U.S. Government Shutdown and Tariff Concerns Impact Markets
Fears of a potential U.S. government shutdown and looming trade war threats have sparked volatility in domestic and global markets. The House recently rejected a spending bill backed by President-elect Donald Trump, raising alarms about a partial shutdown as the funding deadline approaches. This political uncertainty, coupled with concerns over future trade policies, has left investors wary.
Adding to market turbulence, the Federal Reserve implemented a "hawkish cut" in interest rates. While signaling modest rate reductions, the Fed also hinted at a less accommodative monetary stance moving forward. This has driven long-term Treasury yields to five-month highs and strengthened the dollar index, creating additional challenges for the markets.