FED: US TSY 8W BILL AUCTION: HIGH 3.815%(ALLOT 41.82%)

Laura Weiss at Punchbowl News reporting that House Minority Leader Hakeem Jeffries (D-NY) has called a potential one-year extension for enhanced Obamacare subsidies a “non-starter”. Comes after Punchbowl reported that Senator Mike Rounds (R-SD) “has talked about doing a one-year clean extension and then a second year with reforms/phase-outs. But this is by no means a majority view among Senate Republicans, and certainly not House Republicans.”

• Jeffries' comments may cause some discomfort for Senate Minority Leader Chuck Schumer (D-NY), who has declined to outline his specific demands for supplying votes to the Republican funding measure, and is likely searching for an offramp to the ongoing government shutdown.
• Schumer is cognizant that Republicans are highly unlikely to agree to Democrats’ central ask for a permanent extension to the ACA subsidies, with a short-term extension likely the best route to resolving the current standoff. Weiss notes that, “Several House Dems back a bipartisan bill for a 1-year extension. [Rep Tom] Suozzi [D-NY] is co-lead.”
• Senate Majority Leader John Thune (R-SD) is expected to hold a seventh vote on the House-passed November 21 funding bill (and Democrat alternative) at some point this evening. Both bills are expected to fail again. 

Tsy futures are extending highs (TUZ5 104-07.88, +1.38; TUZ5 112-22 +9.5) ahead of the $58B 3Y note auction (91282CPC9) at 1300ET, WI is currently at 3.585%, 10bp cheap to last month's stop. Results will be available shortly after the competitive auctions closes at 1300ET.

• September auction recap: Treasury futures remained weaker but pared losses after $58B 3Y note auction (91282CNY3) stopped through: drawing 3.485% high yield vs. 3.492% WI; 2.73x bid-to-cover vs. 2.53x prior.
• Peripheral stats saw indirect take-up climbed to 74.24% vs. 53.99% prior; direct bidder take-up retreated to 17.39% from 28.13% prior; primary dealer take-up 8.37% vs. 17.88% prior.

• RES 4: 114-10   High Apr 7 (cont.)
• RES 3: 114-00   Round number resistance
• RES 2: 113-12/29 High Sep 18 / High Sep 11 and the bull trigger
• RES 1: 113-00 High Sep 24
• PRICE:‌‌ 112-22 @ 17:12 BST Oct 7
• SUP 1: 112-12+/01 50-day EMA / 50.0% of Jul 15 - Sep 11 upleg  
• SUP 2: 111-26   Low Aug 26
• SUP 3: 111-13+ Low Aug 18 and a key support 
• SUP 4: 111-01+ 76.4% retracement of the Jul 15 - Sep 11 bull phase  

Treasuries continue to trade below last week’s high print of 112-31+ (Oct 3). Attention is on support at the 50-day EMA, at 112-12+. It has recently been pierced but for now remains intact. A clear break of it would undermine a bull theme and signal scope for a deeper retracement towards 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high. A break would be bullish.