Washington funding delays raise shutdown odds, pressuring cyclicals, energy, and financials, while defensives and mega-cap tech remain comparatively resilient.
Sectors & Industries
January 26, 2026
Table of Contents
Alongside global currency stress, markets are also watching Washington as the January 30 funding deadline approaches.
On substance, there is broad bipartisan agreement on most of the funding bills. A package covering major agencies — including Defense, Transportation, Health, Education, and Housing — has already been negotiated, and leaders from both parties have said they want to avoid a shutdown.
The uncertainty now centers on Homeland Security funding. Senate Democrats, led by Chuck Schumer, have said they will block any package that includes DHS funding without changes, while Republicans argue DHS should be funded alongside the broader government. Both sides continue to signal a desire to avoid a shutdown, but the disagreement has slowed progress.
Compounding the issue, Monday’s scheduled Senate vote was canceled, compressing an already tight timeline. With only days left before the funding deadline, procedural delays — rather than policy disagreements — are becoming the primary risk.
That shift is starting to show up in markets. Betting markets now imply roughly a 79% chance of at least a partial government shutdown, reflecting concern that timing and process, not political intent, could push negotiations past the deadline.
From a market perspective, this matters less for direct economic damage — past shutdowns often saw limited or short-lived market impact — and more for uncertainty and sentiment, especially when layered on top of existing macro and policy stress.
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