US govt shutdown pushes Gold to record high and weighs on US Dollar and indices

EU Mid-Market Update: US govt shutdown pushes gold to record high and weighs on US dollar and indices; EU inflation slightly re-accelerates; Tesla sales in Europe finally bounce.

Notes/observations

- US Govt partial shutdown began due to a failed funding bill (1st in 7 years), with essential services continuing. Approximately 2-4 million federal workers, including military personnel, are furloughed without pay until the shutdown ends, though backpay is expected later. Airport operations face delays and longer TSA lines, but air traffic control persists despite staff being unpaid. National parks are closed to visitors. Social Security payments proceed, but new claims, passports, and visas are halted. The Postal Service, being self-funded, remains unaffected. The BLS September jobs report, due Oct 3rd, is delayed by approximately two weeks due to halted data collection. Other economic releases, such as the CPI, weekly jobless claims are also postponed.

- Taiwan publicly rejected a US push for a "50-50" split of chip production on American soil, with Vice Premier Cheng Li-chiun saying Taipei never agreed to such terms and "will not agree" to them.

- Collection of European manufacturing PMIs for Sept were mixed against consensus but tilted towards lowest reading in a couple of months. UK was in line; EU, Germany and France were revised higher; Italy and Spain missed estimates.

- During its earnings call, Nike struck a cautious tone with no FY26 guidance, raising its annual tariff impact estimate to about $1.5B from $1.0B as gross margin fell 320 bps to 42.2% on higher product costs and mix, while organic traffic slowed and Greater China and Nike Direct remain key improvement areas even as North America leads the recovery; Management says the new "sport offense" realignment of ~8,000 teammates is delivering early wins.

- Notable EU Corp News: Greggs climbs after reaffirming full-year earnings guidance despite inflation pressure and market doubts, CEO said in conf they will raises prices slightly.

- Asia closed mixed with NZX50 higher by +1.1%. EU indices -0.4% to +1.4%. US futures -0.6% to -0.7%. Gold +0.9%, DXY -0.2%; Commodity: Brent -0.4%, WTI -0.4%; Crypto: BTC +2.9%, ETH +3.6%.

Asia

- India Central Bank (RBI) leaves Repurchase Rate unchanged at 5.50%; As expected.

- Taiwan Government: Rejects US request to make 50% of its chips locally [follows recent WSJ article].

- Japan's Koizumi leads LDP leadership race (no % update) - Asia press citing poll.

- Japan Q3 Tankan Large Manufacturing Index: 14 v 14e; Large Manufacturing Outlook: 12 v 13e (large manufacturers index highest since Dec 2024).

- South Korea and US agree to avoid manipulating FX rates to gain unfair competitive advantage; [No mention of FX swap] - US Treasury statement.

- South Korea President Lee: To increase defense budget for 2026 by 8.2% to KRW66.3T.

Europe

- Poland to extend controls on borders with Germany and Lithuania until April 4th 2026 (prior extension ends Oct 4th 2025).

- Swedbank appoints Timo Hirvonen as Chief Economist Finland.

- France Sept New Car Registrations +1.0% y/y.

Americas

- US government shutdown begins.

- Pres Trump to sign EO aimed at using AI to boost childhood cancer research.

- White House said to pull Brian Quintenz to lead CFTC - Politico

- White House said to withdraw E.J. Antoni's nomination as BLS head; No explanation provided - press.

- Pres Trump: Reiterates that layoffs will happen with a Gov shutdown.

- US Transportation Dept: FAA will furlough 11K employees in light of a Gov shutdown.

Global conflict/tensions

- Former Russian Pres Medvedev: US Pres Trump did not send submarines to Russian shores.

- Houthis claim to have attacked Dutch cargo ship Minervagracht with a cruise missile.

Trade

- EU Commission reportedly plans to hike import tariffs on foreign steel to ~50%; To cut foreign steel quotas by nearly half in new safeguards package - press.

- South Africa, US expected to finalize trade deal this month - press.

- USTR Greer: Expects Trump to sign trade deals during trip to Asia.

- Japan Chief Trade Negotiator Akazawa: We secured a win-win trade deal with the US - press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.36% at 560.20, FTSE +0.63% at 9,409.10, DAX -0.04% at 23,870.23, CAC-40 -0.03% at 7,893.77, IBEX-35 -0.43% at 15,414.41, FTSE MIB -0.35% at 42,577.00, SMI +1.32% at 12,253.80, S&P 500 Futures -0.63%].

Market Focal Points/Key Themes: European indices opened mixed with a downward bias and failed to gain direction through the early part of the session; Cyprus and Israel closed for holiday; impact of US government shutdown keeping a lid on risk appetite; better performing sectors include health care and utilities; among underperforming sectors are technology and real estate; earnings expected in the upcoming US session include Conagra Brands.

Equities

- Consumer discretionary: Greggs [GRG.UK] +7.0% (trading update), Carlsberg [CARLB.DK] +2.5% (CMD), Adidas [ADS.DE] +0.5% (Nike results).

- Consumer staples: Glanbia [GLB.IE] -1.0% (holder sells stake).

- Industrials: Taylor Wimpey [TW.UK] +1.0% (trading update; UK house prices data).

- Technology: ASML [ASML.NL] -1.0% (Taiwan Government rejects US request to make 50% of its chips locally).

Speakers

-ECB’s De Guindos (Spain): Fiscal policy challenges could give rise to increase in yields.

-Thailand Fin Min Pichai: Asked Central Bank to ensure THB (baht) is not volatile.

- BOE's Mann (hawkish dissenter): Have to balance inflation and activity; Rates on hold is appropriate for current period; Policy is relatively loose.

-Fed's Logan (non-voter in 2025; voter in 2026): It's not clear how much further the Fed can cuts rates before hitting neutral; There may be relatively little room to make additional rate cuts without inadvertently moving to an inappropriately accommodative stance; Will be cautious about further cuts.

-Fed's Logan (non-voter in 2025; voter in 2026): Optimism is coming back up in surveys - Q&A.

-Australia PM Albanese: China's ban on BHP ore cargoes is disappointing.

Economic data

-(EU) Euro Zone Sept CPI Estimate Y/Y: 2.2% V 2.2%E; CPI Core Y/Y: 2.3% V 2.3%E (highest annual pace since Apr); CPI M/M: 0.1% v 0.1%e.

-(ZA) South Africa Sept Manufacturing PMI: 52.2 v 49.5 prior.

-(UK) Sept Final Manufacturing PMI: 46.2 v 46.2e (confirms lowest since Apr).

-(DE) Germany Sept Final Manufacturing PMI: 49.5 v 48.5e (lowest since July).

-(FR) France Sept Final Manufacturing PMI: 48.2 v 48.1e.

-(IT) Italy Sept Manufacturing PMI: 49.0 v 49.9e (lowest since Jun and below all estimates).

-(TH) Thailand Sept Business Sentiment Index: 48.0 v 47.5 prior.

-(CZ) Czech Sept Manufacturing PMI: 49.2 v 49.0e.

-(CH) Swiss Sept PMI Manufacturing: 46.3 v 48.0e; PMI Services: 51.3 v 43.9 prior.

-(ES) Spain Sept Manufacturing PMI: 51.5 v 53.8e (lowest since June and below all estimates).

-(AT) Austria Sept Preliminary CPI M/M: -0.2 v +0.2% prior; Y/Y: 4.0% v 4.1% prior.

-(TR) Turkey Sept Manufacturing PMI: 46.7 v 47.3 prior.

-(HU) Hungary Sept Manufacturing PMI: 51.5 v 49.2e.

-(PL) Poland Sept Manufacturing PMI: 48.0 v 47.0e.

-(SE) Sweden Sept PMI Manufacturing: 55.6 v 55.3 prior (14th month of expansion).

-(CH) Swiss Aug Real Retail Sales Y/Y: -0.2% v +0.9% prior.

-(UK) Sept Nationwide House Price Index M/M: +0.5% v +0.2%e; Y/Y: 2.2% v 1.8%e.

-(RU) Russia Sept Manufacturing PMI: 48.2 v 48.7 prior.

-(NL) Netherlands Sept Manufacturing PMI: 53.7 v 51.9 prior.

-(IN) India Sept Final PMI Manufacturing: 57.7 v 58.5 prelim.

-(NL) Netherlands Aug Retail Sales Y/Y: 3.6% v 4.3% prior.

-(NL) Netherlands Sept Preliminary CPI Y/Y: 3.3 v 2.8% prior; CPI EU Harmonized M/M: -0.3% v 0.3% prior; Y/Y: 3.0% v 2.4% prior.

-(ID) Indonesia Sept CPI M/M: 0.2% v 0.1%e; Y/Y: 2.7% v 2.5%e; CPI Core Y/Y: 2.2% v 2.2%e.

-(ID) Indonesia Aug Trade Balance: $5.5B v $4.1Be.

-(IE) Ireland Sept PMI Manufacturing: 51.8 v 51.6 prior (9th month of expansion).

Fixed income issuance

-Sweden sells total SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month bills.

-UK DMO sells £1.6B in 1.125% Sept 2035 inflation-linked Gilts (UKTi); Real Yield: 1.673% v 1.728% prior; bid-to-cover: 3.09x v 3.10x prior.

-Denmark sells total DKK880M in 2027 and 2035 DGB Bonds.

-Vietnam Finance Ministry sells total VND5.07T vs. VND11.0T indicated in 5-year and 10-year, 15-year and 30-year bonds.

Looking ahead

- 05:30 (DE) Germany to sell €4.5B in 10-year Bunds.

- 05:30 (GR) Greece Debt Agency (PDMA) to sell Bills.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (PT) Portugal Aug Retail Sales M/M: No est v -1.1% prior; Y/Y: No est v 3.5% prior.

- 06:00 (PT) Portugal Aug Industrial Production M/M: No est v -1.5% prior; Y/Y: No est v 2.3% prior.

- 07:00 (US) MBA Mortgage Applications w/e Sept 26th: No est v 0.6% prior.

- 07:30 (CL) Chile Aug Economic Activity Index (Monthly GDP) M/M: No est v 1.0% prior; Y/Y: No est v 1.8% prior.

- 08:00 (CZ) Czech Sept YTD Budget Balance (CZK): No est v -165.4B prior.

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

- 08:15 (US) Sept ADP Employment Change: No est v +54K prior.

- 09:00 (BR) Brazil Sept Manufacturing PMI: No est v 47.7 prior.

- 09:45 (US) Sept Final S&P Manufacturing PMI: No est v 52.0 prelim.

- 10:00 (US) Sept ISM Manufacturing: No est v 48.7 prior.

- 10:00 (US) Aug Construction Spending M/M: No est v -0.1% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (CO) Colombia Sept PMI Manufacturing: No est v 55.3 prior.

- 11:00 (MX) Mexico Sept Manufacturing PMI: No est v 50.2 prior.

- 11:00 (PE) Peru Sept CPI M/M: No est v -0.3% prior; Y/Y: No est v 1.1% prior.

- 11:00 (MX) Mexico Aug Total Remittances: No est v $5.3B prior.

- 11:00 (MX) Mexico Central Bank Economist Survey.

- 11:30 (US) Treasury to sell 17-week bills.

- 12:00 (IT) Italy Sept New Car Registrations Y/Y: No est v -2.7% prior.

- 12:00 (RU) Russia Q2 Final GDP Y/Y: No est v 1.1% prelim.

- 12:00 (RU) Russia Aug Unemployment Rate: No est v 2.2% prior; July Real Wages Y/Y: No est v 5.1% prior.

- 12:00 (RU) Russia Aug Real Retail Sales Y/Y: No est v 2.0% prior.

- 13:00 (US) Treasury to sell 10-Year Notes.

- 14:00 (MX) Mexico Sept IMEF Manufacturing Index: No est v 45.6 prior; Non-Manufacturing Index: No est v 49.9 prior.

- 19:00 (KR) South Korea Aug Current Account Balance: No est v $10.8B prior; Balance of Goods (BOP): No est v $10.3B prior.

- 19:00 (KR) South Korea Sept CPI M/M: No est v -0.1% prior; Y/Y: No est v 1.7% prior; CPI (ex-food/energy) Y/Y: No est v 1.3% prior.

- 19:50 (JP) Japan Sept Monetary Base Y/Y: No est v -4.1% prior.

- 21:30 (AU) Australia RBA Financial Stability Review.

- 21:30 (AU) Australia Aug Trade Balance (A$): No est v 7.3B prior; Exports M/M: No est v 3.3% prior; Imports M/M: No est v -1.3% prior.

- 21:30 (AU) Australia Aug Household Spending M/M: No est v 0.5% prior; Y/Y: No est v 5.1% prior.

- 23:35 (JP) Japan to Sell 10-Year Bonds; Avg Yield: % v 1.6120% prior; bid-to-cover: x v 3.92x prior (Sept 1st 2025).

**Early Q4 Update of TradeTheNews.com's Risk Radar: