US: MNI POLITICAL RISK - Cracks In Democrat Unity Point To Govt Shutdown Offramp
Oct-01 10:50
At 00:01 ET 05:01 BST this morning, the US government shut down for the first time since 2018-19, after the Senate rejected a House-passed Continuing Resolution to extend FY25 government funding through November. The Senate also rejected a competing Democratic funding bill that would extend expiring Obamacare subsidies, among a raft of healthcare measures.
- There are no ongoing negotiations or meetings planned today, but Senate Majority Leader John Thune (R-SD) is likely to hold a third vote on both bills at 11:00 ET 16:00 BST. They are expected to fail again.
- Yesterday’s Senate vote indicated that moderate Democrat support for prolonging a shutdown is not particularly robust. While Senator John Fetterman (D-PA) was the only Democrat ‘yes’ on the first Senate vote last week, that number is now up to three.
- If President Donald Trump and OMB Director Russell Vought follow through on threats to use the shutdown as a pretext to enact mass layoffs across government agencies, moderate Democratic Senators will find it hard to hold the line without a clear endgame.
- Should Democrats maintain their block, the most obvious route out of the shutdown is a deal on extending the expiring Obamacare subsidies. An extension could be included in a rewritten CR or in a handshake deal with Republican leadership. Indeed, Democrats believe that Trump, often out of lockstep with GOP orthodoxy, can be convinced that extending Obamacare subsidies is in his own political interests.
Full Article: GOVT SHUTDOWN BRIEF
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EUROPEAN INFLATION: Analysts See Limited Risks To August EZ HICP Consensus
Sep-01 10:47
Comments after Friday's national-level August HICP data suggest analyst consensus for headline Y/Y stands somewhere between 2.0% and 2.1% (2.1% prior to national-level data) for tomorrow's EZ-wide release. Key highlights below:
- Barclays: "we track EA flash headline HICP inflation at 0.19% m/m NSA and 2.08% y/y (Barclays initial forecast 2.05% y/y) [...] EA flash core HICP inflation at 0.31% m/m NSA and 2.29% y/y (Barclays initial forecast 2.24% y/y)"
- Berenberg: "Overall Eurozone inflation will stick close to the target rate in August again – perhaps ticking up to 2.1% yoy in August [...] We maintain our call that [the ECB] will keep the deposit rate steady at 2%"
- Commerzbank: "The national consumer price figures for August available so far do not indicate any major surprises in the figures for the eurozone due on Tuesday. Inflation remaining close to the ECB's target level is unlikely to prompt the ECB to consider changing its key interest rates, either upwards or downwards."
- Goldman Sachs: "We upgrade our Euro area headline inflation forecast for August to 2.02%yoy, from 2.0%yoy previously, and revise up our Euro area core inflation forecast by 1bp to 2.21%yoy. This would imply seasonally adjusted sequential core inflation of 0.18%mom in August on our estimates"
- Morgan Stanley: "We confirm our forecast for euro area headline HICP inflation at 2.1%Y in August and core HICP at 2.2%Y [...] we stress some downside risks from rounding down, in particular for headline HICP inflation, which, with some variation across remaining countries, could land at 2.0%Y."
- ING: "We think that it is still too early to rule out a September cut [...] the ECB doves have been very silent since the end of the summer break, and it has been the traditional ECB hawks trying to shape the policy debate [...] there is a growing awareness among eurozone policymakers in general that the trade framework agreement between the US and the EU is anything but set in stone [...] a too-hawkish stance could eventually backfire and increase the risk of inflation undershooting"
- JP Morgan: "We expected Euro area core inflation to decline by 0.2%-pt to 2.1%oya. Based on country-level information released today, we now expect Euro area core inflation to be down a tenth to 2.2%oya. [...] We also raise our headline inflation forecast to 2.1%oya (or 0.2%m/m sa)"
CANADA: Also Set To Observe Labor Day
Sep-01 10:40
Canada will also observe the Labor Day holiday, which will further thin out wider market liquidity, as well as result in closures/reduced trading hours across Canadian markets.
