Government shutdown, government progress
- The US government has shut down. The economics of this do not really matter if the shutdown is short lived. At the moment, this is an economic inconvenience. However, the political implications may raise some investor interest. The Trump Twitter feed has been active in blaming the Democrats. Opinion polls, so far, have suggested the burden of blame is falling on the Republicans.
- It is doubtful whether the shutdown will directly impact the midterm elections in November. However, events today may set the tone of the political debate, and the US is more vulnerable to political risk than other countries (because of the more global nature of its financial markets).
- Germany's political drama is playing out with all the enthralling interest of paint drying, very slowly. The SPD party congress has agreed to start detailed talks on a grand coalition, albeit with a smaller majority than had been expected. The German government has not, of course, shut down in the meantime.
- The data calendar is pretty empty today. This leaves markets at the mercy of media coverage of events at the World Economic Forum in Davos. Significant policy announcements are unlikely, but Davos does give journalists an opportunity to pontificate while wearing silly hats.