The U.S. government shutdown may freeze October’s inflation report, impacting the $2.1 trillion market for inflation-protected bonds. The Bureau of Labor Statistics has halted data collection, causing uncertainty in the Treasury Inflation-Protected Securities (TIPS) market. Yields on TIPS have slightly increased as traders adjust calculations without CPI data.

The Department of the Treasury has a workaround plan to produce a fallback index if the October CPI is not released by November, affecting TIPS for the first time since their launch. While uncertainty in the market remains high, investors and analysts believe the impact on demand for TIPS will be limited in the long term.

Macro uncertainty due to the government shutdown affects investor sentiment for TIPS, with the next auction scheduled for November 20. Lower market expectations of rising price pressures may have a more significant impact on TIPS demand than the lack of CPI data. U.S. consumer prices increased slightly less than expected in September, adding to market uncertainty.

Read more at Yahoo Finance: Analysis-US government shutdown may prompt first-ever workaround for inflation-protected bonds