Shutdown, Cash Cliffs and a Data‑Blind Fed: Why Q4 Risk Appetite Hangs on Paychecks, SNAP and Rates
The government shutdown has shifted from political brinkmanship into real‑economy impact. Essential federal employees have missed their first full pay cycles, air traffic control staffing gaps are driving a rising share of flight delays, and the Agriculture Department says Supplemental Nutrition Assistance Program benefits won’t be issued on Nov. 1 without a deal. Those developments are immediate cash‑flow and services shocks that markets can no longer treat as noise. They are landing just as the Federal Reserve prepares to cut rates while flying partially blind, with most federal data series halted. Inflation remains sticky around 3% year‑over‑year, unemployment has drifted higher and the curve is modestly positively sloped again in the 10s/2s segment. The collision of a fiscal stop‑and‑go at the household level with a data‑dependent central bank raises front‑end sensitivity, rate‑volatility risk and sector dispersion into Q4. This is now a story about paychecks, SNAP timing and the path of rates—and how those three levers will shape risk appetite.