US government shutdown to end after can kicked down the road by McConnell and Schumer

 
Jasper Jolly
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President Trump Attends Congressional Gold Medal Ceremony For Former Senate Majority Leader Bob Dole
Republican and Democrat Senate leaders Mitch McConnell and Chuck Schumer clashed repeatedly over the government shutdown (Source: Getty)

Investors greeted the shutdown of the US government with a collective shrug today as markets opened but non-essential federal functions did not, before a compromise agreement which will kick the can down the road once again.

Chuck Schumer, Democrat leader in the Senate, tweeted that he was "confident" a deal could be reached on an immigration bill, a key sticking point for the opposition.

US stock markets rose on Monday, with a 0.5 per cent increase in the S&P 500 at the time of writing.

The dollar was flat against a trade-weighted basket of currencies, and fell by less than 0.2 per cent against the euro at the time of writing. Sterling made roaring gains against the greenback, creeping close to $1.40 and hitting 18-month highs of $1.399.

Meanwhile the yield on the 10-year US Treasury note retraced some ground to reach 2.65 per cent after a small decline over the course of the day.

The Democrats will vote to reopen the government in return for the promise there will be a vote on the immigration bill covering migrants who have arrived illegally as children, the Deferred Action for Childhood Arrivals (Daca), if no agreement is reached by 8 February, Schumer said. Trump is in favour of ending the Daca programme, which allows so-called Dreamers to remain in the US.

However, prospects for a longer-term compromise appeared limited, with Republican Senate leader Mitch McConnell tweeting that there had been "no substantive progress – not an inch – on the serious, bipartisan negotiations that it will take us to resolve issues such as immigration and border security, health care, disaster relief, defense spending, & many other matters."

The shutdown has been prompted by the failure of the Trump administration to garner the requisite 60 votes in the Senate to push through a so-called appropriations bill to fund government departments.

While the US government has shut down before, most recently under former President Barack Obama, this year's iteration was the first time in history that a party with majority control of both Houses in Congress had failed to pass an appropriations bill. The Republican party currently has majority control of both the 100-member Senate and the House of Representatives.

Funding ran out at midnight last Friday, with Monday the first working day. While the shutdown affected many of the public-facing parts of government, such as national parks and museums, while some branches of government like statistical agencies and land planning authorities also stop work temporarily.

Read more: The US government has now gone into shutdown

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