Have you ever heard the expression, “It’s a headline risk for the markets?”
Headline risk is the chance that an unsettling news event–anticipated or a surprise–can add volatility to the financial markets.
Be prepared for some “headline risk” in as Congress looks to pass a budget bill by October for the 2024 fiscal year.
The Senate has completed much of its work for the new federal spending plan, but the House of Representatives still has a lot of work to do and only a tiny window of time to complete it. A short-term bill was passed earlier this week, as we point our eyes to a new deadline at the end of October.
Headline risk is nothing new. The market was on pins and needles for several weeks in August, building up to Fed Chair Powell’s Jackson Hole speech. And it seems like the market “holds its breath” every month before each inflation update.
Nobody wants a repeat of May 2023, when lawmakers engaged in high-profile, high-stakes talks over the debt ceiling. The stock market was held captive to the ebb and flow of updates, falling when talks faltered and rising when an agreement seemed near.
The hope is that lawmakers will come to a resolution with little drama this time around, with the memory of the debt ceiling talks fresh on Wall Street’s mind.
Thanks, and let us know if you have questions.