Deal or No Deal: Financial Markets Move On Without US Government

deal or no deal, us government shutdownAs the clock pushes past midnight, the US Government still is without a budget deal. But deal or no deal, the financial markets will carry on. And with US equity futures up a couple points, maybe the government shutdown isn’t so bad after all. Check out Andrew Kassen’s analysis on past US Government shutdowns and the effect on treasuries and equity markets.

As Democrats and Republicans are playing deal or no deal for political power (and media share), the rest of the world is likely beginning to wonder about the relevance of the US Government. This kind of shenanigans has carried on for the past few years and market participants are barely batting an eye thus far. Call it complacency, but perhaps it’s a combination of complacency and perceived irrelevance.

So when will this begin to matter? Well, many could argue that the looming shutdown has been a catalyst for price consolidation in equities and that much of this is already priced into the financial markets. But with the debt ceiling talks looming, it could become a larger issue if the Republicans decide to push the shut down into mid-October.

Below is a chart of the S&P 500 with a key price support band highlighted. In summary, many market technicians are watching to see if the S&P 500 can hold the zone between 1665 and 1678. As well, you can see how the US Dollar fell and Gold bounced in the three months leading up to the US Government showdown. Deal or no deal?  Or rather: how much will it matter. We’ll see.

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S&P 500 vs Gold and the US Dollar – End Of Day Chart (9/30/13)

sp 500 vs us dollar vs gold

Twitter:  @andrewnyquist      @seeitmarket

No position in any of the mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.