US STOCKS: Early Equities Roundup: IT Valuations Tempered

• RES 4: 114-10   High Apr 7 (cont.)
• RES 3: 114-00   Round number resistance
• RES 2: 113-12/29 High Sep 18 / High Sep 11 and the bull trigger 
• RES 1: 113-00   High Sep 24 
• PRICE:‌‌ 112-21+ @ 16:57 BST Oct 8
• SUP 1: 112-12+/01 50-day EMA / 50.0% of Jul 15 - Sep 11 upleg   
• SUP 2: 111-26   Low Aug 26
• SUP 3: 111-13+ Low Aug 18 and a key support  
• SUP 4: 111-01+ 76.4% retracement of the Jul 15 - Sep 11 bull phase  

Treasuries continue to find support just below the 50-day EMA, currently at 112-12+. The trend structure remains bullish and recent weakness is considered corrective. A clear break of the 50-day EMA is required to undermine the trend and this would expose 111-13+, the Aug 18 low and a key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high. A break would be bullish.   

The implied probability of the US government shutdown extending to October 15 or later has risen to 83%, per Polymarket, ahead of a sixth Senate vote on the duelling Republican and Democratic government funding measures. Both bills are expected to fail, with no change to the vote share expected.

• There have been no major developments this morning. Senate Majority Leader John Thune (R-SD) indicated to reporters he may hold off on scheduling weekend votes on the GOP Continuing Resolution. “If [Democrats are] just gonna continue to vote down keeping the government open, I’m not sure what purpose that’ll serve,” Thune said.
• Max Cohen at Punchbowl reports Senator Mike Rounds (R-MO) reiterated Democrats need to reopen the government before ACA talks can start. “Our message is eliminate the shutdown. Let's get back to doing the business that we're supposed to be doing.”
• Rounds has been flagged as a potential dealmaker who could work with Democrats on a healthcare offramp to the shutdown; his comments suggest that those talks remain a way off from becoming a credible option.
• Moderate Republican Senator Lisa Murkowski (R-AK), another bipartisan dealmaker, said similarly, “Let’s pass a bill that will allow us to open up the government, and then there's a lot of good conversations that can go on. It doesn't mean that we wait until the end to start conversations, and that's what we're doing.”

Figure 1: End Date of Govt Shutdown

Source: Polymarket

Les Echos reports comments from officials close to caretaker PM Sebastien Lecornu downplaying earlier reports that he could be reappointed as PM amid efforts to avoid snap legislative elections. Les Echos: "Outgoing Prime Minister Sébastien Lecornu hopes that "rumours and false information" about his possible reappointment, which is the subject of speculation in the press, will cease, his entourage announced on Wednesday afternoon." 

• Reports from earlier today suggested that Lecornu could be reappointed as PM amid a nascent deal with the centre-left Socialist Party (PS) that would see the 2023 pension reforms suspended and proposed deficit reduction plans halted in exchange for their support in passing a state budget for 2026.
• PS First Secretary Olivier Faure posted on X in response to the Europe1 story "The Elysée is launching a disinformation operation."
• The far-right Rassemblement National (RN) maintains its stance of demanding fresh legislative elections. RN president Jordan Bardella posted on X, "Macron's supporters are deliberately willing to resort to all sorts of contortions to stay in power. Nothing viable can come out of these backroom deals between parties in the kitchens of Matignon. The only solution is a return to the ballot boxes."
• RN leader in the National Assembly, Marine Le Pen, raised the prospect of Les Republicains (LR) deputies who have not been "totally Macronised" being invited to join a coalition with the RN after an election, should the party fall short of an overall majority. A formal coalition with the far-right may prove too much for the LR mainstream, hence Le Pen's caveated invite.