EMISSIONS: HSBC Softens 2030 Emissions Targets for Oil & Gas Sectors

Jiji Press reports that the social conservative, centrist Komeito party will hold discussions on 9 October with its local organisations on the topic of whether the party should continue in its long-standing coalition agreement with the conservative Liberal Democratic Party (LDP). Jiji: "In light of the LDP faction's slush fund scandal, the Komeito Party is calling for a limit on the recipients of corporate and organisational donations. It is also calling for the full extent of the scandal to be clarified." New LDP President Sanae Takaichi is said to be considering the request, but has issued no comments on the issue yet. 

• Speaking at an online event earlier today, Komeito leader Tetsuo Saito said, "we will hold discussions with great concern," adding, "Our party's supporters are also hoping for an answer that says, 'We can form a coalition without any hard feelings.'"
• Without Komeito's backing, the LDP could face a difficult challenge in confirming Takaichi as prime minister in an extraordinary Diet session on 15 October.
• The entire National Diet votes on PM candidates in a run-off system. There has been speculation that the opposition Constitutional Democratic Party, Japan Innovation Party and Democratic Party for the People could look to put forward their own candidate for PM. In the House of Representatives (which ultimately decides on the PM's identity), the combined seat total for these three parties stands at 213 to the LDP's 196, making Kometio's 24 seats potentially crucial in the face of a united opposition challenge. 

At 11:20 ET 16:20 BST, Senate Majority Leader John Thune (R-SD) will hold a sixth vote on the duelling Republican/Democratic government funding measures. Both bills are expected to fail with no change to the vote share. 

• At 10:00 ET 15:00 BST, House Republican leadership will present a unified front at a press conference after House Minority Leader Hakeem Jeffries (D-NY) broadsided colleagues by declaring a bipartisan effort to extend Obamacare subsidies for one year a “nonstarter.”
• However, cracks in GOP strategy are emerging. Earlier this week, President Trump undermined GOP messaging by hinting at a bipartisan Obamacare deal. The White House has also offered mixed messaging on federal layoffs, threatening mass firings without issuing any reduction-in-force notices, and drawing rebukes from Johnson/Thune on reports the WH could deny backpay to furloughed workers.
• While no resolution appears imminent, pressure will mount in the coming days. Oct. 10, Federal workers will receive their last paychecks for September. On Oct. 13, fundraisers, local media events, and campaigning, during a planned Senate recess will be cancelled. Oct. 15, US troops, including active-service personnel, will miss paychecks. Within the next week or so, SNAP benefits for Women, Infants, and Children may run out of funding. On Oct. 20 and Oct. 31, respectively, Senate and House staffers will miss their first paychecks while lawmakers continue to be paid throughout.
• The implied probability of the shutdown extending to or beyond October 15 is 75%.

Figure 1: End Date of Govt Shutdown

Source: Polymarket

• The extension higher in Bund continues, most has been led by the French OAT and the Italian BTP, which shows in the peripheral spreads, Italy is 2.5bps tighter and France 1.8bp.
• Some Desks will look for a test back below 80.00 in the BTP/Bund spread the small initial support.
• For the outright German Bund, next target comes at the 129.13 gap, this was also the printed high during the last FOMC meeting (17th Sep).
• The US Tnotes (TYZ5) is still lagging, but the initial resistance is unchanged at 113.00, the 10yr future has not traded above that level for the past 13 sessions.