Traders react as government shutdown is averted

investmentnews.com:

An against-the-odds deal to avert a US shutdown is soothing nerves across Wall Street after a week of interest rate-spurred market disruptions. 

While money managers largely shrugged off the political circus in Washington, the passage of compromise legislation to keep the government running until Nov. 17 gives financial markets some breathing room after the recent plunge in stocks and bonds. 

US equity futures saw modest gains in Asia trading Monday, while their bond equivalents dipped. The dollar edged higher against major peers.

A handful of analysts had warned that an extended closure of federal agencies would spur fresh gyrations in the Treasury curve — fueling cross-asset volatility — and hit stocks that rely on government spending, like defense contractors and pharmaceutical companies. 

For now though, Democrats and Republicans have bought some time to negotiate longer-term funding.

Here’s how market players reacted to the fiscal machinations this weekend. 

Yung-Yu Ma, chief investment officer at BMO Wealth Management:

“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now. Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”

Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors:

“The potential for a lasting impact on the economy from a shutdown was quite low, particularly relative to the other swing factors out there, such as inflation, the Fed and overall growth. And while investors can take some solace in the removal of an overhang, if markets weren’t pricing in significant downside risk from a shutdown, then the