29.09.25 - Government shutdown on the cards - nothing new
Republicans and Democrats remain at an impasse over federal funding, raising the threat of a shutdown just as the 2026 fiscal year begins.
The top four congressional leaders are scheduled to meet with Donald Trump at the White House on the eve of the deadline. Without a short-term spending bill, federal funding will expire, forcing the government to shut down.
Such an outcome would immediately disrupt the release of critical US economic data. From job market data to inflation reports, the flow of statistics the Federal Reserve relies on to calibrate monetary policy could be interrupted.
Markets: More signs of resilience
US equities: AI-momentum trade continues
US Bond yields down
US dollar loosing ground against major currencies
Gold new highs now above USD 3’800/oz
Crypto prices climb with regained risk-on mode
My View: Another potential US government shutdown is hardly breaking news. We’ve seen this movie before, and markets usually shrug it off. The risk is not the shutdown itself but the data blackout it could trigger. Key economic data may be delayed, leaving the Fed “flying blind” at a moment when inflation risks and labor market weakness are pulling policy in opposite directions.
For now, investors couldn't care less. The AI-driven momentum trade picked-up again after last week’s brief pause. The narrative has taken on the shape of a perpetuum mobile:
- AI providers (e.g., OpenAI) require massive cloud capacity.
- Cloud providers (e.g., Oracle) in turn buy chips from semiconductor leaders like Nvidia.
- Chipmakers reinvest into AI ventures, fueling the next cycle.
Round and round it goes, a feedback loop that, by definition, cannot last indefinitely. Still, the rally continues to defy logic and valuation gravity. As long as investors and speculators remain convinced by this narrative, or “brainwashed” by it, markets will likely keep pushing to ever more exuberant levels.
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