Following Tuesday's contentious Oval Office shouting match between President Trump and Democratic leaders Nancy Pelosi and Chuck Schumer, it appears more and more likely that some agencies will be shut down after a December 21 deadline looks less and less likely to be met - which, according to Trump, must include $5 billion for his hallmark southern border wall.

Senate Republicans are now looking for a "Christmas miracle" to avoid the shutdown. S&P 500 traders, however, don't seem too concerned about the prospect. During the January 2018 shutdown, the SPX Index rose 4 out of the first 5 trading days after it began.

The Treasury-Bill market is already starting to kink around the shutdown, with the pre- and post-shutdown yield curve steepening dramatically...

Congress and Trump have already approved funding bills for three quarters of the $1.2 trillion operating budget for federal agencies - which leaves several other agencies in unfunded limbo.

Source: Congressional Budget Office



Notes: Based on House subcommittee allocations. Numbers reflect regular discretionary appropriations subject to spending caps and exclude overseas contingency operations funding. Via Bloomberg

President Trump has vowed to block funding if Democrats don't allocate $5 billion to build his signature southern border wall, saying he would be "proud to shut down the government for border security."

Among the agencies which would be affected by the partial shutdown are Homeland Security - although several of the agency's law enforcement components would continue to operate as usual as they are considered essential, according to Bloomberg.

At the Department of Homeland Security, the overwhelming majority of border patrol, emergency management and immigration enforcement staff would be able to keep doing their jobs, though with their pay delayed. At the Department of Housing and Human Development, on the other hand, 87 percent of the agency’s 7,800 employees would be sent home. The Treasury Department is among agencies that would furlough workers. Its biggest component is the Internal Revenue Service and most of its employees wouldn’t report to work because it’s not tax season. Environmental Protection Agency employees would also be furloughed. -Bloomberg

National parks would remain open, however park staff would be sent home.

The Securities and Exchange Commission (SEC) would be forced to halt new investigations unless they are needed "for the protection of property."

The Defense Department, of course, is fully funded and would operate as usual.

An estimated 400,000 federal employees would work without pay and 350,000 would be furloughed, according to a congressional Democratic aide. The essential employees who work during a shutdown are paid retroactively when the government reopens and payroll operations resume . After previous shutdowns, Congress also has passed legislation to retroactively pay furloughed workers. -Bloomberg

That said, it's possible that lawmakers could agree on another short-term funding bill that would last into January, or perhaps they would reach a deal that allows all sides to prevail.