Market transparency just hit a brick wall. On November 21, 2025, fixed income investors are flying blind through the most significant statistical blackout in modern history. The 43 day federal government shutdown, which paralyzed the Bureau of Labor Statistics until November 12, has left a permanent scar on the macro ledger: the October Consumer Price Index (CPI) has been officially canceled. While previous assumptions predicted a smooth glide path toward the Federal Reserve’s two percent target, the data vacuum has forced a pivot toward micro fundamentals and securitized assets.
Navigating the Statistical Void
The absence of October price data is not a mere delay; it is a structural failure of the price discovery mechanism. Without official CPI figures, the bond market is forced to rely on the Cleveland Fed Nowcast, which currently pegs headline inflation at 2.96 percent. This is a far cry from the disinflationary euphoria of early 2025. Bond yields are reacting to the unknown. The 10-year Treasury note settled at 4.06 percent today, down from 4.13 percent earlier in the week, as investors hedge against the uncertainty of the rescheduled November report due on December 18.
Vishy Tirupattur and the 2026 Transition Year
Morgan Stanley’s Chief Fixed Income Strategist, Vishy Tirupattur, released his 2026 Global Outlook just 24 hours ago. His thesis is a sharp departure from the generic “higher for longer” narrative. Tirupattur argues that 2026 will be a transition from synchronized global tightening to “asynchronous normalization.” He is signaling a high-conviction call for a 2s10s yield curve steepener, betting that the front end will collapse as the Fed cuts toward a neutral rate while the long end remains anchored by massive fiscal deficits.
The AI Supply Shock in Corporate Credit
Investment grade credit is facing a unique technical challenge. Tirupattur highlights a looming surge in issuance from high-quality tech giants. The demand for AI-driven capital expenditure is expected to trigger a massive wave of bond offerings, which could widen spreads by approximately 15 basis points. This is not a reflection of deteriorating credit quality, but rather a simple supply-demand imbalance. In this environment, the smart money is rotating into segments insulated from this tech supply. Morgan Stanley specifically favors Agency Mortgage-Backed Securities (MBS) and senior securitized products, which offer superior carry with lower duration risk.
Fixed Income Benchmark Data: November 21, 2025
The following table tracks the critical shifts in the yield curve and credit spreads following the government reopening.
| Metric | Current Value (Nov 21, 2025) | Weekly Change | Tirupattur 2026 Target |
|---|---|---|---|
| 10-Year Treasury Yield | 4.06% | -8 bps | Rangebound (3.75% – 4.25%) |
| 2-Year Treasury Yield | 3.38% | -12 bps | 3.00% (Neutral Rate Convergence) |
| 2s10s Spread | +68 bps | +4 bps | +100 bps (Steepener Conviction) |
| IG Credit Spreads | 88 bps | +2 bps | Widen to 105 bps (AI Supply) |
The Mechanism of the Basis Trade Squeeze
Hedge funds are currently grappling with a volatility spike in the Treasury basis trade. By exploiting the price gap between Treasury futures and the underlying cash bonds, funds have built massive leveraged positions. However, the government shutdown created a settlement lag in cash markets that didn’t exist in futures. This divergence has triggered margin calls for several mid-tier macro shops. As liquidations occur, we are seeing a tactical bid for cash Treasuries, explaining the recent dip in the 10-year yield despite the lack of official inflation cooling.
The next critical milestone is the December 17 Federal Open Market Committee meeting. Markets are currently pricing in a 62 percent probability of a 25 basis point cut, but the real focus will be the 2026 Dot Plot. If the Fed acknowledges the pro-cyclical boost from AI investment, expect the 10-year yield to test the 4.25 percent resistance level by year-end.
