Well, I think right now we're looking at the US shutdown and how long that's going to go on for. Our base case is still that this is going to remain pretty short-lived in terms of the look ahead. But if it does continue lengthening for a significant time and more paychecks get missed, then you go into realms of permanent scarring. For now, guardrails are in place and the macro impact will be relatively short-lived.

The Fed doesn't have payroll data at the moment, but many other indicators can be assessed. Labor market is slowing gradually but still building. Inflation is pretty contained, with goods inflation accelerating moderately due to tariff pass-through but magnitude contained. Inflation expectations remain contained and services inflation is disinflating, expected to continue.

The economy appears bifurcated. Part of layoffs are AI-driven structural changes, where Fed policy is less effective. Part is cyclical demand weakness. Base case is still sub-trend growth, not recession. Layoffs are picking up but not to a degree that would force the Fed to cut rates below neutral yet. Margins remain healthy supported by cost reductions and some investment is expected going forward with less uncertainty on trade.

Miron likely to dissent wanting a 50 basis point cut; others expected to favor a 25 basis point cut. Labor market continues to slow but remains above neutral rates. The Fed should end its balance sheet runoff before year-end to address funding market tensions and reduce volatility risk. Focus will also be on reinvestment composition across the yield curve.

Looking at a range of 3.75% to 4.25%. 4% is a strong magnet currently. Next moves depend on payroll data once the shutdown ends. Value lies more in intermediate forward rates considering less uncertainty and contained inflation.

Trade talks are going in the right direction, bringing some stability and easing tension, which supports risk assets. Not the end of US-China trade tensions but a broad framework with ongoing smaller agreements is expected.