BTP: Block trade

• On the commodity front, a bull cycle in Gold remains in play and today’s fresh cycle high, reinforces current conditions. This maintains the bullish price sequence of higher highs and higher lows and note too that corrections, when they do occur, are shallow. Furthermore, momentum studies highlight a condition known as momentum drag - where momentum studies remain in overbought territory and move sideways. This condition reinforces the current trend direction. Sights are on $3987.3 next, a 2.236 projection of the May 15 - Jun 16 - 30 price swing. Support to watch lies at $3715.0, the 20-day EMA.

• In the oil space, WTI futures remain in a bear-mode condition. Last week’s sell-off resulted in a move through key support and the bear trigger at $60.85, the Aug 13 low. Clearance of this level strengthens a bearish theme and paves the way for an extension towards $57.50, the May 30 low. Initial firm resistance has been defined at $66.42, the Sep 29 high. Clearance of this level would highlight a reversal.

TY futures trade back towards London morning lows after bulls failed to close the opening gap lower during a relief rally, last -0-06+ at 112-15.

• Immediate support at the 50-day EMA (112-12+) protects retracement support (112-01). Conversely, bulls look to break the Sep 24 top (113-00).
• Spill over from Japan (where a new LDP Party leader & PM promoted twist steepening) and France (with another PM resignation seen) provides bear steepening pressure, yields 0.5-5.0bp higher.
• 2s10s at 57.2bp, 5s30s at 102.9bp, consolidating within multi-week ranges. 2s10s ~7bp off cycle closing highs, 5s30s ~20bp off cycle closing top, after some modest steepening last week.
• The government remains in shutdown. ~75% of Polymarket bettors believe the shutdown will last until October 15 at the earliest.
• Markets remain focused on the timing of delayed data releases, most notably the September Employment report.
• This week’s supply (including 3-, 10- & 30-Year Tsy auctions) will go ahead as scheduled.
• Fed pricing little changed to start the week, OIS near enough fully discounts a 25bp cut at this month’s meeting and prices ~47bp of easing through year-end.
• Just over 100bp of cuts priced between now and the end of the September ’26 FOMC, while SOFR-implied terminal rate pricing sits at 3.065% (vs. ~2.80% at one point in September).
• Kansas City Fed President Schmid well speak on the economic outlook and monetary policy later today (17:00 NY/22:00 London).

Senate Majority Leader John Thune (R-SD) is expected to hold a fifth vote at 17:30 ET 22:30 BST on the GOP's CR to fund the government through Nov. 21. The vote is likely to fail again. Thune has shown no sign of pivoting on his strategy to keep re-running the vote until enough Democratic Senators fold amid a pressure campaign led by OMB Director Russell Vought. 

• Thune likely needs at least eight Democrats to clear the 60-vote Senate filibuster. There is no sign yet any new Democrats will join the three who have voted in favour of the bill in the previous ballots. There are still no leader-level talks on Democrats' demands for an Obamacare deal to reopen the government. House Speaker Mike Johnson (R-LA), is expected to keep the House recessed for a second successive week, effectively closing the door to any rank-and-file bipartisan negotiations.
• Pressure will intensify on Democrats this week when some federal workers miss their first paycheck on Friday. On October 15, active-duty service members will miss their first paycheck. House Majority Leader Steve Scalise (R-LA) told Republicans on Saturday to “hammer Democrats on the military pay deadline,” per Politico.
• Polling appears to give the Democrats a slight edge in public opinion. The Canvass found, "More than half of top Capitol Hill staffers (58%)” say the GOP is to blame for the shutdown. CBS notes, “Republicans and the president get relatively more [blame] than congressional Democrats." Polymarket sees a 72% implied probability the shutdown extends beyond October 15. 

Figure 1: End Date of Govt Shutdown

Source: Polymarket