FRANCE: Gov't-Supporting Horizons Won't Back Social Sec Budget-Le Figaro
Le Figaro reports that the centre-right Horizons, which sits as part of the governing coalition, will not back the draft Social Security Finance Bill (PLFSS) in the 9 December vote that will prove crucial for the future of PM Sebastien Lecornu's administration. The report claims Horizon lawmakers' opposition to the PLFSS over the planned postponement of the 2023 pension reforms and increase in the generalised social contribution was unanimous.
- The National Assembly will take up PLFSS this afternoon for its second reading. The National Assembly will inevitably reinstate the postponement of the pension reforms, which were stripped out by the conservative-dominated Senate.
- A vote on the revenue section could come as soon as Wednesday, 3 December, providing the first concrete signal of whether Lecornu has been able to corral sufficient support. Lecornu met with the leadership of the centre-left Socialist Party (PS) on 1 Dec in an effort to gauge the party's temperature towards the PLFSS.
- Opposition from the far-right Rassemblement National and far-left La France Insoumise is guaranteed. The Greens and Communists are also likely to vote against. The conservative Les Républicains could abstain. For many PS lawmakers, the 'worst-case' scenario would be abstaining, but if Horizons commits to abstention as well, they may be required to vote in favour to pass the PLFSS. This is seen as a risk ahead of next year's municipal elections.
- If the PLFSS fails, the more controversial draft State Financing Bill (PLF) will be seen as effectively defeated as well. This leaves the option of forcing through via Art. 49.3, via ordinance, or enacting a 'special law' that will see last year's budget implemented in twelfths in 2026 until a new budget is passed.
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
