Bond investors are watching the US jobs report closely to gauge the likelihood of another Federal Reserve interest-rate cut in October. Traders are less certain after diverging views on monetary policy and stronger economic data. A potential government shutdown could delay key data releases, adding to market uncertainty.

The Fed lowered rates this month due to a softening job market, but more weak data is needed to solidify expectations for further easing. Traders see an 80% chance of a cut in October, but a strong jobs report is crucial to validate this view. Yields climbed last week after hitting a five-month low post-Fed rate cut.

The median forecast for the upcoming jobs report is 50,000 nonfarm jobs added in September, up from previous months. Fed Chair Powell highlighted concerns about job creation and inflation risks. Officials are divided on the path forward, with differing views on inflation and the job market.

Market positioning is split on Treasury yields, with some betting on a drop to 4% and below, while others are shorting Treasuries. The importance of unaffected data, like the ADP private employment report, is highlighted due to the potential government shutdown. Resilient job data could impact rate cuts next year.

Economic data releases and Fed calendar events are closely watched for further insights into the US economy and monetary policy decisions. Auction calendars for bills are also on investors’ radar. Overall, uncertainty around the jobs report and potential rate cuts is keeping markets on edge.

Read more at Yahoo Finance: Bond Traders Say Rally Hinges on Jobs Data at Risk From Shutdown