The government shutdown lowdown

Of course, much of the federal government’s work will still take place, and in case you are worried, members of Congress will continue to receive their salaries.

Robert Schroeder, the Washington bureau chief for MarketWatch, summarizes five things that would be affected by a government shutdown and five things that would not be affected:

Affected:

1. Food aid for millions of people will be disrupted, the White House has warned, reports MarketWatch’s Zoe Han.

2. With Securities and Exchange Commission staff furloughed, initial public offerings will freeze up, the agency’s chairman said this week, reports our Chris Matthews.

3. Economic data that investors chew over every day would also be cut off, probably including the next monthly jobs report, which is due Oct. 6.

4. You will still be able to travel, but things could get slow at the airport. As the Wall Street Journal notes, the 2019 shutdown saw longer waits at airports around the country after employees at the Transportation Security Administration stopped coming to work.

5. And if you’re a federal employee, you won’t get paid, at least not while a shutdown is going on.

Not affected:

1. If past is prologue, U.S. stocks may not suffer. As Victor Reklaitis writes, there have been six government shutdowns since 1978 that lasted five days or more, and the S&P 500 stock index gained in the four most recent shutdowns.

2. Social Security checks will go out. But the agency’s daily work on benefit verifications and earnings-record updates will grind to a halt, writes MarketWatch’s Alessandra Malito.

3. The U.S. Postal Service will keep delivering the mail. It is not funded by tax dollars.

4. Student-loan borrowers will still be expected to pay their bills if the government shuts down, reports Jillian Berman. But they could face challenges getting help assessing their options.

5. Amtrak is expected to continue running. The train service gets federal subsidies but is run as an independent business, as the Washington Post reports.

Bond-market opportunities

When interest rates rise, bonds’ market values decline. So what may be reported to be bad news might be good for income-seeking investors. The yield on 10-year U.S. Treasury notes
BX:TMUBMUSD10Y
was 4.53% early Friday, increasing from 4.13% a month earlier.

The Treasury yield curve remains inverted — 3-month Treasury bills
BX:TMUBMUSD03M
were yielding 5.46% early Friday. The inversion and Treasury futures trading activity indicate long-term bond investors expect a recession to cause the Federal Reserve to reverse course and lower interest rates within the next year. Former Goldman Sachs Group Inc.
GS,
-0.50%
CEO Lloyd Blankfein said he expects that to happen. Lower rates would push bond prices higher, setting up profit opportunities for investors.

Income-seekers can easily receive yields of about 5.5% with little risk with short-term Treasury paper or bank certificates of deposit, but they face the risk of yields being significantly lower upon maturity. For investors looking to lock up income streams for the long term, thousands of high-quality bonds from issuers such as Apple Inc.
AAPL,
+0.30%
are now on sale at significant discounts to face value, as Ciara Linnane reports.

A related chart: Who is buying U.S. Treasury securities? Households and hedge funds.

The Tell: Popular Treasury bond ETF crashes to lowest level in more than 12 years as yields surge

Bargain prices for a bond-fund manager: Brutal U.S. bond-market selloff puts popular ETF on cusp of lowest close since 2008

From the daily Need to Know column: Gundlach says investors can sidestep carnage in stocks and earn 8% returns in bonds. Here’s how.

A consequence of rising U.S. bond yields: A surging U.S. dollar just sent gold to a 6½-month low below $1,900 an ounce

Bond-market warning

Not everyone expects interest rates to stop rising, or that the Federal Reserve’s current hawkish stance against inflation will reverse over the next year. Bill Ackman said he expects long-term Treasury yields to keep rising quickly, as Joseph Adinolfi reports.

Joy Wiltermuth explains why the spike in long-term interest rates, including those on mortgage loans, will slow down the Federal Reserve’s efforts to shrink its bond portfolio.

More from Joy Wiltermuth:

• A wrecking ball could hit leveraged loans if the Fed keeps rates high

• ‘It’s pretty dire,’ John Hancock strategist says of sentiment on Wall Street as bond yields march higher

A possible recession warning

William Watts highlights a commodity market move that hasn’t happened in 30 years and could signal economic weakness.

Different views on a possible recession and market bearishness:

• Let’s debunk the bears’ top arguments against further stock market gains

• Put on your rally cap — market timers are way too down on stocks

Income seekers: don’t forget about taxes

You might be thrilled at how easy it is to get a yield of 5% or more in a bank CD right now. But don’t forget about the tax bill. A lot of your interest income may be lost, as Beth Pinsker explains.

Pursue dividend growth instead of high current payouts

If you are desperate for income right now and have money to invest, you are forced to look for the highest yields you can get for the level of risk you can tolerate. But what if you need income further down the line?

Frances Yue explains why dividend-growing stocks may be more lucrative over the long term than stocks with high current yields.

Related: Dividend Aristocrats may shine again if the Fed causes another bad year for the stock market

Might Amazon or Alphabet be chopped up?

Both Amazon.com Inc.
AMZN,
+0.90%
and Google holding company Alphabet Inc.
GOOGL,
-1.10%
are facing calls to break up into smaller units or at least change their business practices, through lawsuits by federal agencies. The Federal Trade Commission sued Amazon this week, while the Department of Justice’s lawsuit against Google went to trial on Sept. 12.

Here’s a sampling of coverage.

Tomi Kilgore celebrates Google’s 25th birthday.

The Ratings game: Amazon’s stock sports ‘compelling’ opportunity after pullback, says analyst

Help with retirement planning

Allesandra Malito writes the Help Me Retire column. This week she helps a reader in her 60s who seems to have planned wisely to consider moving now to a new retirement destination. But the numbers can be tricky.

Read on: These funds may be better than the S&P 500 for retirement savers

The Moneyist

No family financial drama is too sticky for Quentin Fottrell, the Moneyist. These are among the difficult topics he has addressed this week:

• My siblings hid our father’s will, which would have left me $135,000. What can I do?

• ‘Have we made a terrible mistake?’ My brother put our names on the deed to our 88-year-old mother’s home. What should we do?

How the U.S. housing market has changed

With mortgage loan rates at their highest levels in 23 years, many people who might normally consider moving are content to stay put with low-rate loans locked in. Demand for homes in the U.S. was already high when interest rates were low, but the new limit on supply is pushing prices even higher.

Katie Marriner and Aarthi Swaminathan developed a tool you can use to see how much home prices have risen in U.S. counties over the past five years, using data provided by Realtor.com.

More housing coverage:

• These are the most overvalued housing markets in the world, according to UBS

• These are the ‘lottery’ winners of America’s housing market, according to Zillow’s chief economist

End on a bright note with retail

It might seem as if the news about U.S. retailers is always dismal, but James Rogers reports on indications of better times ahead for Target Corp.
TGT,
+0.92%
and other large industry players.

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