Financial markets survey 07.10.2013

The risk of shutting down the US Government in connection with the failure to adopt the budget came true last week. On 1 October 2013, US Federal agencies had to suspend their operations, to send more than 800,000 out of 2.9 million employees on leave and to scale down a significant part of their activities. According to calculations made by Macroeconomic
Advisers, a three-four weeks’ suspension of federal agencies’ operation will result in losing 0.5 percentage points of economic growth. If the Government is paralyzed the entire October , GDP growth in the fourth quarter will slow down 0.7 percentage points.

The leading trading platforms stood rather firm against the political crisis in the US. By the end of the previous week, the leading trading platforms closed with a negative growth. However, the reaction to shutting down the US Government turned out to be much weaker than the commotion that rose regarding the threats of tapering the government incentive  program.

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