ON DECK FOR WEDNESDAY, OCTOBER 1
KEY POINTS:
- US risk appetite softens as Washington’s ineptitude shuts government
- The US is clearly unserious about CUSMA negotiations
- US nonfarm payrolls are very likely to be suspended
- Today’s US private data is on track…
- …including ADP, ISM-mfrg and vehicle sales
- Eurozone core CPI lands on the soft side of history
Washington’s bipartisan ineptitude has brought us yet another US government shutdown. US equity futures are underperforming with losses of about ½% compared to modest gains in Europe. US Ts are mildly outperforming at the front-end.
THE GOOD AND THE BAD OF THE US SHUTDOWN — SO FAR
Among the consequences to the shutdown is that US government data releases will be suspended and that’s likely to include Friday’s nonfarm payrolls given that neither side is likely to flex in time to strike a deal and reopen. The last time a shutdown was only two days long—which would be today and Thursday—was in 2018 and it’s a rarity to be so short (chart 1). In any event, time is needed to restore functions after a shutdown.
The Trump administration used the shutdown as cover to pull the nomination for BLS head by the thoroughly unqualified EJ Antoni, so I guess we can say that some good can come from shutdowns.
TODAY’S US DATA RELEASES WILL BE MOSTLY INTACT
On tap for today will be US ADP private payrolls (8:15amET, 50k expected), ISM-mfrg (10amET, 49.0 consensus, 48.5 Scotia) and US vehicle sales (e.o.d., 16.2 million consensus, 16.4 Scotia) since they are all released by private sources. Construction spending is released by the Census Bureau and so it’s suspended.
Markets paid little heed to overnight developments. Eurozone CPI offered little surprise given a) individual countries release in advance, and b) core CPI was in line with expectations at 2.3% y/y. Core CPI at 0.1% m/m NSA wasn’t much of a stand out compared to prior seasonally unadjusted figures for months of September.
Japan’s Tankan report was also in line with expectations.
WASHINGTON’S UNSERIOUS ABOUT CUSMA/USMCA NEGOTIATIONS
Canada updates the S&P manufacturing PMI for September this morning (9:30amET). More important are the signals from Washington that it isn’t approaching CUSMA/USMCA trade negotiations with any seriousness. Trump’s additional tariff announcements since last week including another levy on softwood lumber combined with his resurrection of 51st state insults to my nation continue to signal amateurish belligerence and American isolationism.
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