US: Yields, USD Edge Higher as WaPo Report on Move to End Shutdown
Washington Post report that "A handful of moderate Senate Democrats are considering voting to end what has now become the country's longest government shutdown, splitting the caucus as some colleagues to their left urge them to hold out. [...] A bipartisan group of senators is working to craft a deal in which Congress would pass three full-year appropriations bills to fund some agencies, along with a short-term bill that would reopen the rest of the government, according to four people familiar with the talks"
- US 10y yields inch to new daily highs on the back of that Washington Post story - testing 4.09%. In tandem, USDJPY edges higher, briefly printing 153.84. We note that much of that plan had emerged late yesterday - and while the move to end the shutdown is clearly gaining traction, it is still well short of any firm resolution in the very near-term.
- Core global FI markets tick lower, with TY, Bund and gilt futures to fresh session lows, but remain comfortably within week-to-date ranges given uncertainty whether a deal will ultimately be struck.
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US TSY FUTURES: Mix Of Short Setting & Long cover seen On Friday
OI data points to a mix of net short setting (FV, UXY & US) and long cover (TU, TY & WN) as Tsy futures ticked lower on Friday.
- The net short setting in US futures provided the only move of any real note and was enough to bias the curve-wide net positioning adjustment in that direction.
| 03-Oct-25 | 02-Oct-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,576,545 | 4,581,926 | -5,381 | -211,960 |
FV | 6,690,084 | 6,685,014 | +5,070 | +221,710 |
TY | 5,477,591 | 5,480,087 | -2,496 | -168,411 |
UXY | 2,464,473 | 2,463,578 | +895 | +80,678 |
US | 1,872,448 | 1,859,040 | +13,408 | +1,890,760 |
WN | 2,055,049 | 2,058,891 | -3,842 | -709,704 |
|
| Total | +7,654 | +1,103,074 |
EUROZONE DATA: Retails Sales Extend Recent Tepid Trend In August
Eurozone (real) retail sales came in in line with expectations in August at 0.1% M/M following a weak July (-0.4%, revised from -0.5%). Highlighting a weak recent trend, the August print has left little net movement in sales volumes since April.
- Sectoral trends flipped from July: Increases were apparent for food / drinks / tobacco (0.3% M/M vs -1.1% prior) and car fuel (0.4% vs -1.6% prior) categories. Non-food products except automotive fuel sales meanwhile fell 0.1% M/M (vs 0.3% prior).
- Across countries, the "big 4" were mixed this time with Germany at -0.2% M/M (-0.5% prior), France at 0.5% (-0.9% prior), Spain at 0.4% (-0.4% prior), and Italy at -0.3% (-0.2% prior). In none of these countries a clear directional trend developed over the last couple of months.
- The overall Y/Y print was 1.0% in August, below consensus of 1.3%, after 2.1% in July (revised from 2.2%). Across categories, non-food products (excl. fuel) continue to be the strongest on a yearly comparison, followed by the auto fuel category but Y/Y measures have deteriorated across the board for the second consecutive time in August.
- Eurozone consumer confidence decreased most recently (by 0.8 points) and remains subdued, at -15.5 in the September release. "Consumers were less pessimistic about their household's future financial situation and upgraded their intentions to make major purchases over the next 12 months, while their views on their household's past financial situation and their expectations for the overall economic situation in their country remained largely unchanged.", the European Commission comment (leaving open where the overall index decline came from).
OUTLOOK: Price Signal Summary - S&P E-Minis Bull Cycle Remains Intact
- In the equity space, a bull cycle in S&P E-Minis remains intact. The contract traded to a fresh cycle high last week to confirm a resumption of the uptrend and maintain the positive price sequence of higher highs and higher lows. Sights are on 6812.29, a 2.382 projection of the Aug 20 - 28 - Sep 2 price swing. Initial support to watch is at the 20-day EMA, at 6684.22. It has recently been pierced, a clear break of it would signal scope for a deeper pullback.
- EUROSTOXX 50 futures maintain a bullish theme. Last week’s gains resulted in a breach of key resistance at 5525.00, the Aug 22 high. The break confirms a resumption of the uptrend. The impulsive climb opens the 5700.00 handle next, with potential for a test of 5727.18 further out, a 1.236 projection of the Aug 1 - 22 - Sep 2 price swing. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Initial firm support is 5525.00, the Aug 22 high.
