The recent news of a partial shutdown of the US federal government has resurfaced in the market, but analysts believe this shutdown differs from last year's complete paralysis in scope and duration, theoretically limiting its impact on economic fundamentals. However, the market remains vigilant. The real concern isn't the government shutdown itself, but whether it coincides with the release schedule of key economic data. This week, in particular, coincides with the release of the January non-farm payroll report (February 6th), a core indicator of the labor market's health and directly influencing the Federal Reserve's future interest rate decisions. A delay in its release would cut off the market's most important source of information, triggering a chain reaction.



The shutdown was triggered by a dramatic turn of events: the two parties were close to reaching an agreement on funding, but the shooting death of a civilian by a federal agent in Minneapolis instantly ignited political controversy. Democrats subsequently hardened their stance on the Department of Homeland Security's funding, particularly unwilling to easily release funding before reforms to Immigration and Customs Enforcement and the Border Patrol were finalized. Although the Senate subsequently passed a two-week temporary funding bill by a large majority of 71-29, providing a buffer for negotiations, the House of Representatives was in recess and unable to vote in time, resulting in the shutdown of some agencies.

The most crucial variable now lies in when the House of Representatives will reconvene and complete a vote. According to House Speaker Mike Johnson, there are enough votes to end the shutdown, and if all goes well, it could end sometime on Tuesday. This means the entire event may only last a few days, more like a short-term policy friction than a systemic crisis. But these very few days have become a "golden window" determining market sentiment.

Will the non-farm payroll report fail to deliver?

More than the government shutdown itself, traders are concerned about whether the January non-farm payroll data will be released on time. This question is sensitive because the U.S. Bureau of Labor Statistics typically needs two to three days for final data processing and quality checks before officially releasing the data, and then submits a briefing to the White House. Even if the raw data has already been collected—in fact, the January data was most likely collected by mid-January—the shutdown could still cause a delay in release if administrative or technical processes are disrupted.

The current optimistic sign is that if the House of Representatives can complete its vote and resume government operations by Wednesday, the labor statistics system is expected to restart within the preparation window before the non-farm payrolls release, thus avoiding a substantial delay. Analysts generally believe that in this scenario, Friday's data release plan can still be maintained. However, if the shutdown drags on to Thursday or even Friday, the situation will deteriorate sharply: market expectations of a data delay will rapidly intensify, and volatility will jump accordingly.

Even a delay of just one or two weeks in the non-farm payrolls report would create a significant information vacuum. Traders would lose a key anchor for judging the strength of the job market, making it difficult to assess whether the Federal Reserve would continue raising interest rates, pause its observation period, or shift to rate cuts. This uncertainty would be directly reflected in interest rate futures pricing, driving sharp fluctuations in short-term US Treasury yields, and potentially leading to a safe-haven rally in the US dollar. More importantly, the delay itself could be interpreted as a signal of dysfunction in the US administrative system, potentially undermining international capital's confidence in the stability of US policy in the long run.

The market's real fear: an uncertainty amplifier

Even if the shutdown ends quickly, its psychological impact cannot be ignored. Historical experience shows that financial markets often react before fundamentals. In the current climate of delicate risk appetite, any disturbance that might disrupt the data release schedule will be amplified. If the shutdown continues beyond Thursday, traders are likely to reduce their positions and leverage in advance, waiting for the data to be released before repositioning. This defensive behavior itself will exacerbate market volatility.

At the asset level, the most direct reaction will be a rise in risk aversion. US Treasuries may see price increases and yields decline due to capital inflows, with short-term Treasuries benefiting significantly. The US dollar may be supported and strengthened in the short term, but if policy uncertainty continues to escalate, it could trigger a reverse sell-off. In commodities, gold may find support driven by both declining real interest rates and increased safe-haven demand.

A greater concern lies in the continued postponement of the timeline. If the shutdown extends to mid-month, the impact will escalate from "whether data can be released" to "whether data collection can proceed." At that point, not only will the January report face risks, but the collection of February's employment data may also be disrupted, compromising the continuity and comparability of data in the coming months. Once the macroeconomic picture becomes blurred, the market will be forced to rely on fragmented indicators to piece together an economic picture, significantly increasing the probability of misjudgment, and volatility will shift from being driven by short-term events to a trend of rising risk premiums.

Conclusion: Focus on two key moments

In conclusion, the essence of this partial shutdown is not an economic crisis, but rather a game of "time" and "information." Its market impact depends not on the shutdown itself, but on whether it disrupts the data release schedule. If the House of Representatives can complete its vote by Tuesday or Wednesday, the government can resume operations, and the Bureau of Labor Statistics can restart its process within a 2-3 day preparation period. In this case, the non-farm payrolls report will most likely be released on schedule, and the impact of the event will be manageable, manifesting more as a temporary emotional disturbance.

Conversely, if the shutdown extends to Thursday or later, the likelihood of a delayed non-farm payrolls report increases significantly. The market will face a double whammy of information gaps and policy uncertainties, causing volatility to spread from short-term sentiment to medium- to long-term pricing logic. Therefore, traders are currently focused on two specific points: the House vote and whether the labor statistics system can resume normal operation within the critical window. Analysts believe that as long as these two points hold, the market still has a chance to return to a data-driven approach; however, if they fail, a manageable minor disturbance could trigger far more significant unrest than anticipated.