The U.S. Government entered a shutdown earlier this week, raising questions on what this means for the market and the U.S. economy.
The key impacts for investors are:
- Delayed data availability – critical economic reports from government sources (like today’s Jobs Report) are delayed until the shutdown is over. This means investors, and the Fed, are flying blind for the duration of the closure.
- Increased uncertainty and volatility – reports like Consumer Confidence tend to be more volatile and reactionary during government shutdowns as respondents express frustration and grapple with uncertainty.
In the midst of the 2013 partial government shutdown, we said:
Federal shutdowns tend to be scary for investors, but in reality they have little impact on financial markets
InvesTech Research October 4, 2013
That was true then and is most likely the case again today. So, stay focused on the developing macroeconomic and technical evidence available, as it will prove more impactful on markets than the shutdown itself.