Traders are nearly abandoning the expectation of a rate cut in December due to the lack of job data leading to inadequate information for the Federal Reserve.

After the US Labor Department announced that it will not release the October employment report, traders are now expecting that the Federal Reserve is more likely to postpone a rate cut at the December policy meeting. Following confirmation from the Labor Department that there is not enough data to release the October employment report, the federal funds rate futures market saw a wave of selling, leading traders to lower their expectations of a 25 basis-point rate cut at the December 10 policy meeting. They now expect the Federal Reserve to maintain the target range for the benchmark interest rate at 3.75% to 4%. The swap market linked to the Fed's policy rate currently only prices in a 6 basis-point easing expectation for the December policy meeting, equivalent to a 24% chance of a 0.25 percentage point rate cut, with the cumulative easing expectation for January next year at just 19 basis points. Prior to Wednesday, the swap market priced in an 11 basis-point easing expectation for December, indicating a roughly fifty-fifty chance of a Fed rate cut in three weeks. "We already knew there would be no October unemployment rate data, but finding out that the November data won't be released until after the Fed meeting should be disappointing to the market," said Leah Traub, portfolio manager at Lord Abbett & Co. "Given the internal divisions within the Federal Open Market Committee, this reduces the likelihood of a rate cut."