USD: Government shutdown ends — UBS

U.S. President Donald Trump has signed legislation bringing the government shutdown to an end, an outcome that markets largely took in stride given how routine such episodes have become.

However, UBS Chief Economist Paul Donovan noted that Democrats have coalesced in opposition to confirming former Federal Reserve Governor Kevin Warsh as the next Fed chair until the administration’s legal challenge involving the Fed is resolved. This impasse raises the possibility that Chair Jerome Powell could remain in office beyond May.

Resolution of the government shutdown influences market conditions.

Government dysfunction in the U.S. has become so routine that financial markets largely ignored it.

Democrats have indicated they will block the confirmation of former Federal Reserve Governor Warsh as the next Fed chair unless the administration halts its legal actions against the Federal Reserve.

While this outcome was widely anticipated, it increases the likelihood that Chair Powell could remain as FOMC chair—though not as Chair of the Board of Governors—beyond May.

Sources: Bloomberg