United States — Record shutdown, data blackout deepens
With no agreement signed, the US government shutdown has become the longest on record. While signs suggest it could be resolved in the coming weeks, the ongoing data blackout is increasingly problematic. Alternative indicators are sending mixed signals, and noise around inflation, unemployment, and layoffs will likely persist for some time. We do not anticipate major near-term market implications, but the uncertainty premium may linger until the publication of official data resumes.
Tariffs — On trial
Last week, the Supreme Court heard oral arguments on tariffs under the IEEPA framework. A decision is likely between late 2025 and early 2026. As these measures account for a substantial share of the effective tariff burden and related revenues, an adverse ruling could materially affect US finances. Even so, we think the administration will seek to preserve the current trade stance, with alternative tools available if needed.
BoE — Dovish hold keeps December live
The Bank of England (BoE) left rates unchanged last week. Markets had priced in only a 20% chance of a cut, but MPC communications pointed to a close call within a split committee, with Bailey’s vote proving decisive. The vote split 5–4 in favour of holding. The Governor indicated he would like to see clearer progress in the data before easing, yet the statement’s tone was sufficiently dovish to keep a December cut on the table, currently priced at around 60%. Focus now shifts to the Budget and its implications.
Algebris Investments’ Global Credit Team
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