šØ U.S. government shutdown risk by January 31st has surged, now estimated at 75-80% likelihood. This isn't minor political noise; it's a significant economic risk impacting markets.
Senate Democrats signal they will block the Homeland Security (DHS) funding bill. This stance comes unless ICE and Border Patrol enforcement provisions are separated from the main funding package.
A recent deadly Border Patrol shooting in Minneapolis has ignited national outrage and political pushback. This incident is hardening Democratic resistance to a combined DHS funding bill.
A partial shutdown is more than political theater. Past shutdowns have led to significant economic costs, delaying paychecks, contracts, permits, and economic data. This uncertainty consistently slows economic activity.
The Minneapolis incident became a flashpoint, hardening Democratic resistance. Without a DHS deal by Jan. 31, a partial shutdown clock starts ticking.
Markets will react quickly to this uncertainty. Delayed government spending, disruptions in approvals, and slower economic signals are expected outcomes.
Historically, different assets react in sequence:
š Bonds typically react first as traders price risk.
š Equities follow on growth uncertainty.
š Crypto often sees spikes on risk-off flows.
The shutdown risk is no longer abstract politics. It's a credible market catalyst, already visible in prediction markets and Capitol Hill dynamics.
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