Congress’ inability to arrive at a short-term budget deal has led to a government shutdown. Investors worry about the impact this has on their investments.
There have been 17 U.S. federal government shutdowns since 1976, and Scott Minerd at Guggenheim Partners analysed eight of the shutdowns in the past 30 years. From Minerd:
“Excluding drastic moves in commodity prices and bond yields in the late 1970s, analysis of eight occasions during the past 30 years reveals that U.S. equities and the dollar tend to decline during shutdown periods, while gold and commodities tend to perform well. Shutdown periods do not appear to have a significant effect on 10-year Treasury yields. Historically, when a shutdown ends, market performance reverses quickly, and Treasury yields fall by an average of 22 basis points over the following 10 days.”