A partial US Government shutdown is now over

Highlights: The brief partial US government shutdown has formally ended after President Trump signed into law the Senate-approved funding bill passed by the House on Tuesday, 3 February 2026. The shutdown began on 31 January following unresolved differences over Department of Homeland Security (DHS) immigration policy. While most of the federal government is now funded through 30 September 2026, DHS funding has been extended only until 13 February, creating a near-term follow-up deadline. In our view, the shutdown should have minimal market impact, and hence, our views remain unchanged. We stay mildly overweight fixed income, favouring high-quality investment-grade yield. Robust economic growth, strong corporate earnings, and the ongoing AI-led tech revolution underpin our global overweight to equities, with a mild overweight stance on US markets.

• This latest shutdown was triggered when the US Senate lacked the votes to pass the House’s original USD1.2 trillion omnibus bill, which included full-year DHS funding, ahead of the 30 January deadline, leading to a lapse in funding for several non-essential agencies
• The Senate resolved the impasse by passing a modified funding package that completed full-year funding for most federal agencies, while separating DHS funding into a short-term extension
• The House approved the revised Senate bill on 3 February, clearing the final legislative hurdle and allowing federal operations to fully resume once the President signs the bill. Essential government services, including defence, law enforcement, air traffic control, Social Security, Medicare, and Treasury debt servicing, continued throughout the shutdown
• This shutdown was procedural and short-lived, driven by timing and DHS policy disputes rather than fiscal stress, and was viewed by markets as transitory
• The next key date to watch is 13 February, when DHS funding expires again unless Congress finalises full-year funding or passes another short-term extension