EU CREDIT SUPPLY: €€€ Blackstone Property Partners (BPPEHX): Priced

The Senate passed the 2026 budget bill earlier today by a margin of 110 in favour to 66 opposed, which followed a confidence vote that the gov't won by 113 to 70 votes. The legislation still needs to be approved by the Chamber of Deputies (to take place next week) before it can be ratified by year-end, avoiding automatic curbs on the levying of taxes and gov't spending. While PM Giorgia Meloni's conservative coalition gov't holds majorities in both chambers of the Italian Parliament, the 2026 budget has not been a smooth process. 

• La Repubblica: "The budget is worth "around €22 billion," Economy Minister Giancarlo Giorgetti said in a statement to reporters in the Senate. The total amount, initially €18.7 billion, "has increased," the minister explained, "because with the latest major amendment, we've supplemented the allocations for Transition 5.0, the Economic Zone (ZES), and price adjustments.""
• Last week, MNI's Policy team reported on the prospect of an additional EUR3.5bln in gov't spending to support businesses (MNI: Italy To Increase Funds For Investment In Budget Update).
• Local media reports suggest possible disagreement between Giorgetti and right-wing populist League group leader in the Senate, Massimiliano Romeo, in the aftermath of the vote. There has also been speculation of a falling out between the Economy Minister, who hails from the League, and party leader and Deputy PM Matteo Salvini, regarding changes to pension provisions. 

The December Conference Board consumer survey was weak, echoing its UMichigan counterpart in portraying a deterioration in sentiment at the close of 2025. While the Expectations index was steady at 70.7 (having been upwardly revised from 63.2), the Composite fell to an 8-month low 89.1 from 92.9 prior (upward rev from 88.7) as consumers' Present Situation fell to 116.8 from 126.3 (downwardly revised from 126.9). That's easily the weakest reading for the latter since February 2021, and outside of the pandemic, since 2016.

• Present Situation is "based on consumers’ assessment of current business and labor market conditions" per the Conference Board, and that assessment has turned increasingly dire. "Net views on current business conditions were negative for the first time since September 2024, a month that included a labor market scare and deadly hurricanes."
• The "labor differential" in the December Conference Board survey - possibly the most closely-watched indicator from this report - was its lowest since February 2021 at 5.9, pointing to a continued pickup in the unemployment rate. Recall this is the share of those seeing jobs as "plentiful" (26.7% in December) minus those seeing jobs as "hard to get" (20.8%).
• We took note of the mixed responses that weren't captured in the headline aggregates. Per the report: "consumers’ views of their Family’s Current Financial Situation collapsed into negative territory for the first time in nearly four years. However, expectations for their Family’s Future Financial Situation were the most positive since January of this year."
• On recession expectations: "the share of consumers believing a US recession over the next 12 months is “not likely” edged up to about one-fifth of respondents and those saying recession is “very likely” continued to recede. Still, the largest share of consumers—those anticipating that recession is “somewhat likely”—grew again and the small percentage stating that the US is “already in one” crept higher."
• The report also notes that "Consumers appeared more cautious about plans for buying big-ticket items over the next six months."
• The upward revisions to prior were attributed to "responses collected after the end of the federal government shutdown" in mid-November.

• ADP employment saw an average week-on-week increase of 11.5k in the four weeks to Dec 6, a moderation after the upward revised 17.5k (initial 16.25k) in the four weeks to Nov 29.
• Prior revisions were generally upward although they don’t materially change the recent story: there has been some improvement in the second half of November, which has since continued into December, after a return to negative -31k in the monthly ADP report (based off its reference period including the 12th of the month).
• The latest rate is equivalent to a 46k monthly increase as it starts to give a better idea of potential readings ahead of the December ADP report released on Jan 7. We’ll have a particularly good idea after next week’s weekly update on Dec 30 as it runs up to Dec 13 and starts to directly overlap that reference period including the 12th.
• ADP didn’t provide any color this week.