Treasury Yield Slippage and FOMC Uncertainty Amid Government Shutdown Resolution

This analysis is based on the Schwab Network interview [1] published on November 12, 2025, where Charles Schwab’s Cooper Howard discussed market dynamics surrounding the government shutdown resolution and FOMC policy uncertainty.

The Treasury market experienced notable movements on November 12, with the 10-year yield slipping to 4.08% from 4.11% at Monday’s close [2][3]. This 3-basis-point decline reflects market optimism about the potential end to what has become the longest government shutdown in U.S. history, lasting over 40 days [2]. The broader Treasury market showed similar patterns, with the 2-year note yield falling over 3 basis points to 3.556% and the 30-year bond yield down 1 basis point to 4.688% [2].

Equity markets displayed mixed reactions to the shutdown developments. The Dow Jones Industrial Average achieved a record close above 48,000 for the first time, gaining 239.03 points (+0.50%) to settle at 48,254.82 [0]. However, technology-focused indices declined, with the NASDAQ Composite falling 157.38 points (-0.67%) to 23,406.46 and the S&P 500 dropping 16.85 points (-0.25%) to 6,850.92 [0]. This divergence suggests optimism about economic normalization alongside ongoing concerns about uncertainty.

The government shutdown, which began on October 1, 2025, has created a significant data blackout for markets. Federal agencies stopped releasing most key economic reports, including the Consumer Price Index and Producer Price Index [3]. Howard’s warning about a “massive influx of jobs and inflation data” is particularly critical because markets have been operating with incomplete information for over 40 days, forcing reliance on alternative indicators and private-sector gauges.

The December FOMC meeting (scheduled for December 9-10) faces considerable uncertainty regarding rate policy [4][5]. Current market expectations show a 65% probability of a 25-basis-point rate cut according to the CME FedWatch Tool [4], while 80% of economists in a Reuters poll expect a rate cut [5]. However, the Fed remains divided, with recent FOMC decisions passing 10-2, indicating significant internal disagreements [5].

Key factors influencing the December decision include labor market weakness, with recent data suggesting a cooling job market [5], and persistent inflation concerns, as some Fed officials like Raphael Bostic view inflation as a greater threat than unemployment [5]. The economic data blackout has further complicated the Fed’s decision-making process by limiting access to comprehensive economic information.

The combination of Treasury yield movements and divergent equity performance suggests markets are positioning for both resolution and uncertainty. The Dow’s record close indicates optimism about shutdown resolution and potential economic normalization, while declines in tech-heavy indices reflect concerns about the impact of delayed economic data and uncertain Fed policy.

1. Data Shock Volatility
   : The sudden release of 40+ days of economic data could create extreme market volatility as investors rapidly adjust positions based on new information [1]. Markets have been operating without official CPI, PPI, or employment data since early October [3], making the upcoming data releases particularly significant.

2. Fed Policy Uncertainty
   : The December FOMC decision remains “very much up in the air” with significant internal divisions among policymakers [1][5]. This uncertainty could lead to market turbulence regardless of the actual decision.

3. Economic Damage Assessment
   : The full extent of economic damage from the prolonged shutdown remains unknown and could be worse than current expectations, potentially impacting corporate earnings and economic growth projections.

1. Treasury Yield Dynamics
   : Continued monitoring of the 10-year yield will provide insights into market sentiment and inflation expectations as data resumes flowing.

2. Fed Communications
   : Close attention to public comments from voting and non-voting FOMC members could provide early signals about December policy direction.

3. Data Release Calendar
   : Tracking the schedule for resumption of official economic data releases will be crucial for anticipating market reactions and positioning strategies.

The Treasury market’s response to the potential government shutdown resolution, with the 10-year yield declining 3 basis points to 4.08%, reflects market optimism about ending the 40+ day data blackout [2][3]. The December FOMC meeting faces heightened uncertainty, with markets pricing in a 65% probability of a 25-basis-point rate cut despite significant internal Fed divisions [4][5].

Equity markets showed mixed performance, with the Dow achieving a record close above 48,000 while technology indices declined, suggesting both optimism about normalization and concerns about uncertainty [0]. The impending release of delayed economic data represents a critical inflection point for markets, with Howard warning investors to prepare for potential volatility as this information becomes available [1].

The shutdown has created an unprecedented information vacuum, with no official government economic data available since early October [3]. This lack of comprehensive economic indicators has forced market participants to rely on alternative measures, making the upcoming data releases particularly significant for market positioning and Fed policy decisions.