The ongoing government shutdown, which commenced at the start of the month, is now predicted by Polymarket to extend well into October, with a significant 70% probability of lasting until Oct.15th or even later.
70% Bets See Government Reopening After Oct. 15
This forecast suggests a prolonged period of federal inactivity, stemming from deep-seated budgetary disagreements between Democrats and Republicans.
Charlie Bilello, Chief Market Strategist at Creative Planning, highlighted this looming prospect in a recent X post, referencing the Polymarket odds.
In a detailed video accompanying his post, Bilello explained, “The majority saying it’s going to last October 15th or later,” underscoring the betting market’s bearish outlook on a swift resolution.
Why Is The Reopening Stalling?
The core of the impasse revolves primarily around healthcare spending. Republicans have proposed cuts to healthcare in their budget, while Democrats are pushing to reinstate those spending levels and extend enhanced
Affordable Care Act (ACA) subsidies, initially introduced during COVID-19. Bilello elaborated on the chasm: “You had such a big gap in terms of the Democratic party and the Republican party over what they wanted in terms of spending.”
The Committee for a Responsible Federal Budget has warned that extending these subsidies and reinstating healthcare spending could add a staggering $1.5 trillion to the national debt over the next decade.
See Also: Government Shutdown To Continue Into Second Week as Senate Vote Falls Short Again
Stock Markets Likely To Be Undeterred By Shutdown
Despite the political gridlock, Bilello offered a nuanced perspective on the shutdown’s potential impact on financial markets and public benefits. Addressing widespread fears, he reassured that essential services like Social Security would remain unaffected.
Historically, government shutdowns have had a surprisingly benign effect on the stock market. Bilello noted, “More often than not, the stock market’s actually been higher during a government shutdown. So really no impact whatsoever.” He cited the 2018 shutdown, which lasted 35 days and saw the S&P 500 rally 10%, as a testament to investors’ tendency to look past temporary political disruptions.
National Debt Mounts Even During Shutdowns
However, Bilello cautioned that the underlying issue of government spending remains a critical concern, regardless of the shutdown’s duration.
He emphasized, “The spending is going to continue regardless of how long the shutdown is regardless of what the agreement is. There’s really no scenario where we’re going to see additional cuts to spending.”
This unchecked spending, he argued, is causing the national debt to “absolutely explode to the upside,” increasing by $1.7 trillion in less than three months and nearing the $38 trillion mark.
Ultimately, while the immediate impact on markets might be minimal, the prolonged shutdown highlights persistent fiscal challenges. Bilello’s analysis suggests that investors are focusing on the bigger picture of sustained government spending rather than the transient nature of the shutdown itself.
Price Action
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, declined on Friday. The SPY was down 0.0015% at $669.21, while the QQQ fell 0.42% to $603.18, according to Benzinga Pro data.
The futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were higher on Monday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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