U.S. Government Shutdown is Averted, or Merely Delayed

October 2, 2023

U.S. Government Shutdown is Averted, or Merely Delayed Photo

Last Saturday night, a temporary funding bill was signed by President Joe Biden to keep the government open for 45 more days. This stopgap measure pushes the 2024 fiscal year funding legislation deadline to November 17, avoiding a government shutdown, for now.1

It was also another week of rising interest rates and falling equities. The 10-year Treasury finished at 4.59% last week, while also marking its first time topping 4.60% post-financial crisis earlier in the week.2 The higher interest rates clearly have their effects on the housing market. New home sales fell 8.7% in August, echoing the slowing existing home sales data published earlier.3,4 According to the National Association of Home Builders (NAHB) survey, almost one-third of builders reported cutting home prices to attract buyers.5 However, if interest rates continue to rise, those discounts will only go so far to bridge the affordability gap.

Last Thursday, the Bureau of Economic Analysis (BEA) released its comprehensive update to the national economic accounts.6 The update includes a small up revision to gross domestic product (GDP) over the last five years. It also revised higher the second quarter year-over-year change of the Core Personal Consumption Expenditures (PCE) Price Index from 4.41% to 4.58%. This hints at more inflation for the Federal Reserve to chip away.

Looking ahead, student loan repayments resumed on October 1 and could cost consumers $100 billion over the coming year.7 On the data front, key releases include ISM Manufacturing & Services on Monday and Wednesday, respectively, and the non-farm payroll data on Friday.8



1AP – Government shutdown averted with little time to spare as Biden signs funding before midnight; 10/1/23

2U.S. Department of the Treasury – Government shutdown averted with little time to spare as Biden signs funding before midnight; as of 9/29/23

3U.S. Census Bureau – Monthly New Residential Sales, August 2023; 9/26/23

4National Association of Realtors – Existing Home Sales; September 2023

5National Association of Homebuilders – High Mortgage Rates Continue to Weaken Builder Confidence; 9/18/23

6Bureau of Economic Analysis – Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), Second Quarter 2023 and Comprehensive Update; 9/28/23

7The Wall Street Journal – Student-Loan Restart Threatens to Pull $100 Billion Out of Consumers’ Pockets; 9/16/23

8MarketWatch – U.S. Economic Calendar; as of 10/2/23

Tags: Government shutdown | Interest rates | Economic data | FOMC minutes | Inflation

< Go to Monday Morning Perspectives

This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications