US govt partial shutdown looms

EU mid-market update: US govt partial shutdown looms as funding expires midnight Sept 30th with potentially delayed jobs report; Tensions in eastern Europe increase.

Notes/observations

- Euro rose after Spain won double-upgrade by Fitch and Moody's and Spanish Sept CPI accelerates to 2.9% from 2.7%, reinforcing expectations ECB will hold rates; Eurozone inflation data due this week.

- Japanese Yen gained on prospects of BOJ rate hike after comments on rising upside risks from typically dovish member Noguchi.

- Gold hits another record and US dollar falls as US govt shutdown looms, deadline end of tomorrow, Sept 30th.

- TTN FAQ on US govt shutdown: Republicans controlling both chambers are pushing a short-term CR to roughly Nov 20-21, but Senate Democrats blocked the GOP stopgap over an ACA-subsidy extension, so Trump meets leaders later today to avert a funding lapse at 11:59 pm ET Tuesday, Sept 30.

- Economically, a broad shutdown typically shaves ~0.1-0.2% from annualized quarterly GDP per week with most losses later recouped (2018-19 saw an $11B hit with $3B permanent), key data including the Oct 3 jobs report, CPI, PPI, JOLTS, GDP, PCE, retail sales, and housing starts would be delayed while the Fed and Treasury continue operating; ADP should still be released this week.

- Notable EU Corp News: Lufthansa confirms 4,000 job cuts and sets ambitious mid-term targets of 8-10% EBIT margin by 2028-30.

- Political note: Contested eastern European country Moldova held a snap election, with a strong victory for pro-EU party against the pro-Russian party. Latest UK polls put Reform heavily ahead of Labour and Conservatives as immigration debate remains hot; US, Israel said to be "very close" to an agreement on Pres Trump's plan to end war in Gaza ahead of today's Netanyahu visit to White House.

- Asia closed mixed with Hang Seng outperforming +1.9%. EU indices +0.0-0.5%. US futures +0.4-0.7%. Gold +1.6%, DXY -0.2%; Commodity: Brent -1.1%, WTI -1.3%; Crypto: BTC +2.4%, ETH +3.3%.

Asia

- China said to be planning to support growth of non-ferrous metals sector plus 5% growth in petrochemical sector.

- China launches new “K” visa program from Oct 1st; Aims to attract “the world’s best and brightest” in science and technology – NYT.

- China holds Politburo meeting; Studied draft of next five-year plan; China to hold CPC plenary session on Oct 20-23rd.

- BOJ Board member Noguchi (dove): Need to raise rates is increasing more than ever.

- Japan BOJ's "hawkish split" said to lower bar for potential October rate hike - opinion piece from US financial press, citing various sources.

- Japan to convene an extraordinary Diet session in mid-October - Yomiuri; Koizumi leads the LDP leadership race at 33%; Takaichi 31% - ANN Poll.

- Japan's Sanae Takaichi leads the LDP leadership race at 34%; Koizumi 25% - Nikkei Poll.

- Indonesia Pres Prabowo said to order "large operation" against illegal tin mines in Indonesia.

- Fire at South Korea govt data center affects govt websites - Korean press.

- Moody's affirms India sovereign rating at Baa3 [lowest level of investment grade]; Outlook stable.

Europe

- Moldova election results see pro-EU party ‘PAS’ win majority with ~50% of votes vs pro-Russia party with ~24-25%.

- UK Chancellor Reeves when asked about raising VAT: The manifesto commitment to not raise VAT stands; The IMF has said we should move to 1 fiscal event per year and I agree with that.

- UK reportedly plans to offer to pay more for drugs to placate Pres Trump and avert recent pharma tariffs announcement - press.

- UK Former MI5 head: Those who think the UK is already at war with Russia "may be right".

- Fitch raises Spain sovereign rating to A; Moody's raises Spain sovereign rating to A3; Outlook revised to Stable.

- SNB and ECB explore interlinking of instant payment systems - press.

- Swiss National Bank (SNB) adjusts remuneration of sight deposits; Again lowers threshold factor from 18 to 16.5.

Americas

- SEC Chair Atkins: Fast-tracking bid to allow semi-annual reporting: Market must decide how often companies report [inline with comments made by US President Trump on Sept 15th] - FT.

- Trump is planning to meet with top congressional leaders on Mon [Sept 29th] at the White House as government shutdown looms - NBC.

- Trump plans to meet with the Bicameral bipartisan leadership on Mon at 3 PM ET, to sign executive order on Mon at 10:15 AM ET; plans to hold press conference with Israel Netanyahu on Mon at 1:15 PM ET.

- Trump: We have a real chance for greatness in the Middle East. Aall are on board for something special.

- Trump: At the request of Secretary of Homeland Security, Kristi Noem, I am directing Secretary of War, Pete Hegseth, to provide all necessary Troops to protect War ravaged Portland.

- Trump: Corrupt and Totally Trump Deranged Lisa Monaco... It is my opinion that Microsoft should immediately terminate the employment of Lisa Monaco - post on Truth Social.

- US and South Korea are planning to hold working group talks on the US visa systems on Sept 30th.

Global conflict/tensions

- US, Israel said to be "very close" to an agreement on Pres Trump's plan to end war in Gaza - Axios.

- IDF: Identifies missile launch from Yemen towards Israel - financial press.

- Former Russian Pres Medvedev: Russia does not want a war with EU; Europe cannot afford a war with us.

- Sweden PM Kristersson: Swedish Armed Forces to support Denmark with military anti-drone capabilities in connection with this week’s summits in Copenhagen - X post.

Energy

- OPEC+ plans another oil production hike in Nov; cites sources - financial press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.32% at 556.28, FTSE +0.44% at 9,325.85, DAX +0.31% at 23,805.76, CAC-40 +0.19% at 7,885.33, IBEX-35 -0.01% at 15,346.50, FTSE MIB -0.09% at 42,608.00, SMI +0.45% at 11,974.67, S&P 500 Futures +0.51%].

Market focal points/key themes: European indices opened higher across the board, but moderated gains through the early part of the session; markets reacting to trade front, as pharma tariffs announced last week will not apply to countries that have trade deals; among sectors leading the way higher are health care and materials; lagging sectors include financials and energy; oil & gas subsector underperforming amid reports OPEC+ plans another rate hike in November; TotalEnergies divests half if its stake in its US solar portfolio to KKR; Kloeckner to sell some of its US distribution business to Russel metal; Landis+Gyr divests its EMEA unit to Aurelius; earnings expected in the upcoming US session include Carnival.

Equities

- Consumer discretionary: Asos [ASC.UK] +1.5% (Inditex plans to launch its ultra-low-cost chain Lefties in the UK), Lufthansa [LHA.DE] +2.0% (job cuts; targets), Ubisoft [UBI.FR] +3.0% (EA may go private).

- Healthcare: GSK [GSK.UK] +3.5% (CEO designate), Astrazeneca [AZN.UK] +1.5% (trial data; listing update), Genmab [GMAB.DK] -3.0% (confirms to acquire Merus).

- Industrials: Stellantis [STLA.NL] +0.5% (new CFO; affirms outlook).

Speakers

- Fed's Hammack (non-voter for 2025): We have pressure in inflation, particularly in services; Labor market looks mostly in balance - CNBC.

- BOJ Board member Noguchi (dove): Need to raise rates is increasing more than ever; Need to check price trend as much as possible - speech at Sapporo Chamber of Commerce and Industry.

- ECB's Cipollone (Italy): The digital euro keeps you in control of your money, your choices and your future in an increasingly fragmented world.

- ECB's Makhlouf (Ireland): ECB near bottom of the rate-cutting cycle; Ireland must adopt and stick to fiscal rules - FT.

- Singapore Dep PM / Trade Min Gan: Pharmaceutical companies in Singapore need clarity if they qualify for new pharma tariffs by US.

- South Korea Fin Min Koo: US and South Korea have completed currency negotiations.

- Thailand PM Anutin: Thai govt to quickly address economic, security issues.

- Spain Econ Min: Expect Mercosur agreement to be ratified by end of 2025.

- UK Chancellor Reeves: Economic discipline has crucial importance; Reiterates commitment to fiscal rules.

Economic data

- (EU) Euro Zone Sept Economic Confidence: 95.5 v 95.3e; Industrial Confidence: -10.3 v -10.5e; Services Confidence: 3.6 v 3.9e; Consumer Confidence (final): -14.9 v -14.9 prelim.

- (PT) Portugal Sept Consumer Confidence: -16.5 v -16.2 prior; Economic Climate Indicator: 2.9 v 2.9 prior.

- (UK) Aug M4 Money Supply M/M: 0.4% v 0.1% prior; Y/Y: 3.4% v 2.9% prior; M4 (ex-IOFCs) 3-month annualized: 4.1% v 3.3% prior.

- (UK) Aug Mortgage Approvals: 64.7K v 64.6Ke.

- (UK) Aug Net Consumer Credit: £1.7B v £1.5Be; Net Lending: £4.3B v £4.8Be.

- (ES) Spain Sept Preliminary CPI M/M: -0.4% V 0.0% prior; Y/Y: 2.9% v 3.1%e; CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 3.0% v 3.0%e; CPI Core Y/Y: 2.3% v 2.5%e.

- (ES) Spain Aug Adjusted Retail Sales Y/Y: 4.5% v 4.4%e; Retail Sales (unadj) Y/Y: 3.0% v 4.3% prior.

- (TR) Turkey Sept Economic Confidence: 98.0 v 97.9 prior.

- (FI) Finland July Final Trade Balance: €1.3B v €1.3B prelim.

- (NO) Norway Aug Credit Indicator Growth Y/Y: 4.0% v 4.1% prior.

- (NO) Norway Aug Retail Sales M/M: 0.2% v 0.6% prior.

- (DK) Denmark Aug Unemployment Rate: 2.6% v 2.6% prior; Gross Unemployment Rate: 2.9% v 2.9% prior.

- (FI) Finland Sept Consumer Confidence: -6.6 v -7.6 prior; Business Confidence: +3 v -1 prior.

- (JP) Japan July Final Leading Index CI: 106.1 v 105.9 prelim; Coincident Index: 114.1 v 113.3 prelim.

- (NL) Netherlands Sept Producer Confidence: -1.6 v -3.3 prior.

Fixed income issuance

- (PH) Philippines sells total PHP22.0B vs. PHP22.0B indicated in 3-month, 6-month and 12-month bills.

Looking ahead

- 05:30 (BE) Belgium Sept CPI M/M: No est v -0.0% prior; Y/Y: No est v 1.9% prior.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel to sell combined ILS2.75B in 2028, 2029, 2031, 2032, 20035 and 2052 bonds.

- 06:00 (RO) Romania to sell RON400M in 8.25% Sept 2032 Bonds.

- 06:00 (IE) Ireland Aug Retail Sales Volume M/M: No est v 0.8% prior; Y/Y: No est v 4.2% prior.

- 06:30 (IN) India Aug Industrial Production Y/Y: 5.4%e v 3.5% prior.

- 07:00 (BR) Brazil Sept FGV Inflation IGPM M/M: 0.3%e v 0.4% prior; Y/Y: 2.7%e v 3.0% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:30 (BR) Brazil Aug Total Outstanding Loans (BRL): No est v 6.716T prior; Outstanding Loans M/M: No est v 0.4% prior; Personal Loan Default Rate: No est v 6.5% prior.

- 07:35 (EU) ECB's Vujcic (Croatia) in Brussels.

- 08:00 (MX) Mexico Aug Unemployment Rate: No est v 2.8% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.3-7.9B in 3-month, 6-month and 12-month bills.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.50%.

- 10:00 (US) Aug Pending Home Sales M/M: +0.1%e v -0.4% prior; Y/Y: No est v 0.3% prior.

- 10:30 (US) Sept Dallas Fed Manufacturing Activity: No est v -1.8 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 15:00 (AR) Argentina Q2 Current Account: No est v -$5.2B prior.

- 16:00 (US) Weekly Crop Progress Report.

- 19:00 (KR) South Korea Aug Industrial Production M/M: No est v 0.3% prior; Y/Y: No est v 5.0% prior.

- 19:00 (KR) South Korea Aug Cyclical Leading Index Change: No est v 0.5 prior.

- 19:01 (UK) Sept Lloyds Business Barometer: No est v 54 prior.

- 19:01 (UK) Sept BRC Shop Price Index Y/Y: No est v 0.9% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 84.6 prior.

- 19:50 (JP) Japan Aug Preliminary Industrial Production M/M: -0.7%e v -1.2% prior; Y/Y: 0.0%e v -0.4% prior.

- 19:50 (JP) Japan Aug Retail Sales M/M: +1.2%e v -1.6% prior; Y/Y: 1.1%e v 0.3% prior (revised from 0.4%); Dept. Store, Supermarket Sales Y/Y: No est v 0.4% prior.

- 20:00 (NZ) New Zealand Sept ANZ Business Confidence: No est v 49.7 prior; Activity Outlook: No est v 38.7 prior.

- 21:00 (PH) Philippines Aug Trade Balance: No est v -$4.0B prior; Exports Y/Y: No est v 17.3% prior; Imports Y/Y: No est v 2.3% prior.

- 21:30 (AU) Australia Aug Building Approvals M/M: +2.8%e v -8.2% prior; Private Sector Houses M/M: No est v 1.1% prior.

- 21:30 (CN) China Sept Manufacturing PMI (Govt Official): 49.6e v 49.4 prior; Non-Manufacturing PMI: No est v 50.3 prior; Composite PMI: No est v 50.5 prior.

- 21:30 (AU) Australia Aug Private Sector Credit M/M: No est v 0.7% prior; Y/Y: No est v 7.2% prior.

- 21:45 (CN) China Sept RatingDog PMI Manufacturing: No est v 50.5 prior; PMI Services: No est v 53 prior; PMI Composite: No est v 51.9 prior.

- 22:00 (SG) Singapore Aug M2 Money Supply Y/Y: No est v 9.2% prior; M1 Money Supply Y/Y: No est v 11.8% prior.

- 23:00 (TH) Thailand Central Bank (BOT) to sell THB65B in 3-month bills.

- 23:35 (JP) Japan to sell 2-Year JGB Bonds.