While global markets were asleep, Washington quietly pulled the plug. A partial U.S. government shutdown is now in effect after the House failed to pass a funding agreement. Lawmakers won’t reconvene until Monday, and while a fix is possible, nothing is guaranteed.
Because this happened over the weekend, markets had no chance to react in real time. No volatility spike, no early signals. The reaction was delayed — and now it hits at the open.
When shutdowns start during thin liquidity, uncertainty builds beneath the surface. By the time markets reopen, positions often adjust all at once, creating headline-driven risk as traders react simultaneously rather than gradually.
Key things to watch:
- How futures respond at market open ⏱️
- Volatility spikes from policy uncertainty 🔥
- Risk assets pricing the possibility of a longer shutdown
- Rotation toward Treasuries and safe havens 🏦
- Interrupted economic data leaving macro investors with fewer signals
History offers some reassurance. Short-lived shutdowns rarely trigger market crashes, but they almost always raise uncertainty. Markets dislike ambiguity even more than clearly bad news — repricing fuels volatility.
Timing makes this episode delicate. Since the shutdown began while markets were closed, price discovery was postponed, concentrating risk. Monday is when the real test begins.
Washington may remain closed, but markets never sleep.
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