Daily Archives: October 1, 2013

John Authers

Just what depths of political stupidity are markets discounting? The partial shutdown of the US government passed with little or no impact on the markets that stood to be most affected, even though there was uncertainty about it to the end.

Almost all European stock markets opened higher, despite the news from the US. The dollar index dropped 0.35 per cent in the minutes following the realisation that the shutdown would happen, and then recovered somewhat. The yield on the benchmark 10-year Treasury bond gained 5 basis points to 2.66 per cent – still far below the 3 per cent it briefly touched a few weeks ago. So what has happened so far – the failure to agree on a budget and an initial shutdown of the US government – has evidently been priced in. Read more >>

James Mackintosh

Here’s the market reaction to the shutdown of (some of) the US government:

  • Benchmark US 10-year Treasury yields rose 0.05 percentage points immediately
  • The dollar index fell 0.4 per cent immediately
  • US equities dropped 0.6 per cent in the build-up yesterday, but the fall was still less than the 0.73 per cent fall in developed world equities.
  • The e-mini S&P 500 futures contract is up 0.4 per cent since the shutdown took effect at midnight in Washington

All of which suggests that investors really aren’t that bothered. Here is conventional wisdom on why: Read more >>