MACRO ANALYSIS: MNI US Macro Weekly: December Cut Far From A Done Deal

• Stocks continue to rise late Wednesday, ignoring for the moment at least, last night's US government shutdown as SPX eminis quietly rise to a new record high in late trade (6,768.0 +29.25).
• Much lower than expected ADP data contributed to a rise in rate cut projections helped kindle risk appetites in the irst half, as did the shift in focus from the shutdown to fundamentals and the Supreme Court denying Trump from firing Fed Gov Cook until oral argument on the case is heard in January 2026.
• Currently, the DJIA trades up 91.02 points (0.2%) at 46484.55, S&P E-Minis up 27.75 points (0.41%) at 6766.25, Nasdaq up 111.2 points (0.5%) at 22770.28.
• Leading gainers in the second half included Health Care and Utility sector shares, pharmaceuticals leading the former: Eli Lilly +9.08%, Thermo Fisher Scientific +8.74%, Biogen +7.97%, Merck & Co +7.84% and Regeneron Pharmaceuticals +7.71%
• The Utilities sector was buoyed by AES - surging 16.57% higher as wires reported BlackRock's GIP is in advanced talks to purchase the energy company. Follow-through support for other energy companies includes: Constellation Energy +5.33%, Vistra +3.22% and PG&E +3.05%.
• Conversely, Materials and Financial sectors led decliners in the second half. Weighing on Materials: Corteva -8.87%, CF Industries Holdings -2.83%, Vulcan Materials -2.45% and Ecolab -2.01%.
• Meanwhile, Raymond James Financial -3.23%, Robinhood Markets -3.10%, Wells Fargo -3.05%, Northern Trust -2.99% and Charles Schwab-2.95% weighed on the Financials sector.

European curves steepened Wednesday, with Gilts slightly outperforming Bunds.

• Yields were higher in early trade, amid uncertainty over the U.S. federal government shutdown that started overnight, and supply weighing somewhat (E5B of 10Y Bund).
• However, the tone was lightened as data proved to be on the dovish side: Italian and Spanish PMIs disappointed, while yields saw the biggest move of the day (to the downside) as US ADP private payrolls unexpectedly contracted. Eurozone HICP came in broadly in line with consensus.
• On the day, the German and UK curves both twist steepened.
• Periphery/semi-core EGB spreads closed a little tighter, with BTPs outperforming.
• Thursday's schedule includes French industrial production and Spanish labor market data, with DMP inflation expectations the highlight of the UK docket. There will also be attention on Swiss inflation, as well as appearances by ECB's Makhlouf, Villeroy and de Guindos.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.6bps at 2.013%, 5-Yr is down 0.8bps at 2.301%, 10-Yr is up 0.2bps at 2.713%, and 30-Yr is up 1.8bps at 3.298%.
• UK: The 2-Yr yield is down 2bps at 3.965%, 5-Yr is down 1.9bps at 4.117%, 10-Yr is down 0.3bps at 4.696%, and 30-Yr is up 0.5bps at 5.511%.
• Italian BTP spread down 1bps at 81.3bps /  French OAT down 0.5bps at 81.7bps

• RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 151.21 High Mar 28 
• RES 2: 150.92 High Aug 1 and a key resistance
• RES 1: 148.84/149.96 High Sep 30 / 26 and the bull trigger   
• PRICE: 147.16 @ 16:29 BST Oct 1
• SUP 1: 146.59 Low Oct 1
• SUP 2: 146.36 Trendline support drawn from the Apr 22 low   
• SUP 3: 145.49 Low Sep 17 and a pivot support
• SUP 4: 144.23 Low Jul 7 

USDJPY continues to weaken as the retracement from last week’s high print extends. The move down has resulted in a clear breach of the 50-day EMA, at 147.60. This signals scope for a deeper retracement and exposes the key short-term pivot support at 145.49, the Sep 17 low. A clear break of this level would cancel a recent bull theme. On the upside a reversal higher would refocus attention on resistance at 149.69, the Sep 26 high and a bull trigger.