FRANCE: Socialist Leader Says 'No Progress' On Budget After Talks w/PM

Ahead of last year's Autumn Budget, markets underestimated the market-moving potential of Reeves' first fiscal event. While vols indicated a ~30 pip swing in EUR/GBP, price went on to rally near 150 pips in the next two sessions and even with two months until the event, shifts in option vol suggest markets won't be caught offside again.

• The front-end of the GBP vol curve provide a further signal for market concern over the Autumn Budget. The flatter front-end of the curve and the building premium for 2m implied vols shows markets building a risk premium into the event. 2m vols have posted the sharpest gains over the past week as they begin to capture the event on November 26th.
• This effect is particularly evident in EUR/GBP, for which markets continue to favour as a GBP weakness play given the unpredictability of the USD into year-end. This is despite sell-side pushing out expectations of BoE rate cuts this year (see Deutsche Bank, HSBC earlier this month) - an extension of which could work against the consensus view of EURGBP higher.
• We see sustainability of this week's GBP bounce as resting on the fiscal policy mix ahead. The Gilt curve and, in particular, the longer-end has regained a sense of stability after being marked sharply higher at the beginning of September. How valid and long-lasting this proves to be should determine GBP/USD's ability to hold above 1.3525 (50% mid-Sept downleg) and make meaningful headway toward the bull trigger of the July 1st high at 1.3789.

Speaker of the House of Representatives Mike Johnson (R-LA) confirms that the House will "definitely" return next week, but until that point, “there is nothing truly that we can do much on the floor while the lights are almost literally out here.” Claims House Republicans  “would have been here [in Washington, D.C.,] this week, except that we did our work.” Johnson looks to shut down Democrat attempts to force concessions or negotiations from the GOP, saying, “There isn't anything we can do to make this bill any better for them… So there's nothing to negotiate".  Johnson: "The sad thing about it is that every single bit of this was entirely avoidable."

• House minority leader Hakeem Jeffries (D-NY) claims, "We also need a credible negotiating partner. Donald Trump is behaving in the most erratic and unserious fashion. It's time for him to behave like a leader so we can bring the country together, bring Democrats and Republicans together to find a way out of this shutdown situation that Republicans have created."
• Speaking on the Senate floor, minority leader Chuck Schumer (D-NY) claims, "Donald Trump and Republicans have barreled us into a shutdown because they refuse to protect Americans' health care. Republicans tried to bully us, but they can't. They don't have the votes." The next vote, due to take place ~11:00ET, will show how strong Schumer's claim on Democrat votes is.  
• Our US Daily Brief covers the most likely routes out of the gov't shutdown. 

• 10,000 SFRZ5 96.12/96.25/96.37/96.50 put condors, 6.25 net at 1029:44ET