U.S. Government Is Closed but the Treasury Remains Open
October 6, 2025
.jpg "US-Treasuries (1).jpg")
Markets finished on a softer note on Friday as the U.S. government remained closed and key technology companies underperformed.1 U.S. investment-grade corporate spreads remain near all-time tights, even with September finishing as one of the busiest in terms of new issue supply.2 This morning, technology companies are leading markets higher with another major headline in the artificial intelligence space (OpenAI and AMD).3 Meanwhile, “Merger Monday” continues, with Fifth Third Bancorp buying Comerica in the largest U.S. bank deal announced thus far this year.4 Beyond corporate news, developments in trade and tariffs are also in focus. According to a Bloomberg article, expectations for President Trump and Chinese President Xi Jinping meeting later this month could result in a $1 trillion investment by China in the U.S.5 In tariff news, a Reuters article highlighted potential implications regarding an extension of tariff relief for the U.S. auto industry.6
Despite the U.S. government shutdown continuing over the weekend, a possible path to compromise is emerging. The market seems willing to cope with the shutdown for a bit longer; however, the lack of government economic reports next week may weigh on sentiment. Outside of the U.S. shutdown, there was major political news in Japan and France, moving global markets higher and lower, respectively.
This week will be an important one as we monitor progress on the U.S. government shutdown. The first key U.S. economic event will be the release of the Federal Open Market Committee meeting minutes on Wednesday.7 Next is the weekly jobless claims, which is scheduled for Thursday but is at risk of being delayed with the shutdown.8 This Friday, the Michigan sentiment report for October will be released.9 Several Federal Reserve officials will speak this week. Treasury auctions will also be in focus, including a 10-year auction on Wednesday and a 30-year auction on Thursday.10 The Treasury curve has flattened recently but has steepened throughout most of the year. The success of the 30-year auction could determine if the near-term trend of curve flattening will continue or if more steepening lies ahead.
Sources:
1CNBC – S&P 500 posts winning week, but Friday rally fizzles: Live updates; 10/3/25
2Bloomberg
3CNBC – AMD stock skyrockets 35% as OpenAI looks to take stake in AI chipmaker; 10/6/25
4CNBC – Fifth Third Bancorp to buy Comerica for $10.9 billion in all-stock deal; 10/6/25
5Bloomberg – China Plays to Trump’s Soft Spot for Offering Investments in the US; 10/6/25
6Reuters – Exclusive: Trump considering significant tariff relief for US vehicle production, senator says; 10/3/25
7-9MarketWatch – U.S. Economic Calendar; as of 10/6/25
10Treasury – Tentative Auction Schedule of U.S. Treasury Securities; as of 10/6/25
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.
