Data Delays from Shutdown Muddy Fed's Rate Call as Jobless Claims Rise

U.S. jobless claims totaled 232,000 in the week ending October 18, exceeding market expectations and signaling a cooling labor market despite a recent dip in initial claims according to reports. The data, released by the Labor Department via its historical database, marked a rise from the prior week's 219,000 and above the projected 223,000. Continuing claims, which reflect the number of people receiving benefits, climbed to 1.957 million, the highest since early August. The delayed release of data due to a government shutdown has muddied the economic outlook, with three weeks of claims figures still missing according to analysis.

The Labor Department confirmed it would not publish October jobs data, exacerbating uncertainty ahead of the Federal Reserve's December policy meeting. Fed officials are now split on whether to pause or cut rates, with the probability of a December rate cut dropping to 30% from 62% a week earlier. The mixed labor market- showing both slowing hiring and modestly stable unemployment - has weakened arguments for aggressive easing. "If the unemployment rate rises even slightly, it's a strong signal the economy needs more help," said Columbia Threadneedle's Ed Al-Hussainy according to market analysis.

The data's ambiguity has rattled financial markets. Bitcoin fell below $86,000, erasing 2025 gains, as fading hopes for a Fed rate cut dampened risk appetite according to reports. Bond traders are similarly on edge, with 10-year Treasury yields hovering near 4.13% as investors weigh the likelihood of a weak September jobs report due on November 20. Meanwhile, the housing market showed resilience, with existing-home sales hitting an eight-month high in October amid declining mortgage rates.

The government shutdown also delayed the release of the September jobs report, scheduled for November 20. Economists expect 58,000 nonfarm payrolls and a 4.3% unemployment rate. However, the October data's absence has forced policymakers to rely on alternative metrics, such as state-level claims and seasonal adjustment factors.

As the Fed grapples with incomplete data, market participants remain cautious. "The Fed isn't going to have a lot more Tier 1 data prior to the meeting," said Fort Washington's Dan Carter according to market analysis. The path forward hinges on whether the delayed September report reveals a labor market that justifies further easing or one that necessitates a pause. For now, volatility reigns as traders brace for clarity-or another round of uncertainty.