Indeed, the yield on the 10-year Treasury note closed above 4.8% for the first time in more than 16 years on Oct. 3, indicating an ongoing bond sell-off.
However, Bahnsen cautions that issues related to governmental dysfunction can sometimes influence market valuations and expectations.
"This has gone on for many years and holds back markets by forcing a modest discount around such unpleasant realities," he said. "But those are more baked-in than they are event-driven."
Rhys Williams, chief strategist at Spouting Rock Asset Management, which has $2.3 billion in assets under management, said the removal of McCarthy, while not fatal, will likely keep Washington in the center of a political maelstrom.
"While markets will be much more affected by economic growth and interest rates, the fall of Speaker McCarthy could likely be an incremental negative to market psychology," he added.
Olivier d'Assier, head of APAC applied research at Qontigo, a financial intelligence firm and a unit of the Deutsche Borse Group, said the removal of McCarthy is seen by the market as "a negative surprise, so we may see higher volatility in the short-term this month."
If market volatility does suddenly rise, d'Assier added, this "could be bad news for markets as a lot of the leveraged dealmaking that takes place when volatility is low needs to suddenly be unwound all at once."
Still, he noted that "external factors" like the saga surrounding McCarthy "tend to have only a short-term impact on volatility and markets."
On Oct. 3, the House of Representatives removed McCarthy as speaker by a vote of 216-210, with 208 House Democrats and eight Republicans voting for his ouster. The historic measure to remove McCarthy was spearheaded by his rival Rep. Matt Gaetz, R.-Fla., through the introduction of a "motion to vacate."
Rep. Patrick McHenry, R-N.C., who is also a member of the Financial Services Committee, has been appointed speaker pro tempore.
Williams of Spouting Rock also noted that while McCarthy was heavily criticized by some in Washington, he nonetheless engineered a compromise on the debt ceiling earlier this summer and helped to temporarily avert a government shutdown this week.
"Do (Democrats) really think the next speaker will be more likely to cut a better deal? Or any deal at all?" Williams commented.
However, some other experts are more wary about the possible repercussions arising from McCarthy's departure.
Internecine warfare within either party and either chamber doesn't help markets, said Cheryl Smith, economist and portfolio manager of Trillium Asset Management, which has $5.4 billion in assets under management.
The move by a small group of "radical Republicans" to oust the Speaker for the offense of working in a bipartisan way to pass stopgap funding for the government is a negative for markets, she added.
"It increases uncertainty and increases the difficulty of passing a budget in time to prevent a shutdown in the 45-day window," Smith stated. "It increases the likelihood of another bond rating agency downgrade because the MAGA caucus revolt calls into question the viability of the deal reached in the summer to avoid a debt default."
George Schultze, founder and managing member of Schultze Asset Management, which has $102.4 million in assets under management, said McCarthy's removal increases the likelihood that the U.S. government will face a near-term shutdown.
"This increases the risks of investing in U.S. government securities and destabilizes other markets as well, since U.S. Treasuries serve as a benchmark for a wide range of other securities," he said.
