How will the U.S. government shutdown end? Goldman Sachs predicts: October 15 is the key point.

The ongoing U.S. government shutdown is raising market concerns over political uncertainty.

Recently, Goldman Sachs Chief U.S. Political Strategist Alec Phillips released a research note analyzing that the current deadlock will ultimately end with some form of statement or concession by Trump, who will need to publicly express willingness to discuss related healthcare issues. The Democrats may then agree to at least a short-term reopening of the government, after which both sides will continue negotiations on other issues.

Phillips believes that the government shutdown could last for several weeks, but is unlikely to continue past the October 15th military pay date. If the shutdown is still ongoing by then, active-duty military personnel will miss an entire paycheck, a situation that has never been allowed to happen before.

Data from the prediction platform Polymarket shows that the probability of the government shutdown lasting at least another 10 days has risen to 75%.

Meanwhile, the continued rally of the stock market has weakened traditional market pressure mechanisms. Historically, stocks would plunge during a government shutdown, but now markets are hitting new highs, undermining the markets’ ability to pressure Washington.

Goldman Sachs Head of FX Strategy Mike Cahill stated that broad-based government shutdowns usually do not last long, as they are considered too disruptive. Cahill believes that the most obvious near-term market impact is lower volatility pricing, due to a lack of data that could substantively change people’s views or policy direction.

Military Pay Date Becomes a Key Juncture

Phillips expects that starting Monday, the House and Senate will hold votes every one or two days. The key issue is how many Democrats will change their position and vote to reopen the government. Three Democrats have already done so; five more are needed.

This shift will not happen immediately but will emerge over time. October 15th is the military pay date; if the shutdown is still ongoing at that time, active-duty military personnel will miss an entire paycheck. Goldman Sachs believes few will want to see this, and such a situation has never previously occurred.

Phillips concludes that while the shutdown may last a few weeks, it is unlikely to continue past the military pay date, and the likelihood of a resolution before October 15th is higher.

The Medical Subsidy Bill Is Expiring, Focus Is on Trump’s Statement

Currently, U.S. government spending authorization is about to expire (mid-November), with both parties deadlocked at the last minute.

As previously reported by Wallstreetcn, the Republican Party advocates for a “clean” short-term extension of government funding, meaning an extension with no additional policies attached. The Democrats reject this “clean” extension, arguing that the Affordable Care Act (ACA)—which expires at the end of the year—will announce premium increases for affected populations on November 1st. If the issue is not resolved now, people will face a surge in premiums.

Therefore, Democrats believe this is the last opportunity to include a subsidy extension in the spending bill.

However, Goldman Sachs further points out that even if Congress reaches a bipartisan compromise as usual, Republicans could still later use the “rescission process”—whereby the President submits a proposal to Congress to cut the budget, and a simple majority (Republicans alone are sufficient) can overturn the original spending. This leaves Democrats unable to trust any “pass now, fix later” commitment.

Therefore, Goldman Sachs analyzes that once Trump signals a willingness to discuss health issues, Democrats are likely to accept and agree to at least a short-term reopening of the government. Afterward, both parties will continue negotiating on other contentious issues. This solution provides both sides with an out and creates space for further negotiations.

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