The shutdown is now moving into its second week, at least in terms of the calendar. The Senate deadlock continues to mean that there is a threat that the shutdown could start to lead to “mass layoffs” next. Or at least that is what Trump and his lackeys are threatening.
On Sunday, White House National Economic Council Director, Kevin Hassett, said that:
“President Trump and Russ Vought are lining things up and getting ready to act if they have to, but hoping that they don’t. If the president decides that the negotiations are absolutely going nowhere, then there will start to be layoffs.”
And that’s the next key risk to watch out for amid the ongoing shutdown.
As for how markets are feeling in general, it’s more of a case that the situation continues to prevent key economic data from being released. And while that might seem bad, the general view remains that everything seems to be enough to suggest that the Fed will cut rates again by 25 bps at the end of this month.
Fed funds futures continue to point to ~96% odds of that happening. However, I reckon market players would feel a whole lot more comfortable about that if they actually had some semblance of softening labour market data; that at least on the official account.
For now, markets can still feel a little at ease with the shutdown only persisting for about six days
