Government Shutdown Nears Resolution, Markets Eye Data Rebound

Investor Relief Builds as Shutdown Nears End
Ending the shutdown would allow investors to regain access to crucial indicators such as jobs and inflation data that have been missing for weeks and are vital to assessing the Federal Reserve’s next move. The prolonged data blackout has left traders operating in uncertainty, particularly as conflicting signals about inflation and employment clouded expectations for a potential December rate cut.

Tech Weakness and Valuation Concerns Keep Sentiment Fragile
While optimism over a government deal lifted risk appetite, markets remain wary following last week’s sharp selloff in technology stocks. Concerns about inflated valuations and the sustainability of the AI-driven rally continue to dampen sentiment. Investors have begun rotating back into cyclical sectors and reducing exposure to safe haven assets such as Treasuries and gold. However, volatility is expected to stay elevated until Congress formally passes the funding bill.

Details of the Funding Agreement
The proposed legislation would provide full-year funding for the Departments of Agriculture, Veterans Affairs, and Congress, while extending temporary financing for other agencies through January 30. It would also deliver back pay to furloughed federal workers and resume payments to state and local governments steps that could help restore short-term economic momentum once implemented.

Market Outlook: Data to Regain the Spotlight
Once the government reopens, attention will quickly shift back to the economic calendar. The return of official data releases will give traders a clearer picture of the economy’s trajectory and the Fed’s potential policy path. With rate cut bets still uncertain and inflation risks unresolved, markets are likely to remain sensitive to every new data point. For traders, this marks a crucial week  one that could redefine sentiment and trading strategies heading into year-end.