Two Important Things to Watch in the Markets This Week

The possible U.S. government "shutdown"

The U.S. government risks entering a shutdown after October 1, 2025 if Congress does not approve the budget.

A federal shutdown occurs when Congress does not approve a funding law (“appropriation bill”) before the start of the new fiscal year.

In such a case, "non-essential" services are interrupted and "non-essential" employees will be sent on forced leave, while essential employees will work without pay until the impasse is resolved. Vital services (the military, security, social payments, postal service) will continue, but many agencies will be affected.

There have been several major shutdowns in recent history:
• 1995–1996 (21 days)
• 2013 (16 days)
• 2018–2019 (35 days) — the longest shutdown in history

Congress must pass a funding law by midnight to avoid a partial shutdown of the FED.

The U.S. jobs report (Nonfarm Payrolls)

On Friday, the report for September will be published, which could show whether the labor market continues to slow. Economists estimate 51.000 new jobs (compared with 22.000 in August), with the unemployment rate at 4,3%. The result will influence Fed decisions on further interest-rate cuts.

The key point regarding the unemployment rate is the 4.3% threshold, which is the highest in almost the last 4 years. Even though the U.S. unemployment rate is expected to rise gradually in the near future, toward approximately 4,6% by mid-2026, an increase in unemployment above last year’s high may push the FED to lower the benchmark rate faster, which in turn leads to depreciation of the U.S. dollar.

In the event of a shutdown, the publication of employment data could also be delayed.

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