PIMCO's Cantrill on When 'Surreal' US Shutdown Will End & GDP Impact

Government Shutdown Implications - The current government shutdown lacks a clear catalyst for resolution, unlike previous instances where debt ceiling negotiations prompted reopening [2][4][5] - Political comfort among both parties is noted, with Republicans and Democrats seemingly content to maintain the shutdown for strategic messaging [3][6][9] - The expectation is that the government may remain closed until at least November, with potential risks extending to Christmas [4][10] Economic Impact - Prolonged shutdowns could lead to significant economic consequences, including a potential reduction of one percentage point in GDP if the shutdown lasts until November [14] - The absence of government data collection during the shutdown is expected to create challenges for economic analysis and decision-making [14][15] - Impaired government services may lead to public dissatisfaction with both political parties, as delays in services like mortgage loans become more apparent [8][9] Healthcare Policy Focus - The shutdown is intertwined with discussions around enhanced Obamacare subsidies, which are set to expire at the end of the year, making healthcare a pivotal issue for voters [12][13] - President Trump is viewed as a potential wildcard in negotiations, with the possibility of pivoting towards a deal on healthcare [10][11] U.S.-China Relations - The anticipated meeting between President Xi and President Trump is expected to yield a detente rather than a comprehensive trade deal, reflecting a shift in diplomatic dynamics [17][19] - There is a risk of deteriorating relations between the U.S. and China, which could lead to increased tariffs and export controls, particularly in advanced technology and rare earths [20]