🥛 The Fed is “flying blind” ⚠️

GM. This is Milk Road, the macro newsletter that’s navigating markets with fresher info than the Fed, and we’re not even invited to the meetings.

Here’s what we got for you today:

✍️ What’s going on with economic data after the shutdown?
🎙️ The Milk Road Macro Show: Dan Tapiero's Macro Outlook: Why Markets Will Rip Into 2026
🍪 Nvidia fell on news Meta may buy Google AI chips

DTFs (Decentralized Token Folios) on Reserve are indices that bundle multiple crypto assets into a single token. Read more about DTFs here.

Prices as of 8:00 AM ET.

WHAT’S GOING ON WITH ECONOMIC DATA AFTER THE SHUTDOWN?

The longest ever U.S. government shutdown is now over.

Which means we’re now starting to see official government economic data again.

This is important for asset markets, because we’re now coming out of the “data black-out” which left everybody running around in the dark.

And it’s also important for the upcoming Federal Reserve meeting - and whether we’ll see a rate cut.

The data is starting to trickle in - starting with new labor market numbers.

This is the first “important” economic data point we’ve seen in weeks and weeks.

So, let’s take a good look at what we can learn from the report…

What did we learn from the latest employment report?

This latest jobs report is the September report.

So it’s now very “stale”.

But anyway, it’s the best we have - so let’s take a look.

The headline unemployment rate moved up from 4.3% to 4.4%.

Although, it’s still low - compared to historical levels.

But obviously, it’s heading in the wrong direction (slowly).

Source: TradingView

Elsewhere, non-farm payrolls (job growth) rose 119k, well above the consensus estimate of 50k.

Job growth had slowed concerningly in recent months - so this was a welcome positive surprise and good news for overall economic momentum.

Source: TradingView

However, looking deeper into the data, it’s the same story as it has been for many months.

The majority of the job growth came from just two sectors - Education and Health, and Leisure and Hospitality.

Employment growth elsewhere was subdued or negative.

Source: Augur Infinity

We also saw an update for Initial Jobless Claims (the number of people claiming unemployment benefits for the first time).

And this is still signalling things are mostly fine.

There is no major employment crisis until/unless Initial Jobless Claims start moving much higher.

Like the unemployment rate, it is low - compared to historical levels.

Source: TradingView

But Continuing Jobless Claims (the number of people continuing to claim unemployment benefits) continued to slowly rise, as it has done for a couple of years.

This essentially means that people out of work are finding it hard to land a new job.

Companies are retaining workers and implementing AI, which reflects in higher output without increasing hours worked.

But, once again, the level here is low, compared to historical levels.

Source: TradingView

So, overall - “solid-ish” labor market data.

As it has been for some time, the general takeaway is that the labor market on the whole is not collapsing - but it is sluggish, with a subdued pace of both hiring and firing.

THE FRUIT SALAD OF CRYPTO

What’s easier?

Buying 5 fruits, washing them, chopping them or grabbing a ready-made fruit salad?

Well, Reserve is basically building the fruit salad of crypto.

DTFs (Decentralized Token Folios) on Reserve are indices that bundle multiple crypto assets into a single token.

Here’s why we’re impressed by DTFs:

Backed by Sam Altman & Peter Thiel
Partnered with Bloomberg, CoinDesk and CoinMarketCap
Just launched CMC20, the crypto version of the S&P 500

No more managing complex portfolios, just buy DTF & chill.

WHAT’S GOING ON WITH ECONOMIC DATA AFTER THE SHUTDOWN? (P2)

So, what’s happening with the October report?

Are we going to see the more recent October employment report?

The answer is: “sort of”.

Because of the government shutdown, some parts of the data for the report were not collected.

So, there will be an October report - but it won’t include an unemployment rate, according to the BLS (Bureau of Labor Statistics).

But, here’s the most important part - we won’t see this “partial” October report until after the next Fed meeting on December 10.

The BLS also confirmed that the October CPI (inflation) report will never be released - because the data should have been collected throughout October (when staff were sent home).

And the November CPI report release date has also been pushed back to December 18.

What are the latest odds for a December rate cut?

This situation with the October employment report and the October CPI report makes the Fed’s job a lot harder.

Fed members will essentially be “flying blind” at the December meeting.

The most recent labor market and CPI data they will have seen will be from September.

A few weeks ago, Jerome Powell cautioned that limited data could justify a more careful approach:

“If there is a high level of uncertainty, then that could be an argument in favor of caution about moving [ahead with a rate cut]”.

Odds for a December rate cut have swung wildly in recent weeks.

In late October, the odds sat at more than 95%.

But then they slid lower to less than 35% as Powell and other Fed members pushed back on a December cut.

But then, last Friday, they shot back up to more than 75% after New York Fed President John Williams said he “sees room to cut rates again in the near term”.

The odds of a December cut currently stand at 81%, according to interest rate traders.

Source: CME FedWatch

Risk asset markets have been trading in lockstep with December rate cut odds - selling off as odds headed lower, and then rebounding again from Friday after Williams’ comments.

The current environment appears to be a "sugar high" environment, where risk markets need their "sugar hit" (rate cut) or they throw a tantrum.

Source: TradingView

Wrapping up

While the headline unemployment number inched up in September - the report was overall pretty “solid-ish”.

There are no immediate signs of any “collapse” or “crisis” - just a continuation of a sluggish labor market.

But the December Fed meeting now looms large - and FOMC members will likely have to make their interest rate decision based on “vibes” rather than any actual official data.

The two most important data points - the unemployment rate and CPI - will be horribly stale (three months old) by the time of the meeting.

This upcoming Fed meeting could certainly be a contentious one…

That’s it for this edition - catch you in the next one.

ZOOM OUT. THE SIGNAL IS CLEAR 🔭

While everyone’s focused on short-term volatility, the real story is happening in the plumbing. The global AI arms race is forcing governments to spend trillions, and that leads to one inevitable outcome: a fresh wave of liquidity flowing into scarce assets.

This is exactly why we’re launching Milk Road AI PRO in a few weeks. To help you capitalize on the intersection of Macro and Technology.

And this week only, you can lock it in at a 40% discount. 🤝

Until next Monday at midnight, PRO All Access is 40% off. This includes our full Macro analysis, Crypto deep dives, and (soon) AI PRO, as well as access to our personal portfolio, market pulse updates, and VIP discord access.