Will Markets Continue To Ignore The Government Shutdown?

Financial markets largely disregarded the recent US government shutdown, which is delaying key economic reports, with Wall Street showing minimal impact. Developed foreign stocks, notably the Vanguard FTSE Developed Markets ETF (VEA) rising 2.8%, led last week's rally, contributing to ongoing year-to-date gains across major asset classes.

Analysis

The US government shut down last week, and markets barely noticed. If the closing of federal agencies, which is delaying key economic reports, is a risk factor, it’s not obvious on Wall Street. All the Will Markets Continue To Ignore The Government Shutdown? Summary - The US government shut down last week, and markets barely noticed. If the closing of federal agencies, which is delaying key economic reports, is a risk factor, it’s not obvious on Wall Street. - Foreign stocks in developed markets led last week’s rally. Vanguard FTSE Developed Markets ETF (VEA) rose 2.8%. - Last week’s gains are all the more impressive when you consider that all the major asset classes continue to post gains for the year so far. James Picerno is the director of analytics at The Milwaukee Co., a wealth manager that is the adviser to The Brinsmere Funds, a pair of global asset allocation ETFs. He also edits CapitalSpectator.com and The US Business Cycle Research Report (CapitalSpectator.com/premium-research). He is the author of three books, including "Quantitative Investment Portfolio Analytics In R: An Introduction To R For Modeling Portfolio Risk and Return." Previously he was a financial journalist at Bloomberg and before that at Dow Jones. Recommended For You Related Stocks | Symbol | Last Price | % Chg | |---|---|---| | VEA | - | - | | Vanguard FTSE Developed Markets Index Fund ETF Shares | || | VWO | - | - | | Vanguard FTSE Emerging Markets Index Fund ETF Shares | || | GCC | - | - | | WisdomTree Enhanced Commodity Strategy Fund ETF | || | VNQI | - | - | | Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares | || | VTI | - | - | | Vanguard Total Stock Market Index Fund ETF Shares | Financial markets demonstrated significant resilience last week, largely disregarding the US government shutdown despite its role in delaying key economic reports. This lack of reaction on Wall Street suggests investors are currently discounting domestic political risk factors. The market's upward momentum was notably led by foreign stocks in developed markets, with the Vanguard FTSE Developed Markets ETF (VEA) posting a strong 2.8% gain for the week. This performance builds on a broader trend where major asset classes continue to show positive year-to-date gains, indicating a robust risk appetite among investors that is, for the moment, unfazed by the potential information vacuum created by the shutdown.

Key Decisions for Investors

• Investors should closely monitor the duration of the government shutdown, as a prolonged delay in economic data could introduce significant market uncertainty and volatility, potentially reversing the current complacent sentiment.
• Consider the relative strength in foreign developed markets, as evidenced by VEA's 2.8% gain, which may signal a tactical opportunity for diversification away from US-centric political risks.
• Given the broad-based positive year-to-date performance across asset classes, it may be prudent to maintain a constructive stance while remaining vigilant to the latent risks posed by the political gridlock in Washington.