US: Implied Probability Of Extended US Govt Shutdown Continues To Rise
The implied probability of the US government shutdown extending to October 15 or later has risen to 83%, per Polymarket, ahead of a sixth Senate vote on the duelling Republican and Democratic government funding measures. Both bills are expected to fail, with no change to the vote share expected.
- There have been no major developments this morning. Senate Majority Leader John Thune (R-SD) indicated to reporters he may hold off on scheduling weekend votes on the GOP Continuing Resolution. “If [Democrats are] just gonna continue to vote down keeping the government open, I’m not sure what purpose that’ll serve,” Thune said.
- Max Cohen at Punchbowl reports Senator Mike Rounds (R-MO) reiterated Democrats need to reopen the government before ACA talks can start. “Our message is eliminate the shutdown. Let's get back to doing the business that we're supposed to be doing.”
- Rounds has been flagged as a potential dealmaker who could work with Democrats on a healthcare offramp to the shutdown; his comments suggest that those talks remain a way off from becoming a credible option.
- Moderate Republican Senator Lisa Murkowski (R-AK), another bipartisan dealmaker, said similarly, “Let’s pass a bill that will allow us to open up the government, and then there's a lot of good conversations that can go on. It doesn't mean that we wait until the end to start conversations, and that's what we're doing.”
Figure 1: End Date of Govt Shutdown
Source: Polymarket
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US DATA: NY Fed Consumer Survey: More Evidence Of Low-Hiring Labor Market (2/2)
On the labor market/household finance side of the NY Fed's Survey of Consumer Expectations, August's findings were relatively steady compared with July, but there were a couple of negative standouts that will add to concerns over the health of the US labor market which still looks best characterized as "low hiring, low firing".
- The main standout was in the category of "Mean probability of finding a job in the next three months if job lost today": this dropped to an all-time survey low 44.9% from 50.7%. The previous low was 46.2%, in 2020. While all demographics (ages, incomes etc) saw a deterioration in August vs July, it was most notable in those educated to high school level or less (plummeting by the most in a single month in survey history, from 51.1% to 36.0%).
- The "macro" question of whether US unemployment will be higher one year from now ticked up (mean probability 39.1% from 37.4%) which is slightly elevated from a historical perspective but below the 44% seen in March/April's tariff uncertainty. Movement various categories were in a slightly softer direction, including: mean probability of leaving job voluntarily, earnings growth expectations, probability of changing primary residence.
- Household income and spending growth expectations and current financial situation metrics were roughly steady on aggregate, though there was an uptick in debt delinquency expectations.
LOOK AHEAD: Tuesday Data Calendar: BLS Survey Revision, 3Y Note Sale
- US Data/Speaker Calendar (prior, estimate)
- 09/09 0600 NFIB Small Business Optimism (100.3, 100.5)
- 09/09 1000 BLS Prelim Benchmark Revision to Establishment Survey Data
- 09/09 1130 US Tsy $85B 6W bill auction
- 09/09 1300 US Tsy $58B 3Y Note auction (91282CNY3)
ITALY AUCTION PREVIEW: On offer this week
MEF has announced it will be looking to sell the following at its auction this Thursday, September 11:
- E2.75-3.25bln of the 2.35% Jan-29 BTP (ISIN: IT0005660052)
- E1.25-1.50bln of the 4.00% Nov-30 BTP (ISIN: IT0005561888)
A reminder that "the auctions of 7-year BTPs and BTPs with a maturity longer than 10 years, scheduled for the same day will not be held due to the recent issuance through a syndicate."
