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Shut the government, economic sense has bolted

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  • A US government shutdown now looms. Republicans and Democrats seem incapable of talking to one another, and if there is no continuing resolution agreed today, the US government has a partial shutdown from midnight. Worse, that means the US government will stop publishing economic data.
  • The direct economic consequences of a shutdown are (initially) relatively limited. However, a failure to compromise will worry investors ahead of debt ceiling negotiations (over the next couple of months) and with other issues that could benefit from bipartisanship.
  • China's HSBC PMI was a lot weaker than the flash estimate, suggesting economic activity may have slowed in the second half of the month. Japan's industrial production was also weaker than anticipated, with the yoy rate slipping back into negative territory.
  • UK house prices from Hometrack showed the strongest performance for over six years, but at 2.4% yoy it would be hard to describe this as a bubble- like level. Mortgage data comes out from the UK today, and the Euro area gives flash CPI.

Listen to the audio version of this briefing.