US: Govt Funding Package Clears Rules Cmte, Final Vote Expected After 16:00 ET
Nov-12 09:22
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.
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FOREX: AUD Rallies, JPY Offered on Smoother China Language
Oct-13 09:20
- US markets are partially closed for Columbus Day on Monday, leaving no cash Treasury trade - which should also limit volumes and price action across currency markets. With the US still in government shutdown, data releases this week are further limited: although the BLS confirmed on Friday that this Wednesday's scheduled release of US CPI will go ahead on October 24th. Modestly stronger risk sentiment today has been fueled by the more complementary tone from Trump on China over the weekend, keeping low-yielders on the back foot while Antipodean currencies outperform.
- BoE's Greene & Mann are both set to appear today in speeches that could set the tone for UK trade this week. No fewer than 14 MPC appearances are on the schedule, and with no rate cut fully priced until April next year, markets will look to see if any speeches suggest this timeline can be brought forward, particularly if this Tuesday's jobs data comes in weaker-than-expected.
- Into the MPC speeches and the run of UK data, GBP/USD is off last week's lows, but inside the Friday range. This leaves the 1.3262 low as key support this week, a break below which exposes the 200-dma of 1.3178 and levels last seen at the beginning of August. It remains difficult to see a protracted GBP/USD sell-off absent a move in the USD however, and with an October Fed rate cut fully priced, there may be limits on how much further the greenback can rally from here.
- As was the case last Monday, the JPY is the weakest currency in G10. USD/JPY is back above 152.00, but a further rally above 152.64 will be needed to erase the sell-off triggered by Trump's threats to raise tariffs on China on Friday. Politics remains a key driver of the currency, with opposition parties set to meet tomorrow to discuss the collapse of the governing coalition last week. These meetings could help determine whether Takaichi goes ahead with a minority government, or looks to bring forward elections.
- The AUD/USD bounce, triggered by Trump's softer China language over the weekend, has the pair again either side of the 0.6532 100-dma. The 0.6560 50-day EMA marks the next upside level, which would go further in erasing last week's sell-off. This comes after Friday's support breaks undermined a recent bullish theme, potentially signaling scope for a deeper retracement towards key support at 0.6415, the Aug 21 and 22 low.
- Further newsflow and tone by both US and Chinese administrations in terms of rare earths and trade have the potential to induce volatility in the coming sessions. Polymarket odds for the US government to remain shut down until at least October 31st rose to above 2/3 over the weekend - suggesting that most official US data may be set for a continued absence.
EQUITY OPTIONS: Estoxx Synth Option Trade
Oct-13 09:13
SX5E (17th Oct) 5600, sold the put at 9 in 5k (100% del).
EGB OPTIONS: Large Bund Call Buyer
Oct-13 09:03
RXX5 130c, bought for 16 up to 18.5 in close to 10k.
