U.S. Shutdown Risks Freeze Fed Ahead of Key Data Release

- Congressional deadlock risks U.S. government shutdown starting October 1. - Shutdown threatens to delay economic data, cripple financial regulators, and trigger mass federal layoffs. The United States faces an imminent risk of a government shutdown as Congress struggles to pass funding measures. If lawmakers fail to act before the October 1 deadline, essential functions across agencies could grind to a halt, impacting the economy, financial markets, and monetary policy. A shutdown could delay the release of critical economic data, including inflation and jobs reports. Consequently, the Federal Reserve would have to navigate monetary policy in a data void. On September 25, 2025, economists at Nomura warned that in such a scenario, the Fed might proceed with its plan for two additional 25-basis-point interest rate cuts before the end of 2025, even if economic conditions shift. Financial regulators, such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), will likely scale back operations to minimal capacity, impairing regulatory oversight and delaying processes like initial public offerings (IPOs). In contrast, banking regulators and the Consumer Financial Protection Bureau will remain unaffected, as they operate outside congressional appropriations. In a stark divergence from previous closures that relied on temporary furloughs, the White House has instructed federal agencies to prepare for mass layoffs. Such layoffs could worsen disruptions by slowing federal rule-making and leaving agencies under-resourced, similar to the extensive delays during the 2019 shutdown. Analysts remain divided on whether this approach is a strategy to reduce the federal workforce or a tactic to pressure lawmakers. According to CoinMarketCap, Ethereum (ETH) was trading at $1,672 as of 12:00 UTC on September 25. Its 24-hour trading volume decreased by 1.5%.