Mindy Gudmundson, Institutional Portfolio Manager with RBC’s BlueBay U.S. Fixed Income team, describes how delayed data has amplified bond market volatility amid investor speculation about the Fed’s intentions at the upcoming FOMC meeting.
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Hello and welcome back to The Weekly Fix. My name is Mindy Gudmundson, and I am an Institutional Portfolio Manager with RBC’s BlueBay Fixed Income team.
Well, the longest government shutdown in U.S. history – 43 days - finally ended on November 12, and since then we have seen some agencies start to release delayed economic data, including September employment, retail sales, PPI (Producer Price Index), and inventories to name a few. Some previously planned data releases (especially for October) are being consolidated or canceled, creating a backlog of critical updates that risks distorting analysis. This data void has forced investors and policymakers to navigate with incomplete information, and the irregular cadence of data releases ahead may amplify market volatility.
Over the past week, the U.S. Treasury market experienced notable fluctuations as investors recalibrated to shifting rate expectations. Earlier in the week, yields had dipped slightly, with the 10-year rate moving down to about 4.00% as investors weighed the possibility of rate cuts by the Federal Reserve. However, that downward trend reversed later in the week as yields surged back above 4.05%, reflecting some renewed investor caution. Right now, the market is pricing in a rate cut at the December 10th FOMC meeting following dovish rhetoric from the Fed. While not certain, we believe that Chairman Powell will likely deliver a cut in order to spare the markets any major surprises in the lead-up to the holidays, though we are inclined to look for a somewhat hawkish commentary to accompany any monetary easing. Moreover, given anticipated economic momentum in 2026 fueled by tax cuts, prior monetary easing, deregulation, and surging AI investment, there’s a compelling case that Chair Powell may position December’s meeting as his final policy adjustment before concluding his term in May.
This week’s bond market volatility underscored investor tension between rate-cut optimism and macroeconomic uncertainty. With yields now firmly back over 4%, borrowing costs remain elevated, and fixed-income securities continue to draw interest as potential sources of stable return amid the recent stock-market uncertainty.
Looking ahead, markets will navigate a dual pull: expectations for further central bank easing (supporting bond prices) versus supply pressures and growth ambiguity (which could push yields higher). We’ll be watching closely as new data trickles in.
Thanks for joining us today. We hope you had an enjoyable Thanksgiving holiday and have a great week ahead of you.
Key points
Delayed economic data releases due to the 43-day government shutdown are creating a backlog, distorting analysis and increasing market volatility as investors and policymakers rely on incomplete information.
U.S. Treasury yields fluctuated amid shifting rate expectations, ending above 4.05%, with markets pricing in a potential Federal Reserve rate cut in December.
Bond market volatility reflects investor tension between rate-cut optimism and macroeconomic uncertainty, with elevated borrowing costs driving interest in fixed-income securities amid stock-market instability.
