The 43-day government shutdown left investors making decisions without the economic data they normally rely on. This week, the fog lifts—and what emerges could reshape expectations for Federal Reserve policy in 2026.
Tuesday brings the delayed November nonfarm payrolls report, originally scheduled for early December. Thursday delivers the November Consumer Price Index. Together, these releases represent the two most market-moving economic indicators in existence, hitting in the same week.
What the Market Expects
Economists are pricing in approximately 40,000 new jobs for November, with the unemployment rate holding steady near 4.4%. That would represent a significant slowdown from October's pace but wouldn't signal recession—more of a gradual cooling that the Fed has been engineering.
On inflation, core CPI has been stubbornly sticky above the Fed's 2% target. Fed Chair Jerome Powell explicitly noted that tariffs are causing "most of the inflation overshoot," but without current data, that's been educated guessing. Thursday's print will provide clarity—or more confusion.
Why This Week Matters More Than Usual
The Fed just cut rates by a quarter point to 3.5%-3.75% and signaled a "wait and see" posture. Markets are pricing a 75.6% probability that the Fed holds rates steady at its January meeting. But that probability was calculated without November's employment and inflation data.
A strong jobs report combined with hot inflation could push pause probability toward 90%—or even spark talk of rate hikes returning to the table. Conversely, weak employment with cooling inflation could revive expectations for continued easing.
The Data Quality Question
There's an important caveat: delayed data is degraded data. Economic statistics work best when timely. Six-week-old readings about an economy buffeted by Fed decisions, tariff uncertainties, and holiday spending may tell us less than usual about current conditions.
The Bureau of Labor Statistics has warned that some data collection was disrupted during the shutdown, potentially affecting sample sizes and accuracy. Investors should treat this week's releases as important but incomplete.
Other Events to Watch
Beyond the headline data releases:
- Tuesday: October retail sales (also delayed)
- Wednesday: Micron earnings—key read on AI memory demand
- Thursday: Nike and FedEx earnings, Bank of Japan rate decision
- Friday: Nasdaq-100 reconstitution effective next Monday
How to Position
Given the uncertainty around stale data and potential for outsized market reactions:
- Consider reducing position sizes ahead of Tuesday and Thursday releases
- Watch for asymmetric reactions—bad news may matter more than good if markets are priced for a soft landing
- Focus on forward-looking indicators within the data, not just headline numbers
- Remember that one data point doesn't make a trend
The Bottom Line
This week's economic data dump is both highly anticipated and potentially misleading. Markets need this information to recalibrate after weeks of flying blind, but the unusual timing means readings deserve extra skepticism. Position carefully, react thoughtfully, and don't mistake one month's data for a definitive trend. The Fed is in wait-and-see mode—investors should be too.
