How Will the Reopening of the U.S. Government Affect Markets?

Highlights of Next Week's Developments

Next week, the focus of investors will be on the uncertainty regarding the reopening of the federal government in the USA. The Federal Reserve (Fed) meeting minutes will also be an important agenda item.

Market Risk Appetite

Last week, concerns over the federal government shutdown in the USA caused significant volatility in the markets; however, signs of weakness in the labor market created an environment supporting "dove" policies regarding the Fed. This has increased investors' risk appetite.

Government Shutdown and Economic Effects

Democrats and Republicans failed to reach an agreement on the budget needed to fund the federal government, leading to the shutdown on October 1. This shutdown created uncertainty in the markets by preventing important institutions, such as the Bureau of Labor Statistics (BLS), from publishing economic data.

Analyst Opinions and Fed Expectations

Analysts state that expectations for continued interest rate cuts by the Fed in both this month and the December meetings remain strong in the pricing of monetary markets. Furthermore, it is indicated that at least two more interest rate cuts are expected in 2026.

The Importance of Labor Market Data

US Treasury Secretary Scott Bessent predicts that the government shutdown could negatively impact economic growth. IMF spokesperson Julie Kozack emphasized the importance of the duration and manner of the shutdown's effects, expressing hope for normalization.

Market Reactions to Developments

As the shutdown situation continues to exert pressure on the markets, a bullish trend was observed in the US bond market as well. The 10-year bond yield finished the week at 4.12%. In the commodity market, the gold price increased to $3,887, showing a rise of 3.4%.

Status of Other Commodities

Silver, as an alternative investment vehicle, drew attention, with its price rising to $48.37, reaching the highest level since April 2011. This week, it closed at $47.99, up 4.2%.

Oil and Dollar Index

The US pressure on the purchase of Russian oil continues to impact oil prices. The Brent crude oil price closed the week at $64.30, down 6.4%. The Dollar Index also closed at 97.7, down 0.4%.