Congress returns with government funding, Pete Hegseth and the debt limit on the agenda

Congress returns this week facing a packed lame-duck agenda, with government funding, the debt limit, and Pete Hegseth’s nomination among the top items for Republicans holding narrow majorities in both chambers. Lawmakers have less than two months before the new Congress is seated, leaving little room for error on must-pass spending legislation needed to avert a shutdown. The debt limit debate is the highest-stakes item for markets, as failure to act risks destabilizing Treasury markets and rattling investor confidence. Hegseth’s confirmation fight adds another layer of uncertainty to the Senate calendar, potentially crowding out floor time for fiscal negotiations. Investors should watch for the size and duration of any funding extension and whether a debt-limit increase is attached, as those details will shape the year-end policy outlook.