Fixed Income & Equities Markets Week in Review

Benchmark Treasury yields moved modestly lower this week as private measures of U.S. economic activity pointed to a cooling labor market, reinforcing expectations for another Fed rate cut next month.

The move began after a report from Challenger, Gray & Christmas showed that U.S. companies announced 153,000 job cuts in October - the highest October total in more than two decades. Year-to-date layoffs now exceed one million. Sentiment weakened further as Revelio Labs, a relatively new source of employment data, estimated that total employment declined by about 9,000 in October. ADP’s private payroll report showed a 41,000 gain, but the two figures are roughly consistent once accounting for differences in government hiring - an area ADP does not capture and Revelio estimated fell by 22,000.

Adding to the uncertainty, the ongoing government shutdown continues to cloud the economic picture. A second consecutive official employment report was postponed this morning, alongside several other key releases, including productivity, labor costs, jobless claims, and wholesale inventories. For both markets and policymakers, the absence of timely data has made it increasingly difficult to gauge the economy’s true trajectory or to calibrate policy decisions with confidence.

In the absence of new data, investors turned their attention to commentary from Federal Reserve officials. Governor Stephen Miran told Bloomberg TV that monetary policy remains “too restrictive,” suggesting that the neutral rate lies “quite a ways below” current settings. He added that, given his more optimistic view on inflation, there’s little justification for maintaining such tight conditions. New York Fed President John Williams shared a similar view, arguing that the Fed funds rate remains well above neutral and that additional cuts could be made without risking overshooting. In contrast, Chicago Fed President Austan Goolsbee struck a more cautious tone, saying, “When it’s foggy, let’s just be a little careful and slow down,” signaling hesitancy toward further easing for now.

Meanwhile, political developments in Washington remained a key source of headline risk. Pressure is building on lawmakers to resolve the shutdown, with The Wall Street Journal reporting that some progress has been made and optimism for a resolution is improving. In the meantime, the impact on air travel is mounting gradually. A 4% reduction in commercial flights took effect today, rising to 6% by Tuesday, 8% by November 13, and the full 10% by November 14. The FAA has also limited certain space launches and parachute operations to ease congestion. Airlines note that a 4% reduction is manageable - akin to weather-related disruptions - but unlike a storm, this gridlock won’t pass quickly. The longer the shutdown persists, the more difficult it will be to keep operations running smoothly.

After a volatile few weeks, Treasury yields ended modestly lower across the curve, with the 10-year note finishing near 4.07%. The market remains focused on incoming data—when it finally arrives - and on signals from the Fed about how soon and how far policy may ease. For now, investors appear to be positioning for a softer economic backdrop and a more accommodative Fed heading into year-end.

As of November 07, 2025