MNI US MARKETS ANALYSIS - Gov Shutdown Risks Rise, RBA Unch

Highlights: 

• Government shutdown looks more likely than not, furloughs, data releases and politics in focus
• RBA keeps rates unchanged, Bullock won't be drawn on further rate cuts
• Busy central bank schedule, with high ranking BoE, Fed and ECB members all due

US TSYS: Month End, Military Heads to Quantico, Data, US Govt Shutdown Looming

SOFR: Mix Of Long Setting & Short Cover Seen On Monday

OI data points to net short cover being most prominent through the green pack on the SOFR futures strip as contracts ticked higher on Monday (albeit with some pockets of net long setting seen), before net long setting came to the fore in the blues.

US TSY FUTURES: Mix Of Short Cover & Long Setting Seen On Monday

OI data points to a mix of net short cover (TU, FV & TY) and long setting (UXY, US & WN) as Tsy futures rallied on Monday.

• The curve-wide bias was tilted towards net long setting (in DV01 terms), owing to the ~$4.2mln DV01 equivalent of net long setting in WN futures.

EUROPE ISSUANCE UPDATE

[EGB FUNDING UPDATE] Spain cuts net debt issuance target from E60bln to E55bln:

• Earlier this morning, Tesoro Publico announced that it was cutting its 2025 net issuance target by E5bln to E55bln due to "strong economic growth" in particular a strong labour market "with record numbers of taxpayers, which has resulted in lower financing needs."
• The Treasury notes that the stronger finances are in spite of the costs of Storm Dana and increased defence spending.
• 2025's net issuance target is now the same as 2024's.

Finland Q4 Funding Plan

• 2 RFGB auctions for E1.0-1.5bln each on 21 October and 18 November (in line with MNI's expectation).
• 2 ORI auctions in Q4 (these were scheduled previously, minor date change) on 30 October and 26 November.
• 2 RFTB auctions for E1.0-2.0bln each on 14 October and 11 November.
• "Government’s latest supplementary budget proposal for 2025 increased the net borrowing requirement to EUR 14.298 billion, which implies gross borrowing of EUR 43.753 billion. Long-term funding operations for 2025 are well advanced with all of the euro-denominated supply in syndicated form completed." In the Q3 funding plan, net borrowing requirements stood at E13.233bln, while gross requirements were 42.688bln.
• "The next Quarterly Review will be published on 19 December 2025."
• Full release here: https://www.treasuryfinland.fi/yleinen-en/quarterly-review-q3-2025/

AUD: RBA Tilts Hawkish, AUDCAD Approaching Bull Triggers

• Broad dollar weakness has boosted AUDUSD back above the 0.66 handle on Tuesday, with a cautious central bank providing an additional Aussie tailwind. Governor Michele Bullock declined to say whether the RBA retains an easing bias after the Board held the cash rate at 3.6%, stressing that future moves will depend on incoming data, with the current level still viewed as slightly restrictive.
• Overall, the AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Initial firm resistance to watch is 0.6628 (Sep 24 high). A stronger reversal higher would refocus attention on 0.6707, the Sep 17 and post-Fed high.
• Price action prompted another impressive surge for AUDNZD, rising to a fresh cycle high above 1.14, continuing to narrow the gap with the 2022 highs located at 1.1491. With risk reward for AUDNZD longs perhaps diminishing, AUDCAD (shown below) might be a better candidate to take advantage of additional AUD strength. Recent highs at 0.9227 are initial resistance, closely coinciding with trendline resistance, drawn from the 2021 highs. A breach would signal scope for a move to 0.9377, last year’s highs.
• Bullock highlighted stronger wealth effects from rising housing and asset prices, which could lift consumption and support growth. However, the RBA could still lower rates if the labour market loosens further and supply-demand imbalances ease, she said, with decisions dependent on forecasts and forward-looking indicators.
• Bullock welcomed the publication of full monthly CPI data set to launch in November, but reiterated the Bank's preference for quarterly results, noting the new series would require a transition period as seasonal patterns are established.

Source: Bloomberg Finance L.P. / MNI

FOREX: Yen Recovery Extends, GBPJPY Testing Below 50-day EMA

• Rising odds of a US government shutdown following the remarks from VP Vance have continued to weigh on the US dollar to start the week. USDJPY has been hardest hit, extending the week’s pull lower to around 1.3% at typing as spot consolidates back below 148.00.
• The move down appears technically corrective and initial support to watch lies at 147.59, the 50-day EMA. Stronger pivot support has been defined at 145.49, the Sep 17 low.
• We did highlight GBPJPY as a potentially vulnerable candidate to further yen demand, and the significance of the 50-day EMA. The cross is currently attempting to break below the average, which intersects at 198.98, and the next downside target would be 195.04, the August low.
• While the US shutdown and potential implications for US data releases remains the focus, it is worth highlighting that overnight the BOJ released the summary of opinions. The disclosures gave no clear signal of an October move, with most members aside from Naoki Tamura and Hajime Takata – who dissented and proposed a hike – seeing little urgency.
• Still, some members cited diminishing external risks and rising domestic pressures as reasons to shift. "Given this, the Bank may return to its monetary policy stance to raise the policy interest rate, and adjust the level of real interest rates that are currently low compared with overseas economies.”

FOREX: Gov Shutdown Still in Flux, AUD Rallies on Hesitant RBA

• The countdown to what will likely be the furthest reaching government shutdown in over 10 years continues, with betting markets looking toward a very high likelihood of a formal government shutdown starting from October 1st. Resultantly, haven currencies are bid and spot gold is key beneficiary, although the outlook for the USD is more complex.
• The USD Index remains pinned to the 50-dma of 98.043  - a level that's helped define price action since the beginning of August. The inability of the USD to build on last week's post-GDP rally will concern those looking for a firmer near-term bounce in the USD, with the Fed's views on a possible second rate cut in October a likely factor here.
• AUD trades well, with the cautious RBA decision overnight providing an additional Aussie tailwind. Governor Michele Bullock declined to say whether the RBA retains an easing bias after the Board held the cash rate at 3.6%, stressing that future moves will depend on incoming data, with the current level still viewed as slightly restrictive. Overall, the AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Initial firm resistance to watch is 0.6628 (Sep 24 high). A stronger reversal higher would refocus attention on 0.6707, the Sep 17 and post-Fed high.
• Data due today includes preliminary German CPI data. Regional numbers out already today suggest an uptick in inflation for this month, inline with the consensus view for today's +0.2% M/M, +2.3% Y/Y expectation.
• Today's MNI Chicago PMI, consumer confidence and JOLTS data may represent some of the last US data releases of the week, with a possible government shutdown likely curtailing the release of nonfarm payrolls due this Friday, as well as the CPI print due on October 15th.
• Central bank speak is far busier relative to the data schedule, with ECB's Rehn, Cipollone, & Nagel, Fed's Jefferson, Collins & Goolsbee and BoE's Lombardelli, Mann & Breeden all set to speak.

OPTIONS: Expiries for Sep30 NY cut 1000ET (Source DTCC)

• EUR/USD: $1.1600-05(E2.4bln), $1.1695-00(E1.8bln), $1.1725(E528mln), $1.1775(E715mln), $1.1800(E1.8bln), $1.1825-30(E850mln), $1.1850(E878mln)
• USD/JPY: Y148.00($827mln), Y149.00-15($755mln)
• AUD/USD: $0.6595-00(A$1.3bln)
• NZD/USD: $0.5785(N$1.0bln)

INR: Rupee Slips to Fresh Record Low on Eve of RBI Rate Decision

USD/INR has edged marginally higher to a fresh all-time high, prompting intervention from the RBI to support the rupee – Reuters note, citing traders, that the central bank sold dollars to limit intraday volatility and prevent the currency’s record low from triggering a broader impact.

• Little substantive progress on reaching a trade deal with the US has been an ongoing headwind for the rupee, while a recent hike in US H-1B visa fees has compounded pessimism towards local assets.
• The visa fee issue could weigh on revenues in India’s technology sector and trigger renewed equity outflows, with foreign investors having already withdrawn more than $2bln from Indian stocks over the past six sessions. The Nifty 50 has fallen over 3% from the September highs.
• Weakness across Indian assets comes just ahead of the RBI’s October meeting tomorrow (05:30BST/10:00IST). While a majority of surveyed analysts (24 of 39 surveyed by Bloomberg) expect the central bank to keep the repo rate on hold at 5.50%, 15 expect a 25bp reduction, citing India’s worsening growth prospects.
• The rupee’s slump to a record low and Governor Sanjay Malhotra’s cautious approach to rate cuts raises the bar for easing, and we are of the view that the RBI will hold tomorrow and instead look ahead to the December meeting for its next rates adjustment. See our full preview here.

EQUITIES: Bull Cycle in E-Mini S&P Intact, Key Resistance at 6756.75

• Eurostoxx 50 futures maintain a bullish theme. Yesterday’s gains resulted in a breach of key resistance and the bull trigger at 5525.00, the Aug 22 high. The break confirms a resumption of the uptrend and paves the way for a climb towards 5564.82, a Fibonacci projection. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Initial firm support lies at 5442.85, the 20-day EMA.
• A bull cycle in S&P E-Minis remains intact. Key short-term resistance has been defined at 6756.75, the Sep 22 high where a break would resume the primary uptrend. This would open 6787.63, a Fibonacci projection. On the downside, the contract has recently pierced initial support at the 20-day EMA, currently at 6647.54. A clear breach of this average would signal scope for a deeper retracement, potentially towards the 50-day EMA, at 6526.11.

COMMODITIES: Gold Hits Fresh Record High Just Shy of $3900

• WTI futures have pulled back from their recent gains. The contract has recently breached $65.43, the Sep 2 high and this has potentially improved the S/T condition for bulls. However, the next key resistance is at $68.43, the Jul 30 high, where a break is required to signal scope for a stronger recovery. For bears, a reversal lower would refocus attention on key support at $60.85, the Aug 13 low. A break of this level would reinstate the downtrend.
• The trend condition in Gold is unchanged and a bull cycle remains in play. The yellow metal has started the week on a bullish note, trading to a fresh cycle high, confirming a resumption of the primary uptrend. Note that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on $3909.4, a Fibonacci projection. On the downside, support to watch lies at $3646.3, the 20-day EMA. A pullback would be considered corrective.

Date	GMT/Local	Impact	Country	Event
30/09/2025	1100/1300		EU	ECB Cipollone In Panel At Sibos
30/09/2025	1150/1250		GB	BOE Lombardelli Panel On MonPol, Bank of Finland
30/09/2025	1200/1400	***	DE	Germany CPI (p)
30/09/2025	1200/1400	***	DE	Germany CPI (p)
30/09/2025	1250/1450		EU	ECB Lagarde Keynote at MonPol Conference, Bank of Finland
30/09/2025	1255/0855	**	US	Redbook Retail Sales Index
30/09/2025	1300/0900	**	US	S&P Case-Shiller Home Price Index
30/09/2025	1300/0900	**	US	FHFA Home Price Index
30/09/2025	1300/0900	**	US	FHFA Home Price Index
30/09/2025	1300/1500		EU	ECB Elderson In Panel On Climate Action
30/09/2025	1300/0900		US	Boston Fed's Susan Collins
30/09/2025	1325/1425		GB	BOE Mann Fireside Chat At FT
30/09/2025	1342/0942	***	US	MNI Chicago PMI
30/09/2025	1400/1000	***	US	Conference Board Consumer Confidence
30/09/2025	1400/1000	***	US	JOLTS jobs opening level
30/09/2025	1400/1000	***	US	JOLTS quits Rate
30/09/2025	1430/1030	**	US	Dallas Fed Services Survey
30/09/2025	1530/1630		GB	BOE Breeden Speech At Cardiff University
30/09/2025	1530/1130	**	US	US Treasury Auction Result for 52 Week Bill
30/09/2025	1600/1200	**	US	USDA GrainStock - NASS
01/10/2025	2300/0900	**	AU	S&P Global Manufacturing PMI (f)
30/09/2025	2310/1910		US	Dallas Fed's Lorie Logan
01/10/2025	2350/0850	***	JP	Tankan
01/10/2025	0030/0930	**	JP	S&P Global Final Japan Manufacturing PMI
01/10/2025	0630/0830	**	CH	Retail Sales
01/10/2025	0715/0915	**	ES	S&P Global Manufacturing PMI (f)
01/10/2025	0730/0930		EU	ECB Elderson Keynote at ECB Climate Conference
01/10/2025	0745/0945	**	IT	S&P Global Manufacturing PMI (f)
01/10/2025	0750/0950	**	FR	S&P Global Manufacturing PMI (f)
01/10/2025	0755/0955	**	DE	S&P Global Manufacturing PMI (f)
01/10/2025	0755/0955		EU	ECB de Guindos Interview & Panel at Politico Summit
01/10/2025	0800/1000	**	EU	S&P Global Manufacturing PMI (f)
01/10/2025	0830/0930	**	GB	S&P Global Manufacturing PMI (Final)
01/10/2025	0900/1100	***	EU	EZ HICP Flash
01/10/2025	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
01/10/2025	0955/1055		GB	BOE Mann In Bloomberg Interview
01/10/2025	1100/0700	**	US	MBA Weekly Applications Index
01/10/2025	-	***	US	Domestic-Made Vehicle Sales
01/10/2025	1215/0815	***	US	ADP Employment Report
01/10/2025	1345/0945	***	US	S&P Global Manufacturing Index (final)
01/10/2025	1400/1000	***	US	ISM Manufacturing Index
01/10/2025	1400/1000	*	US	Construction Spending
01/10/2025	1400/1000	*	US	Construction Spending
01/10/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
01/10/2025	1430/1030	**	US	US DOE Petroleum Supply
01/10/2025	1730/1330		CA	BOC Summary of Deliberations
01/10/2025	1805/1405		CA	BOC Sr Deputy Rogers speaks at competition panel