Some investors think a shutdown could be a positive event in the long-term. The political pressure could force politicians to get down to business and negotiate — particularly on the issue of the debt ceiling.
"This may be good thing in the long run because it may lead to compromise," said J.J. Kinahan, chief strategist at TD Ameritrade.
Treasury Secretary Jack Lew said last week that the government would run out of borrowing authority by roughly Oct. 17. The last time the debt ceiling issue came up in August 2011, it led to Standard & Poor's downgrading the United States' credit rating. The Dow went through nearly three weeks of nauseating triple-digits moves almost daily.
"This sort of political brinkmanship is the dominant reason (the United States' credit) rating is no longer 'AAA,'" Standard & Poor's analysts Marie Cavanaugh and John Chambers wrote in a note to investors Monday.
If domestic and foreign investors begin to question whether the U.S. will pay its debts, it could throw every other investment out of alignment.
"It's a threat to the center of the global financial system," said Jake Lowery, portfolio manager at ING U.S. Investment Management.
Despite fears of default, the bond market was fairly quiet Monday. The yield on the benchmark 10-year U.S. Treasury note eased to 2.62 percent from 2.63 percent late Friday. Bond investors are in a wait-and-see mode.
They can deal with a government shutdown. However, if the political dysfunction becomes worrisome enough that it raises questions about the debt ceiling, "it might be more difficult for the bond market to absorb that," Lowery said.
—AP Markets Writer Steve Rothwell contributed to this report from New York.
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