The highly anticipated Fed Minutes did not disappoint.
They underscore a clear division within the Federal Reserve. Mortgage bonds remain flat, showing little favorable reaction.

Fed members are split on the timing and extent of future rate cuts.

Fed Futures indicate a 95% chance of a cut October 29th.

Inflation and the labor market continue to weigh heavily on their decisions. This is a unique situation, normally, we see an inverse correlation between unemployment and inflation (low unemployment typically drives higher inflation and vice versa). But right now, we’re seeing the opposite: stubbornly high inflation and a weakening labor market.

That combination is the Fed’s biggest headache, and the risk of deflation now quietly lingers in the background.

We are on day 9 of the government shutdown with no clear finish line in sight. No one likes uncertainty and the market is reflecting its anxiety. Investors are hesitant to make bold moves until there’s clarity out of Washington.

While the shutdown itself has limited direct economic impact in the short term, prolonged uncertainty can weigh on consumer confidence and delay key data releases the Fed relies on. For now, the market is treading water, waiting for direction.

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