatility with put options, gold exposure, and reduced leverage in risk assets.