FORTUNE — With a last-minute debt deal winding its way through the legislature, the worst of the uncertainty that has roiled global markets in recent weeks may be past. But the upheaval has already undermined confidence in the U.S., even as the economy shows signs of life. Under the shadow of a looming U.S. default in September, Mary Erdoes, head of J.P. Morgan’s (JPM) $2.2 trillion asset management business, sold every treasury she held that matured in the month of October or that had a coupon payment in the month of October. “And we had a lot of them,” she said.
She didn’t do it because she thought there would be a debt-ceiling breach — she felt the possibility of a U.S. default was low. But with the relentless uncertainty in Washington, “That’s what your day is all about, you’re just stress-testing all those tail events,” she said. Erdoes spoke Tuesday at Fortune’s Most Powerful Women Summit in Washington, D.C. She joined a panel of other fund managers to speak about what the recent political uncertainty means for their businesses. The short answer: It makes the job a lot harder.
After Erdoes sold the fund’s treasuries, it put the money in “basically just overnight cash stuff so we can wait to get through this time period,” she said.
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Carol Deckbar, EVP and COO of asset management at TIAA-CREF, said that she and her team felt the market would be liquid enough and did not sell. But that’s partially because, “The choices for what we could buy down the road were no better,” she said.
Despite the severity of the self-inflicted problems in the U.S., there are still opportunities amid the confusion. “The really smart people will just buy stocks,” Erdoes said. “They’re just waiting for that moment when the market really starts to worry.” One of her greatest stresses as a fund manager is convincing investors to get back in the market, she says, or “they’re going to miss it.”
Of course, it’s not so easy to outsmart the tribe. “Congress has cried wolf with the markets many times,” said Karen Finerman, author and CEO of Metropolitan Capital Advisors. “I think even if you told me exactly what was going to happen on Thursday right now, I wouldn’t know if the market would go up or down because I don’t know if the market has digested that already.”
That doesn’t mean company valuations are driven only by fundamentals. Politics still wields big influence over stocks. “We’ve been in a macro-driven market for years now,” Finerman said. “We were just starting to get out of it before the shutdown.”
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Despite the political chaos, the money managers Tuesday agreed that the U.S. is on the road to recovery. Personal debt levels are back down to 1985 levels, Erdoes says, putting greater power behind consumer spending. Also, the country’s economy is still growing some 2% annually, a rate that might be as much as 1.5 percentage points higher if it weren’t for uncertainty over macro issues such as instability in Europe and U.S. political gridlock.
For investors, that growth is good news – even better than Congress’ pending last-minute temporary debt deal. “The U.S. is going through a renaissance,” said Wellington Denahan, CEO at Annaly Capital Management. “As long as policy makers don’t screw that up, I do think the momentum can continue.”
