NEW YORK (Reuters) - U.S. government shutdowns, which hurt federal workers who go on furlough and taxpayers in need of federal services, have not caused major disruptions to financial markets in the past.
Investors expect nothing different from the shutdown that could begin on Saturday.
“It’s more a political event than an economic one,” said Alessio de Longis, portfolio manager with OppenheimerFunds’ global multi-asset group in New York. “We have been in this situation before.”
On Friday, Washington lawmakers and U.S. President Donald Trump were pushing against a midnight deadline to reach an agreement to keep the government open in the effort to avert a shutdown that last occurred more than four years ago.
The yield on benchmark 10-year Treasury notes US10YT=RR reached a three-year peak at 2.659 percent, meanwhile.
The dollar held steady against a basket of currencies .DXY =USD but still ended lower for a fifth straight week, the longest such streak since April-May 2015.
Spot gold XAU= was up about 0.4 percent at $1,331.84 an ounce, retreating from Monday’s four-month highs.
In the aftermath of the last shutdown in October 2013, which lasted for 16 days, the S&P 500 posted a modest 3 percent gain. Gold, the dollar and the 10-year yield barely changed.
Even if a shutdown begins this weekend, most analysts and investors suspect it will be short lived.
“It’s still seen as a short-term event,” said Vassili Serebriakov, currency strategist at Credit Agricole in New York.
Additional reporting by Chuck Mikolajczak, Sinead Carew and Saqib Iqbal Ahmed; Editing by Tom Brown