The US and markets are threatened by “Shutdown” from October 1

A shutdown in the US could be imminent as of this Sunday.

The deadline is in four days.

A bipartisan deal could potentially lead to a US government shutdown.

Due to the potential risks of a shutdown, the dollar has become the most reliable safe haven.

Moody's cautioned that the shutdown would have a detrimental effect on the nation's credit rating.

There is a possibility that the US government could be forced to close temporarily again due to disagreements in Congress regarding the budget for the 2023 fiscal year, which starts on October 1.

Forbes reports that if Congress is unable to come to an agreement, the government may be forced to suspend some of its operations, resulting in approximately 1 million people being placed on unpaid leave.

Since 1976, the United States has experienced 21 government shutdowns due to disagreements between Republicans and Democrats in Congress, or between Congress and the President, when it comes to approving government spending.

In 2018, the longest government shutdown in history occurred when parliamentarians were unable to come to an agreement on the allocation of $5.7 billion for the wall on the border with Mexico, a promise made by Donald Trump. This shutdown lasted a total of 35 days.

Republicans are advocating for a decrease in funding for certain government programs, while Democrats are pushing for an increase in funding for them.

According to Goldman Sachs, the effect of the US shutdown could be quite negative and contribute to a decrease in GDP growth, even though the consequences of this event are not as severe as defaulting on debt payments. It is estimated that each week of the shutdown will reduce the country's economic growth by 0.2%.

The risk of a short-term government shutdown in the US is high, according to Freedom Finance. This could be beneficial for both Democrats and Republicans, as the former could use it as an opportunity to delay the impeachment investigation of President Biden, while the latter could push for cuts to government programs.

Reuters was informed by US State and Defense Department officials that international arms sales from the US, such as those to Ukraine and Taiwan, could be impacted if a government shutdown were to occur.

PIMCO believes that if the US government shuts down for an extended period of time, which is expected to occur in October, it could prevent the Federal Reserve from increasing rates in November. This could lead to worries about the dependability of the US economy.

Yahoo Finance has reported that Moody's, the last major agency to maintain the highest credit rating for the United States, may follow suit after Fitch downgraded the US credit rating in August of this year to a notch below its maximum.

On Monday, Moody's, a global rating agency, cautioned that the US government shutdown had a detrimental effect on the nation's credit rating.

The US stock market may be adversely affected if it declines, while the US dollar has become the most reliable safe haven due to the shutdown. Bloomberg reports that the collapse of bonds has helped to increase demand for the dollar.