98% Chance of Rate Cut as Fed Navigates "Data Blackout" from Shutdown

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News Flash

Fed Set for Another Quarter-Point Cut Despite Data Drought

Markets are speaking loud and clear: There's a 98-99% chance the Federal Reserve will slice another 0.25 percentage points off interest rates during its October 28-29 meeting.

This would drop the federal funds rate to 3.75%-4.00%, following September's quarter-point reduction. The Fed is walking that familiar tightrope—cooling the labor market without letting inflation rear its head again.

But here's where things get messy.

Government Shutdown Creates Fed's Biggest Headache

The ongoing government shutdown that started October 1st has created something worse than political theater: a complete data blackout.

Critical reports like the monthly jobs numbers and consumer price index? Missing in action.

Fed officials are now cobbling together economic insights from alternative sources—essentially flying blind at the worst possible moment. You've got persistent inflation concerns on one side and signs of labor market softening on the other. Without fresh government data, policymakers are making educated guesses about which direction to lean.

The timing couldn't be worse. The Fed needs accurate, real-time data to navigate its dual mandate of maximum employment and price stability. Instead, they're working with incomplete information during one of the year's most crucial policy decisions.

Market Reactions Tell the Story

Investors are responding predictably to all this uncertainty. Ten-year Treasury yields have dropped to multi-month lows as traders flee to safer assets.

The silver lining? Lower Treasury yields are helping keep mortgage rates down. The 30-year fixed-rate mortgage recently hit a one-month low, potentially encouraging housing market activity despite broader economic uncertainty.

Meanwhile, gold prices—which soared to record highs earlier this year—are pulling back as investors take profits ahead of delayed inflation data.

The broader picture is messier. National debt just crossed $38 trillion, adding fiscal pressure that could influence future Fed decisions.

The Fed's October meeting might be one of its most challenging in recent memory. They're making policy decisions without their usual economic roadmap, at a time when precision matters most.

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More You Should Know

• Rates Fuel Builder Confidence: Home builder confidence reached a six-month high in October, with the NAHB/Wells Fargo Housing Market Index rising due to optimism surrounding declining mortgage rates, even as builders continued to offer price cuts and sales incentives to attract buyers. [Source]

• Home Equity Rates Near Lows: Home equity loan rates have reached a two-year low of 8.11%, with HELOC rates stabilizing at 7.85%, providing homeowners a favorable opportunity to access their home equity without refinancing their primary mortgage, driven by Federal Reserve rate adjustments. [Source]

• US Foreclosures Jump Annually: Despite a slight monthly decline, U.S. foreclosure filings in September 2025 surged 20% year-over-year to 35,602 properties, with lender repossessions up 44% annually, signaling increasing financial strain for homeowners, particularly in states like Florida, Delaware, and Nevada. [Source]

• Housing Inventory Growth Slows: Despite rising annually for 102 consecutive weeks and surpassing one million homes for sale, active housing inventory growth is decelerating, falling from 31.5% in May to 17.0% in October, and remains below pre-pandemic levels. [Source]

• Construction Investment Expands Again: Planned construction investment in the U.S. saw an 8% year-over-year increase in October 2025, marking its third consecutive month of expansion, primarily fueled by significant growth in the industrial, military, and commercial sectors, despite contractions in other areas. [Source]

• Rental Market Cools Significantly: The national apartment vacancy rate climbed to a record 7.1% in September 2025, driven by a multifamily construction boom that also led to a 0.4% decline in national median rent and an average of 31 days on the market for rental units. [Source]

• Zillow Ups Home Price Outlook: Zillow has increased its 12-month national home price forecast to 1.9% growth, reflecting a housing market that has softened more gradually than initially projected, despite a varied outlook across different U.S. metro areas. [Source]

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