Prediction markets see government shutdown lasting nearly two weeks
The U.S. government shutdown has entered its early days, and traders in prediction markets are predicting that it could last for nearly two weeks. With negotiations on Capitol Hill at a standstill, the odds are increasing that Congress will not reach a deal until at least mid-October.
On Kalshi, a federally regulated prediction market, the current forecast suggests that the shutdown will last 11.1 days. This is a significant increase from previous days as uncertainty looms over the resolution of the budgetary impasse.
Meanwhile, on Polymarket, traders are placing the highest likelihood on the government remaining closed until October 15 or later, with a 38% probability. The window of October 6-9 has a 23% chance of a resolution, while October 10-14 carries a 22% probability. Only 14% of traders expect a deal to be struck in the coming days, on October 3-5.
The government shutdown officially began after top Democrats and Republicans, including President Donald Trump, failed to agree on a short-term funding deal. This has led to the furlough of hundreds of thousands of federal workers and the closure of key programs and services.
The duration of the shutdown is crucial, as a prolonged closure could have adverse effects on the already fragile economy and put pressure on a stock market that is hovering near record highs. Data from Bank of America shows that government shutdowns typically last around 14 days, with the S&P 500 seeing an average 1% increase during these events. However, a prolonged closure this time could potentially rattle the markets and lead to increased volatility.
As the government shutdown continues to unfold, market watchers and investors are closely monitoring the situation for any developments that could impact the economy and financial markets.
