What happened
Senate Majority Leader John Thune announced Tuesday that Senate Republicans will hold any budget reconciliation framework passed by the House as a backup plan to avoid a government shutdown at the end of September. Thune told reporters that the GOP will not act immediately on a House budget resolution, keeping it available as a vehicle to pass a continuing resolution if needed.
Why it matters for the market
"If they give us a budget resolution as a vehicle, we will hold that subject obviously to be able to move a continuing resolution to fund the government," Thune said. He added that he hopes such a move won't be necessary, but it remains a possibility.
House Republicans recently unveiled a continuing resolution to fund the government until Dec. 4, but its passage is uncertain due to potential Democratic opposition. GOP lawmakers fear Senate Democrats might filibuster a short-term funding bill in September, as they did last year over a dispute about enhanced health care premium subsidies, leading to a record-setting 43-day shutdown.
What traders should watch
A budget reconciliation package can pass the Senate with a simple majority, bypassing a filibuster. Senate Republicans previously used this tactic in June to pass a $70 billion package funding ICE and Border Patrol through 2029. Thune noted that GOP leaders may not know until September whether they need to use the reconciliation vehicle to avoid a shutdown.
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