Market Check: Small Business Sentiment Slips as Markets Reprice Rates, Bonds Jump and Crypto Stumbles
Small business confidence weakened even as Washington’s shutdown drama faded, underscoring a fragile backdrop for growth, hiring, and consumer demand. With an ongoing data gap after government offices reopened, investors are recalibrating expectations for Federal Reserve policy while equities, bonds, housing, and crypto move in different directions.
The latest read on small business optimism eased to 98.2, with owners citing shutdown-related disruptions, persistent hiring challenges, and softer sales and profit trends. Although the federal government is back to work, the data drought leaves the Fed waiting on key inflation and jobs reports, shifting the odds around the timing and scale of potential rate cuts. Equities reflected that crosscurrent: the Dow Jones Industrial Average notched a 1.18% record on expectations of policy clarity and steady growth, while tech shares lagged as investors rotated—Nvidia slipped 2.96%.
Beneath the surface, sector stresses remain acute. Trucking continues to battle a historic freight recession, with operating costs up roughly 52% and insurance premiums climbing, pressuring already thin margins. In housing, the debate over ultra-long mortgages is resurfacing: a 50-year loan can dramatically increase lifetime interest costs—about $662,000 more than a standard 30-year at higher rates—putting inventory and affordability center stage. Globally, Japanese government bond yields jumped on rising inflation and growing conviction that the Bank of Japan will normalize policy, alongside waning demand for ultra-long maturities—signaling a structural shift in fixed income. In digital assets, crypto risk sentiment softened after a large Bitcoin wallet reportedly paid a $105,000 fee to move $10, with BTC sliding about 2% near $103,000, roughly 18% below its October peak.
Key Points – Small business optimism fell to 98.2 amid shutdown disruptions, hiring difficulties, and softer sales/profits. – The shutdown’s end hasn’t fixed the data gap, leaving the Fed awaiting inflation and jobs reports as rate-cut bets shift. – Dow hit a record (+1.18%) while tech underperformed; Nvidia declined 2.96% on rotation into other sectors. – Trucking faces a prolonged freight recession with costs up about 51.7% and insurance premiums surging. – A 50-year mortgage can add roughly $662,000 in interest versus a 30-year at higher rates, keeping affordability in focus. – JGB yields surged on inflation and BOJ normalization expectations; Bitcoin slid 2% after a high-fee transaction spooked traders.
