The U.S. stock market remains largely bereft of volatility, but the threat of a government shutdown and other near-term events could provide some near-term trading opportunities.

According to a Wednesday note by Goldman analysts, upcoming government deadlines could be primary market drivers over the coming month. The deadlines include the debt ceiling, which must be raised by late September, as well as a spending bill that has to be approved by Sept. 30 to avoid a government shutdown.

While Treasury Secretary Steven Mnuchin said he is “100% confident” the debt ceiling will be raised, the outlook for a shutdown is less clear. Goldman said its economists see a 35% chance of a shutdown occurring, which actually represents improved odds. Previously, it saw a 50% chance of a shutdown, but last week it said that a shutdown during federal relief efforts—related to the recent storm Harvey—“would pose greater political risks than under normal circumstances, raising the probability that lawmakers will find a way to resolve disagreements.”

More detail: From debt ceiling to flood insurance, these are the big deadlines Congress is facing

The note said Goldman economists see several scenarios in which Congress avoids a shutdown, particularly if Congress kicks the can down the road by approving a temporary extension that delays the debate until later this year. But they also warned that with “little chance that Congress will fund the border wall, a fractured Republican majority in Congress and a decision that ultimately rests with the president, the outcome is hard to predict.”

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Very informative
05-03 04:23 by Liam
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