BY ANDREW GIOVINAZZI
September 26th, 2025
Yo Pit Crazies,
The longest government shutdown in the U.S.A. was by none other than President Trump on December 22, 2018.
It went through Christmas… New Years… and stretched for 35 days
It never surprises me that Congress can argue over how to spend a massive amount of money… only to spend even more after all the expense and angst of a shutdown.
Just pass a budget that cuts spending by one percent annually for the next five years.
Grok could do it in two seconds.
I know, I know, it’s a dream scenario.
Although higher spending is typical, it comes with a major consequence.
Runaway Government Spending Will Spook the Bond Market
As it should.
I have a tough time believing that members of Congress are dense to the effects of runaway spending.
When COVID happened, Uncle Sam printed trillions. It was the worst possible event.
While folks can argue about the rights and wrongs of the government response, what hurts the most is the perpetually higher level of government spending.
In 2019, the USA spent $5.47 trillion. By 2024, spending climbed to $6.75 trillion – a 25% increase in five years.
Sure, a growing GDP is great. But most of that growth is due to increased government spending.
Will spending keep going up? 100%.
But, if it’s too much, the bond market could throw a big red flag.
Right now, there isn’t a whole lot of volatility in the bond market.
That could change if the Republicans cave too much on spending.
Expanded health care premiums alone would add another $33 billion a year to new spending.
A hard line on spending would keep bond rates low. But if spending grows too much, expect bond rates to rise, which would in turn hurt stocks.
After all, more spending means more inflation. And more inflation gives a lower chance of rate cuts ahead.
For the rally to keep going, spending can’t increase by too much.
That’s the hope, anyway.
To Your Trading Success,
AG