The potential of another government shutdown has re-emerged today as President Trump announced he wants funding for a wall between U.S. and Mexico to be included in the new spending bill. The stopgap spending measure Congress passed earlier this month expires at midnight tonight, which would result in the closing of some federal agencies.
It is important to know that shutdowns, especially those that only freeze nonessential government operations, do not impact the cash markets. What drives trading at the front end of the market is the Treasury’s ability to issue debt, which will continue. So whether Trump signs a new spending deal extending government funding through mid-February or allows for a partial shutdown, the cash markets will not be affected.