LOOK AHEAD: Thursday Data Calendar: Weekly Claims, Flash PMIs, New Home Sales

France's newly-appointed Minister of Economy, Finances and Industry Antoine Armand speaking to France Inter earlier this morning continued the previous rhetoric from PM Michel Barnier outlining the difficult fiscal situation the country finds itself in. Asked about the prospect of increases in taxation, Armand said "Given the seriousness of the budgetary situation, how can everyone contribute intelligently?", adding "My job is to ensure that any levies that exist do not hinder growth or job creation."

• Armand: "France is the country that taxes the most in the world, "the question we ask ourselves (...) is how we ensure that those who have a significant income or wealth pay a minimum of taxes...Targeted levies on the wealthiest households are under consideration".
• Reports on 23 Sep that the gov't has requested the EU push back its deadline again for the submission of spending plans only serve to highlight the difficult situation the Barnier gov't finds itself in.
• The political environment will also prove immensely challenging. The coalition of parties from the centrist pro-Macron Ensemble (Renaissance, MoDem, Horizons, UDI) and the conservative Republican Right (as Les Republicains are known in parliament) comprises just 212 out of 577 seats in the National Assembly.
• With the leftist New Popular Front (NFP) set to bring censure votes against the gov't come the reconvening of parl't on 1 Oct, this will leave the gov't vulnerable to collapse or reliant on the support/abstention of the far-right Rassemblement National (RN).

• Fed Funds implied rates for meetings out to mid-2025 have seen relatively little impetus from the China stimulus overnight that has helped underpin steepening moves in core FI.
• The November implied rate is unchanged, still hovering close to an implied 40bps of cuts, whilst subsequent meetings out to Jun’25 are only 1-1.5bp higher.
• Cumulative cuts from 4.83% effective: 39bp Nov, 75bp Dec, 109bp Jan and 176bp June.
• Today’s sole schedule Fedspeak comes from Gov Bowman (voter) at 0900ET (text + Q&A), the most hawkish member on the FOMC having dissented against last week’s 50bp cut.
• There’s little scope for surprises here as she explained why she dissented on Friday (remarks here), noting that she’d have preferred to cut by 25bps for a measured return to a more neutral policy stance having not yet achieved the inflation goal.
• She was very likely one of the two FOMC members who pencilled in the Fed Funds target range of 4.75-5.0% (i.e. where it now is) for end-2024. One member then saw rates only 75bp lower from current levels by end-2025 and one saw 100bps lower.