POWER: "*FRENCH POWER FOR DEC. 6 SETTLES AT EU 25.16 /MWH: EPEX AUCTION"-bbg

• On the commodity front, a fresh cycle low last week in Gold highlights an extension of the bear cycle that started Oct 20. The retracement since Oct 20 has allowed an overbought trend condition to unwind. The 20-day EMA has been breached, signalling scope for a test of the 50-day EMA, at $3867.3. Clearance of this EMA would strengthen a short-term bear theme. Initial resistance is at $4161.4, the Oct 22 high.
• WTI futures are unchanged and the contract remains in a corrective cycle for now. Note that price has recently traded through the 50-day EMA, currently at $61.03. The breach of this EMA signals scope for a stronger recovery. Note too that a resistance at $62.34, the Oct 8 high, has also been pierced. A clear move through it would expose key resistance at $65.77, the Sep 26 high. First key support and the bear trigger is unchanged at $55.96, the Oct 20 low.

• Treasuries have pared gains to trade mildly twist steeper on decent overnight volumes ahead of a heavier docket with multiple focal points including ADP (0815ET), Treasury's QRA (0830ET) and ISM services (1000ET) – see preview links below.
• Larger gains in early Asia trade were pared with help from a report on a handful of moderate Senate Democrats considering voting to end the government shutdown whilst some colleagues to their left urge them to hold out.
• Odds of the shutdown ending sooner rather than later had improved since Monday with an acceleration in rank-and-file talks aimed at finding an offramp. However, our political risk team cautions that a strong performance in yesterday’s elections may temper optimism by validating Democrats’ assumption that voters approve of Senate Minority Leader Schumer’s hardline strategy to extract concessions on healthcare.
• Cash yields range from 1bp lower to 0.5bp higher.
• TYZ5 trades at 112-27, back to only 2 ticks higher off an overnight high of 113-02 on elevated cumulative volumes of 385k.
• That 113-02 marks new initial resistance although it needs to trade above 113-18+ (Oct 28 high) to signal a possible bullish reversal away from recent lows. Support is seen at 112-16 (Oct 30 low).
• Data: MBA mortgage applications (0700ET), ADP Oct (0815ET), S&P Global serv/comp PMI Oct final (0945ET), ISM services Oct (1000ET)
• Fedspeak: A break in scheduled appearances todayqra
• Bill issuance: US Tsy $69B 17W bill auction (1130ET)
• Politics: Trump delivers remarks at breakfast with Republican Senators (0830ET), Trump delivers remarks at America Business Forum Miami (1300ET)
• MNI QRA preview found here. It predates Monday’s borrowing estimates which were below MNI expectations and at the lower end of most estimates seen. Current quarter borrowing requirements were lowered to $569B from August's $590B estimate and the initial estimate of Jan-Mar requirements saw a slight further uptick to $578B.
• ADP mini preview: See "Private Labor Indicators To Watch Over The Next Two Days" [Nov 4]
• ISM services preview: “Oct ISM Services: Activity Steadying Out At A Weak Level (1/2)” and “Oct ISM Services: Price Gauge Seen At 4-Month Low (2/2)” [Nov 4]

Le Monde reports that PM Sebastien Lecornu is set to offer the centre-left Socialist Party (PS) concessions on the revenue section of the Social Security Financing Bill (PLFSS) in order to ensure its deputies abstain on the vote, securing its approval in the National Assembly, and allowing debate to move onto the expenditure section. On 4 Nov, Lecornu announced a EUR1bln support package for hospitals, while also voicing support for amendments that would eliminate the non-indexation of pensions and social benefits. The PM is also facing pressure from the left and far-right to back down on the doubling of medical deductibles, which could save EUR2.3bln/annum but has been billed as a 'health tax' by opponents. 

• The compromise could see the PS abstain on a vote as soon as the evening of Thursday, 6 Nov or potentially Friday, 7 Nov. As Le Monde notes, the PS' abstention is crucial as "if [the revenue section] is rejected, the section on expenditure cannot be debated, and the PLFSS will be sent directly to the Senate. This would eliminate the much-anticipated suspension of the pension reform if this scenario, which played out in committee, were to be confirmed in the plenary session."
• In the event the revenue section is passed, debate on the expenditure section, including the suspension of the 2023 pension reform, will not take place until next week. A vote would take place on 12 November, the deadline for the PLFSS to be sent to the Senate according to constitutional deadlines.