"Washington is bracing for its first government shutdown since 2018, a standoff that could disrupt economic data releases and potentially complicate the Fed's policy decisions. Wall Street is uneasy, with UBS's Paul Donovan warning the lack of official data could let rumor and unreliable surveys sway markets, while companies quietly push through price hikes. Still, UBS and Macquarie analysts argue the macroeconomic impact is usually small and temporary-unless the shutdown drags on or Trump follows through on threats to permanently cut furloughed workers."
"The further fallout from a potential pause to data releases is the Fed's decision-making process. While shutdowns have been known to last only a matter of days, there is the chance it could rumble on for weeks. While it is unlikely the shutdown could last near a month, it does mean the Fed's meeting at the end of October could be skewed by either a lack of data or economists frantically playing catch up with reporting."
A government shutdown is expected to begin at midnight, the first since 2018. The shutdown would delay key economic releases, including Friday's payroll report, removing a contemporaneous data point markets rely on. Market participants express unease as the lack of official data could allow rumors and unreliable surveys to influence prices. UBS and Macquarie analysts judge typical macroeconomic effects as small and temporary, but warn of larger disruptions if the shutdown lingers or if furloughed workers are permanently cut. The Federal Reserve's late-October meeting could face skewed information or rushed catch-up reporting. Political stalemate and White House readiness increase the risk of disruption.
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