A Recent History Of Government Shutdowns (1/2)

US Government shutdowns have occurred three times since 2000 (seven shutdowns from 1980 to 1996 lasted from one day to as long as three weeks in 1996). The chart below shows moves in 10Y yield from 2013 to 2020.

• September 30, 2013: lasted 16 days and coincided with efforts to dismantle key parts of Obama's Affordable Care Act. This period saw yields dip going into the first day of the standoff to open at 2.59%, climbing to 2.76% on the eve of the end of the shutdown but closing a week after the resolution below 2.50%.
• January 19, 2018: lasted only two days and stemmed from a fight over immigration, specifically Democrats' demands for protections for "Dreamers," undocumented immigrants who were brought to the U.S. as children. This shutdown was relatively short and yields drifted between 2.60-2.66%.
• The last shutdown started at the end of 2018, from Dec 21 through January 25, 2019 (35 days, the longest shutdown in history) with immigration the focus again: former president Trump demanding $5.7 billion to pay for U.S.-Mexico border wall. Trump signed a bill sans wall funding, reopening agencies for three weeks before Congress passed a measure a few weeks later that included $1.375 billion for the border wall. 10Y yields had peaked in October/November around 3.25% and started to decline into year end falling to 2.54% by mid-Jan 2019, ticking back up to 2.75% by the end of the shutdown.

Bbg/MNI