Selling up to $1.6 trillion in U.S. debt, the Federal Reserve stands at the forefront; The government is about to close down, 800,000 people may be paid without pay, and Congress has been unable to reach an agreement; Trump personally walked out, preparing to stand up with the four great leaders.
White House orders federal agencies to draft large-scale job cuts, a double collapse of the system and the market is quietly approaching.
Stopping funding in a state of impasse
Congressional funding is entering a tense confrontation in mid-September 2025.
The Senate vetoed a short-term appropriation continuation bill, which brought the federal government's operation to the brink of fracture. Financial funds will be exhausted at midnight on September 30. The gap between legislation and administration is rapidly exposed.
Both parties in Congress blame each other.Republican lawmakers stressed that short-term bills must first be passed to prevent government shutdowns; Democrats blocked and were only willing to include provisions on medical subsidies and social programs in the bill. The Senate's majority voting standards are high, making the short-term proposal difficult to pass.
The White House Budget Office issued an internal notice, Urge federal departments to launch funding interruption response programsMulti-sectors have been instructed to prepare “cuts or personnel cuts” plans to deal with possible operational disruptions. Emergency mobilization within government agencies, prioritizing tasks, suspending new projects, and cutting spending.
Several functional areas such as aviation, transportation, justice, scientific research, public health, social security, government subsidies have entered early warning. Infrastructure departments involved in federally funded airports, transportation hubs and more secretly assess the risk of staffing shortagesIf the shutdown occurs, the first perception will be these public services.
Financial markets are expected to be pulled. Dollar trend shocks, bond interest rate curve adjusts frequentlyIf government operations are partially interrupted, financial reports, economic indicators, etc. are postponed or delayed, market participants interact in waiting, watching and avoiding risks.
Trump cancelled talks with Democratic leaders He called the request “absurd”; then announced a rearrangement of the meeting.The game between the White House and Congress goes from behind the scenes to the front. The three lines of administrative, legislative, and financial markets are simultaneously engaged in a time race.
High-pressure line on power organs, budget organs, and public service network synchronous stations。 Under the short-term gap of the whole system, the fragile nodes of design and operation are exposed.
State debt walls and holding structural disputes
U.S. government debt long-term high. international debt data show, Total holdings of U.S. Treasury bonds by foreign institutions exceeded $9.159 trillion in July 2025, a record highThe data reflect the continued interest of international capital in U.S. government bonds and the safe attributes of U.S. dollar assets.
Public data from the U.S. Treasury Department and the Federal Reserve System show that the total public debt issued by the U.S. is billions of dollars. Domestic institutions, pensions, financial institutions and the Federal Reserve itself constitute the main creditors.
In terms of monetary policy operation, The Fed has adjusted its balance sheet over the past few years, including reducing long-term government bond holdings and recovering liquidity in the open market.This kind of balance sheet reduction behavior is regarded by market participants as a means to control the liquidity and interest rate environment.
Public reporting lieutenant general The reduction of bond holdings by the Federal Reserve is called a "selling" act.But within the official framework, this should belong to the legitimate operation of monetary policy instruments, not to passive liquidation.
There is competitive debt structure. If one party massively reduces holdings, increases financing demand, and government debt credit pressure rises, the risks of rising interest rates increase simultaneously.
U.S. debt growth trajectory raises long-term concerns. If fiscal deficits persist, interest spending rises, and economic growth slows, the ratio of debt to GDP will continue to rise.
In the current atmosphere of funding crisis, debt problems are intertwined with government shutdowns 。 Debt interest, refinancing cost, credit rating, market expectation, etc. may all bear the amplification effect in the short term.
The system path is in trouble.If government funding is blocked, the Ministry of Finance’s ability to issue new debts and repay old debts will be tested.Market participants will closely monitor the interest rate, subscription demand and risk premium changes at the U.S. bond auction.
Stop the spread of cracks and market shocks
Once the funding breakdown occurs, more than the federal agencies are burdened, more than the financial, regulatory, market, and economic sectors are under pressure. The public service sector is in the first place.Courts, national parks, transportation, health, scientific research and social security projects may be suspended or postponed. Some federal employees will be forced into unpaid leave.
The daily rhythm or disruption of the financial regulatory system: The Securities and Exchange Commission, the Commodity Futures Commission and the regulatory authorities may suspend business approval, report review, compliance supervision and other aspects under the "non-emergency" classification. Corporate report audit, IPO review, major merger review, market rule update or forced settlement.The sensitivity of investors to regulatory empty windows will be pushed to the limit.
In terms of market, the three asset lines of the US dollar, treasury bonds, and stocks were involved in the storm of uncertainty at the same time. If the release of critical economic data is delayed, the market loses its basis for judgment; the interest rate curve may incline towards the risk premium.The speculative transactions of the market to the policy trend will increase, and the volatility will be sharp.
The dollar exchange rate is under pressure under the stagnation expectation.The market reflects concerns about future interest rate path, fiscal burden, and policy liquidity.If the dollar is under pressure, capital outflow pressure increases, emerging market assets or face chain shocks.
Credit rating risk is hidden savings.The stuck point of rating agencies' assessment of U.S. fiscal sustainability will be revisited. If the rating outlook is downgraded, financing costs will be under pressure. If the market expects credit pressure to rise, the spread of U.S. Treasury bonds may widen to the visible range.
Institutional investors, pensions, insurance companies, sovereign wealth funds, etc., passively restructure the asset arrangement in the market structure adjustment. Rising capital costs may reduce the investment capacity of enterprises.
If the shutdown lasts for weeks, consumer confidence, corporate investment, and credit expansion will be delayed. Small and medium-sized businesses, companies that rely on federal subsidies or federal contracts bear the brunt. Tightening credit, reduced orders, and cautious spending will become the tonality.Economic growth may decline in the short term, and even be negative at quarterly ratio levels.
Market participants will pay great attention to two paths: The first is whether Congress can quickly reach a stop-loss allocation; the second is whether the Fed can maintain monetary policy stability without the support of critical data.If it stops beyond the Fed’s next interest rate meeting, the policy foundation will be weakened.
During this break period, the pressure of treasury bond financing is superimposed. The ability of the Ministry of Finance to issue new bonds, pay interest and repay maturing bonds is tested. If market confidence is shaken, the underwriting interest rate of new bonds may rise, and the financing cost will further rise. Capital markets may be priced incorrectly.
At the crossroads of public credit and market confidence, policymakers and market participants face an extremely fragile framework. Political games, fiscal arrangements, and markets are expected to friction each other on the brink of rupture.
Political meetings, diplomatic turmoil and system sweeping
As the shadow approaches, Trump announced that he would meet with the four leaders of Congress.
The White House hopes to break the impasse with this meeting and promote the adoption of temporary appropriations. Both sides have repeatedly shaved on the arrangements and agenda of the meeting. If the talks succeed, release the image that federal governance can still function; If it fails, the political game will enter a more open declaration of war stage.
Most Republican lawmakers advocate the adoption of a clean continuation bill without any binding issues, while Democrats insist on adding medical and social security provisions to the appropriations. Both sides are reluctant and fighting harshly.The threshold is pushed higher.
In the case, the White House has repeatedly threatened to remove some federal posts. The U.S. government has publicly released a signal that "if the funds fail, some institutional personnel will be permanently removed."This strategy became a new high point for both sides' tactics. Institutional threats go hand in hand with personnel panic.
The Ministry of Foreign Affairs stated in its information that if funding is interrupted, the embassy, diplomatic projects, and assistance projects abroad may be delayed. Some state aid projects may be delayed due to financial interruption in the United States. There may be short-term cracks in the foreign image of the United States in the diplomatic arena.
In this context, the markets and diplomacy synchronize to perceive America’s vulnerability on the global platform. If the United States loses its chains in multilateral affairs due to internal financial breaches, its international credibility and strategic gesture will be reevaluated.If diplomatic commitments are delayed due to budget disruptions, it will increase allies and opponents’ doubts about the reliability of U.S. decision-making.
Adversaries observe the trajectory of American actions. If the shutdown forces the United States to reduce foreign actions and overseas aid, other big countries or regional forces may take advantage of the opportunity to expand. The strategic priorities of the United States may be reshuffled by other countries.
Domestic public opinion has also aggravated this mixed political and financial crisis.The media continues to report on the headlines of blocked public services, delayed salaries of federal employees, transportation, and research projects being stopped. Public sentiment shifts from anxiety to anger. Both the Democratic Party and the Republican Party are trying to take the initiative in the public opinion war.
In the two-way stretch between foreign affairs and domestic affairs, the American system faces a test.If allocation crises recur, the stability of institutional arrangements, policy coherence, and fiscal discipline will be re-tested.The balance of power, budgetary mechanisms, and interaction patterns between Congress and administration may enter a restructuring cycle.
at this time, The shutdown is not an isolated event, but a crossroads of financial, debt, political and diplomatic crises.Market, livelihood, diplomacy and security are affected at the same time at this moment. The next few days and weeks will determine whether the American system stops at the cracks or slides into deeper uncertainty.