Investors Monitor Washington’s Ticking Budget Clock

Michael Zezas and Ariana Salvatore discuss the potential U.S. government shutdown as the fiscal year ends on September 30th. They explain that Republicans are advocating for a clean continuing resolution until November 21st, while Democrats seek to tie funding to legislative compromises on ACA subsidies and Medicaid spending. The hosts analyze the potential duration of a shutdown, noting that historical shutdowns typically end when economic and political risks become significant. They also discuss the economic impact, including a potential 0.1% GDP reduction per week of shutdown, the risk of durable layoffs, and the indirect effects of delayed data releases on markets. The conversation concludes with an assessment of market reactions, anticipating weaker growth potential, falling Treasury yields, and increased equity market volatility, amplified by data uncertainty.