The US federal government is currently experiencing a partial shutdown due to the failure to approve appropriations necessary to commence the new fiscal year. The president has indicated a potential permanent termination of numerous “non-essential” government employees, while also noting that as of yesterday, approximately 150,000 federal workers have opted for the government’s buyout offer. The most extended shutdown in this troubling and recurring political saga lasted 35 days during President Trump’s initial term. There is concern that this situation may extend over a longer period.

The dollar is exhibiting a narrow mix, stabilizing during the late European morning session following an initial sell-off. The dollar exhibits a generally stronger position against emerging market currencies. The strengthening yen, currently the most robust among the G10 currencies, has impacted Japanese equities negatively. In contrast, other markets within the Asia Pacific region are experiencing gains, although the markets in China and Hong Kong remain closed due to the national holiday. Australia stands out as the primary exception today. Europe’s Stoxx 600 has increased for the fourth straight session, equaling the longest streak of gains since May. US index futures are down approximately 0.50%-0.60%, although historical trends indicate that government shutdowns have not generally had a detrimental impact on US equities. European benchmark 10-year yields are predominantly up by 1-2 basis points. The 10-year US Treasury yield remains nearly unchanged, positioned just under 4.15%.

Gold has reached an unprecedented high, slightly exceeding $3895. The closing value last week was approximately $3760. November WTI has continued its pullback. The value is currently under $62. The low recorded last month was approximately $61. Prior to the weekend, it experienced a short-term trade above $66. The Dollar Index, following a three-day pullback, has reached the (38.2%) retracement level of the rally that commenced after the FOMC meeting, currently positioned at 97.70. The 50% retracement level is positioned around 97.40, which has been approached today. The upcoming retracement (61.8%) is positioned just under 97.15. The 97.70-80 range could serve as the immediate ceiling. Given the significant portions of the federal government currently inactive, the value of private sector data becomes increasingly evident. The Mortgage Bankers Association releases the weekly mortgage applications, while the final September manufacturing PMI, manufacturing ISM, and auto sales data are sourced from non-government entities.

The ADP private sector jobs estimate is arguably the most significant report today. It has outperformed economists in predicting the BLS estimate. During the initial eight months of the year, ADP projects that the US private sector experienced an average increase of 80.4k jobs per month. Following the revisions, the BLS estimates the average to be approximately 74k. In 2024, the BLS projected that the US private sector generated an average of 130k jobs per month. ADP’s estimate stood at slightly over 144k. Auto sales are expected to come in gradually today. The median forecast in Bloomberg’s survey indicates a projected annualized pace of 16.2 million. As of August, the average stands at 16.26 million, an increase from 15.52 million during the initial eight months of 2024.