NETHERLANDS: Final Poll Shows Five-Way Split At Top, D66 Surge & PVV Slump

15:00 ET 20:00 BST, President Donald Trump will meet Senate Majority Leader John Thune (R-SD), House Speaker Mike Johnson (R-LA), Senate Minority Leader Chuck Schumer (D-NY), and House Minority Leader Hakeem Jeffries (D-NY) at the White House in a last-ditch attempt to avert a government shutdown at 00:01 ET 05:01 BST on Oct. 1. 

• While the meeting keeps the possibility of a deal open, neither Schumer nor Thune has indicated flexibility. Moreover, it is unclear if Trump intends to propose a deal or press Democrats to accept the GOP funding package. Schumer told NBC if Trump is going to "just yell at Democrats... We won’t get anything done.”
• Thune said, “Democrats can either vote for [the House-passed 'clean' CR] or they can choose a completely avoidable shutdown.” Thune's advocacy for a clean CR is not unusual, but it is backed by an OMB memo threatening mass federal worker layoffs, hardening Democrats' resolve.
• The long-shot route to avoiding a shutdown is a deal on extending Obamacare subsidies in the coming weeks, allowing Schumer to supply seven Democratic votes to the CR. Pollster G. Elliot Morris noted the OBBB’s healthcare provisions are “underwater by 20-30 points,” and slightly more voters would blame the GOP for a shutdown, appearing to validate Schumer's decision to dig in on healthcare.
• According to Polymarket, the implied probability of a shutdown edged back up toward 70%, reversing a slight drop on news of the meeting.

Figure 1: Government Shutdown by October 1

Source: Polymarket

10-Year BTPs trade ~0.5bp tighter vs. Bunds, seemingly benefitting from an uptick in equities and focus on positive European fiscal and rating stories in light of Spain’s sovereign rating upgrades on Friday vs. more negative instances (namely France after the country received another negative sovereign rating outlook on Friday, compounded by ongoing political headwinds).

• Still, BTP/Bunds has consolidated last week’s move back above 80bp, with August’s cycle closing low/lowest close since early 2010 (77.05bp) intact.
• Looking ahead, UniCredit expect the BTP/Bund spread to trade “broadly sideways”.
• The note that “issuance activity has proceeded smoothly this year, with the Italian Treasury having achieved almost 90% of its funding objectives. The offering of a new retail bond, the third this year, at the end of October will be in the spotlight, as it will test investor appetite for such instruments. With respect to rating reviews, Moody’s is scheduled to review Italy’s sovereign rating at the end of November. In May, the rating agency changed its outlook to positive from neutral, which opens the door for a rating upgrade, possibly even in the upcoming review”.
• They caution that “the political situation in France could also have an indirect impact on Italian paper. Should tension escalate, investors would probably step up their Bund purchases, leading to BTP underperformance relative to Bunds, while Italian govies would outperform their French peers. Furthermore, escalating political pressure would likely make French govies even cheaper than BTPs (their spread is currently close to zero), which could divert more opportunistic flows away from Italian paper”.

WTI futures are holding on to their recent gains. The contract has breached resistance at $65.43, the Sep 2 high and this has improved the short-term condition for bulls. However, the next key resistance is at $68.43, the Jul 30 high, where a break is required to signal scope for a stronger recovery. For bears, a reversal lower would refocus attention on key support at $60.85. A break of this level would reinstate a bearish theme. The trend condition in Gold is unchanged and a bull cycle remains in play. The yellow metal has started the week on a bullish note, trading to a fresh cycle high, confirming a resumption of the primary uptrend. Note that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on $3831.4, a Fibonacci projection. On the downside, support to watch lies at $3646.3, the 20-day EMA. A pullback would be considered corrective.

• WTI Crude down $0.73 or -1.11% at $64.92
• Natural Gas down $0.02 or -0.53% at $3.188
• Gold spot up $58.88 or +1.57% at $3819.13
• Copper up $4 or +0.84% at $481.05
• Silver up $0.9 or +1.95% at $46.9881
• Platinum up $26.98 or +1.71% at $1606.7