In Short: Shutdown a political—not market-moving—event

01-22-2018

After a weekend of political gamesmanship between Democrats and Republicans, the nearly 3-day partial government shutdown ended this evening. A compromise was struck extending funding for the federal government to Feb. 8 so that the two sides can discuss and draft a potential solution for dealing with the so-called Dreamers—hundreds of thousands of young, undocumented immigrants brought into this country by their parents.

The weekend shutdown made for intriguing political theater and news headlines, but for the cash and broader markets, it was hardly a market-moving event. The real issue for them remains the debt limit and the point, much later in this quarter, when the Treasury says it will run through extraordinary measures and no longer will be able to pay its bills and issue new debt. That’s the deadline that has our focus given the potentially severe detrimental effects if the debt ceiling isn’t raised.

For now, the can has been kicked again, leaving for another day the question as to whether Congress and the White House can come together and address longer-term funding issues. We’ll keep you posted.