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Investing.com -- Wolfe Research said in a note Wednesday that the ongoing U.S. government shutdown is likely to extend “into next week, but not beyond,” as pressure builds in Washington ahead of the Oct. 15 military payday.
Wolfe Research wrote that “all sides remain comfortable with their positions and still seem dug in,” but there are now “some glimmerings of potential deals” as disruptions spread.
The firm noted that issues such as “missed paychecks” and problems in “air traffic control” could accelerate resolution, similar to what ended “the last shutdown under Trump 1.0.”
“Our best guess is still that the shutdown will last into next week, but not beyond,” Wolfe Research said, adding that the “risks on our original prediction are skewed to the upside as we’ve already passed the 1-week mark.”
According to the analysts, “both sides think they’re winning,” with “neither convinced they’ll be blamed for missed paychecks and other fallout.” Wolfe Research observed that “polling has uniformly shown that voters see Republicans as more responsible,” despite expectations that Democrats would take the blame.
On the prospect of federal layoffs, Wolfe Research said it “remain[s] skeptical that there will be large-scale permanent layoffs.”
While acknowledging that Trump “absolutely has the option to pursue reductions in force,” the firm said, “if Trump himself actually wanted to do these RIFs... we think he would have done it already.”
In the absence of “large-scale RIFs or permanently lost paychecks,” Wolfe Research concluded that “markets will continue to shrug off the shutdown.”