USD/JPY is now dipping to a two-week low of 147.18 while S&P 500 futures are extending losses to 0.8% on the day. This comes despite some relative calm in the bond market, but traders and investors are certainly feeling anxious already. From earlier:
- US government begins shutting down most operations as Congress fails to pass funding bill
- How long have previous US government shutdowns lasted?
As much as it sounds like a major ordeal, best be reminded that a government shutdown presents more operational risks rather than economic risks for the US. That unless it extends long enough to cause permanent layoffs and what not. Otherwise, the reaction here seems to be all about the relative uncertainty of having to see the US labour market data this week (and perhaps CPI report eventually) get delayed.
But as mentioned earlier, this doesn't mean the Fed will be flying totally blind ahead of the FOMC meeting at the end of the month: The central bank will still have access to other resources like private sector surveys and their own business surveys in getting a feel of things.
