Government Funding Deadline Approaches
The big market news this week was the Fed action increasing rates by 75 bps. The Fed chair, as has been his policy, well telegraphed the move and most market participants had expected the action.
At the post-meeting press conference the Chair reiterated his basic stance that the Fed will keep up the pace of increases, but will be data driven on future actions. He said that the Fed will not give up the fight prematurely and that the goal is an inflation rate of 2%. But he had a bone for doves with the statement “at some point, as the stance on policy tightens further, it will become appropriate to slow the pace of rate hikes while we assess how our cumulative policy decisions are affecting the economy and inflation.”
Government Funding
The October 1 deadline for Congress to pass a stopgap budget measure is fast approaching. The vehicle for these short-term funding measures is a Continuing Resolution (CR) that needs to pass the House and Senate. In the Senate the bill and any procedural steps leading to the bill’s passage will require 60 votes. This means that assuming all 50 Democrats vote Yea then 10 Republicans will also have to vote Yea.
The major obstacle remains Leader Schumer’s commitment to West Virginia Senator Joe Manchin to have a vote, as part of the CR, on his government-permitting reform measure. Republicans continue to support a competing proposal by Manchin’s West Virginia colleague Senator Shelley Moore Capito and will not support a CR with the Manchin proposal. Additionally, a group of progressive Democrats have said they don’t support the Manchin proposal. A similar problem exists in the House where Speaker Pelosi only has a 4-vote majority and progressive Democrats oppose the Manchin language.
With the Congress out on Monday to observe Rosh Hashanah, the first procedural vote in the Senate won’t occur until Tuesday night. This will be a motion to stop debate and move on to the bill that requires 60 votes. With the Manchin proposal included it is likely to fail. That will set up a vote later in the week on a CR without the Manchin proposal, and at this point it is not clear what other measure may be added to the legislation. With the October 1 deadline only a weeks away it will be a busy week in DC.
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