BONDS: Gilt/Bund Nears Next Support After Close Below 165bp

The House Rules Committee voted 8-4 along party lines to advance the Senate-passed government funding package to the floor of the House of Representatives, clearing a key procedural hurdle to reopening the government. The rule sets one hour of debate on the bill, followed by a final vote. The House will hold its first votes since September 19 at 16:00 ET 21:00 GMT. 

• While, there is little Democrats can do to delay the package, there will be focus on a handful of House Republicans – including Reps Thomas Massie (R-KY) and Marjorie Taylor Greene (R-GA) – who have expressed reservations. House Speaker Mike Johnson (R-LA) has only a two-vote majority but there is little risk to final passage, considering strong support from President Donald Trump. Any delays are likely to come from attendance related to shutdown-associated travel issues, which could push the vote into Thursday.
• The funding package includes full-year appropriations bills for the Department of Agriculture, Legislative Branch, and Military Construction and Veterans Affairs. The rest of the federal government will be funded via a short-term Continuing Resolution through January 30, 2026.
• As the shutdown impasse was ended with the votes of eight ‘rebel’ Democrat Senators, the underlying conflict remains unresolved. If lawmakers fail to complete the remaining nine annual bipartisan spending bills by the new January 30 deadline, there is a risk of a second shutdown in February.
• A potential second shutdown would be partial, as the three above agencies will be funded through the end of the fiscal year (Sept 30). Notably, as the Supplemental Nutrition Assistance Program (SNAP) is funded via the Department of Agriculture, a second shutdown would have a key pressure point removed. 

• CHF continues Tuesday’s outperformance following the latest optimism on a potential Swiss trade deal with the US. While such a deal would be unlikely to sway SNB rates this year or the next, it should prompt a moderate upwards revision of 2026 GDP forecasts for Switzerland, which is providing a boost to the Franc.
• EURCHF (-0.23%) sees further downside pressure as a function of that to session lows of 0.9249 at typing, while USDCHF (-0.15%) has tracked further back below the 0.8000 handle.
• Conflicting forces of an attractive funding status and solid economic fundamentals continue to characterise the broad consolidation of EURCHF towards cycle lows. This keeps the extremely significant support cluster between 0.9206-22 in high focus for those looking for a break to the lowest levels since the peg removal in 2015.
• As a reminder, softer-than-expected October CPI data in Switzerland prompted a moderate extension of Swiss Franc weakness earlier in the month. It is worth highlighting the bar to an SNB move back into negative rates territory remains high in the short-term. Indeed, SNB's Tschudin said last week that it is ok if inflation moves below 0% for a "short time” and then reiterated this week that a rate cut below zero is not warranted for now.
• Chart Highlight: 0.9206 Support Continues to Hold Firm:

TYZ5 111.50 puts paper paid 0-02 on 4K.