Blame it on the Democrats or blame it on the Republicans but the stalemate has forced the first US government shutdown in 17 years. Lawmakers failed to agree on a federal budget by the midnight deadline which will start a partial shutdown that will put up to 800,000 federal employees out of work and will shut down some government programs and services.
At 3:00 am CT. the ESU is up 8 handles at 1682.25. For the last two weeks the deadlock has helped push the S&P to its largest losing streak of the year: down five days in a row and down 7 out of the last 8 sessions. After shaking all the shorts out during the Fed’s no-taper the sellers came back in force.
The Asian markets closed mostly higher and Europe is following suit, with 8 of 12 markets up. Today’s economic calendar includes six different economic releases; Motor Vehicle Sales, Gallup US ECI, Redbook, PMI Manufacturing Index, ISM Manufacturing Index and Construction Spending.
Welcome to ObamaCare and the government shutdown. As we expected, the S&P futures rallied off the news. With the current shutdown underway this Friday’s Labor Department monthly employment report won’t be released if the government doesn’t reopen in time.
While the shutdown is big the U.S debt ceiling is a much bigger problem. The world’s currencies are backed either directly or indirectly by the US dollar and even the possibility of a US refusal to pay its debts can dampen foreign investment and willingness to buy US bonds. We lean to selling the early rally and then buying the weakness. Like the downside the ESZ is “packed” with upside buy stops.
As always, keep an eye on the 10-handle rule and please use stops when trading futures and options.
In Asia, 9 of 11 markets closed higher: Shanghai Comp. up 0.68%, Hang Seng down 1.50% , Nikkei up 0.20%.
In Europe, 8 out of 12 markets are trading higher: DAX up 0.62%, FTSE down 0.19%.
Morning headline : S&P Futures Seen Higher Despite Government Shutdown
Total volume: 2.14mil and 6k SPZ traded
Economic calendar: Motor Vehicle Sales, Gallup US ECI, Redbook, PMI Manufacturing Index, ISM Mfg Index and Construction Spending.