Markets Await House Vote on Shutdown

STOCK INDEX FUTURES

The indexes are higher as investors welcomed upbeat earnings and as hopes that the US government shutdown could end soon lifted sentiment. Advanced Micro Devices shares are up nearly 6% before the bell after the company delivered an upbeat revenue outlook at the chipmaker’s analyst day gathering. Nvidia shares are up nearly 2%, paring some of yesterday’s losses amid a rotation away from big tech companies on Tuesday. The House will vote to end the longest government shutdown in US history today. The final ballot is expected to come later this evening and is expected to receive a quick approval from President Trump.

The indexes moved higher on Tuesday apart from the Nasdaq, which was held down by Nvidia, which faced early losses after SoftBank’s sale of its entire $5.8 billion position. The Dow advanced over 550 points to a new record as investors positioned themselves into blue chip and cyclical stocks on expectations that the US government shutdown would end sometime this week. Hopes of an end to the shutdown lifted sentiment across markets, specifically economically sensitive sectors. Large healthcare providers also helped lift the Dow higher, while AI-exposed equities felt pressure.

On the earnings front, Cisco will report after market close, while Circle posted a quarterly profit beat ahead of the bell on stablecoin growth, but its shares fell.

CURRENCY FUTURES

US DOLLAR: The USD index moved higher, recovering some losses from yesterday that were spurred on after ADP published data that estimated employers were cutting 11,250 jobs a week in the four weeks through October 25, leading markets to add bets of a December rate cut out of the Fed. Traditionally, private data releases like this would not move markets too much, but in the absence of official data, they have gotten more of a spotlight. Prospects of the shutdown ending have lifted sentiment across markets but have also presented a situation where past data releases, such as September’s nonfarm payrolls report, could have a volatile effect on the dollar. Markets have been in a flux as to the state of the economy, with recent private releases offering different signals on the economy. Official data, although somewhat dated, could serve to confirm or reject opinions about the economy and shape interest rate expectations for the Fed. Fed Funds futures are currently pricing a 64.4% chance of a December rate cut from the Fed.

EURO: The euro edged lower against a broadly stronger dollar as final CPI figures for Germany were left unchanged at 2.3%, while Italian industrial production figures for September beat out expectations of a 1.5% growth with a reading of 2.8%. The euro gained against the dollar on Tuesday after weak labor data was published out of the US but has since given up most of those gains. Expectations of a firm policy stance from the European Central Bank have offered some underlying support for the euro. On Monday, ECB Vice President Luis de Guindos said in an interview that policy rates are currently appropriate. The ECB is enjoying a period of low unemployment and inflation, making it unlikely that it will move interest rates anytime soon, leaving it exposed to policy signals out of the Fed. Germany’s ZEW economic sentiment indicator for November fell, reflecting concerns that a planned increase in infrastructure spending by the government will not be enough to boost the economy. ZEW President Achim Wambach said the souring mood shows concerns that Germany’s weakening industrial competitiveness and the country’s aging population will hamper spending efforts by the government to revitalize the economy. Looking ahead, the second estimate of eurozone GDP for Q3, flash estimate employment data, and final October CPI figures for France and Spain are due on Friday.

BRITISH POUND: The pound fell against the dollar Wednesday as weak labor data and reports that Prime Minister Keir Starmer would challenge attempts at his leadership pressured the sterling. Weak labor data on Tuesday helped set up conditions for the Bank of England to lower interest rates in December, as unemployment rose to 5.0% in the three months through September from a previous 4.8%, higher than forecasts. Wage growth slowed from its previous reading; wages, including bonuses, rose 4.8%, below expectations of a 5.0% rise and below the previous reading of a 5.0% growth. Unemployment has reached its highest level in over four years, rising sharply after starting 2025 with an unemployment rate of 4.4%. Regarding the Prime Minister, reports were published saying at a briefing by his allies, the prime minister said he would fight any challenge to his leadership despite denials of the event from his cabinet members. Weak labor market conditions, moderating wage growth, and reduced household and business spending and investment pose downside risks to inflation. If these factors persist, inflation could fall below the central bank’s 2% target in the coming years. Markets have priced in a 75% chance of a December cut following the jobs data, up from 57% on Monday. Looking ahead, third-quarter GDP figures on Thursday should give markets further clues to determine the BoE’s policy direction.

JAPANESE YEN: The yen continued its fall against the dollar, hitting a nine-month low, prompting further attention from Japanese officials regarding the currency’s decline. Finance Minister Satsuki Katayama said on Wednesday that it was important for currencies to move in a stable manner, reflecting fundamentals, and that there have recently been one-sided, rapid moves. She also acknowledged that the negative effects of the yen were becoming more pronounced than the positive ones. Katayama also reiterated that the government would continue to monitor movements in the yen “with a strong sense of vigilance against excessive volatility.” Her comments did little to move the yen, suggesting that it will take an actual intervention by Japanese authorities to provide the yen some support. The yen was little changed on Tuesday after Prime Minister Sanae Takaichi called for policymakers to go slow on rate hikes at the Bank of Japan. The central bank is likely to raise rates if there is “no negative news” regarding the global economy or markets, as well as if wages keep growing despite pressure from higher US tariffs.

AUSTRALIAN DOLLAR: The Aussie moved higher against the dollar as Reserve Bank of Australia Deputy Governor Andrew Hauser issued more cautious commentary regarding the central bank’s rate path on Wednesday. Hauser said there was increasing debate about whether the current rate of 3.6% is restrictive enough to keep inflation in check. Hauser said the current judgment that monetary policy is mildly restrictive is central to the expectations that inflation would still slow in the economy. Newly published data showed that home loans in the third quarter rose 4.7%, well above expectations of a 2.5% rise, adding some investors to speculate whether or not the current cash rate is restrictive enough to keep inflation down. This comes as third-quarter inflation data surprised to the upside, causing many to speculate that the RBA’s easing cycle could be over. The central bank noted that inflation is likely to continue to move upwards well into next year. Markets are pricing in under a 70% chance that the RBA will cut rates in May of 2026, while some large banks have called an end to the easing cycle.

INTEREST RATE MARKET FUTURES

Futures are lower across the curve, while bonds rose in the spot market, sending yields lower with the 10-year note falling below 4.10%. Futures rose strongly across the curve on Tuesday as bets of a December rate cut were upped following the release of ADP weekly payroll data, which estimated that employers shed an average of 11,250 jobs per week in the four weeks to October 25. The data does contrast with their nonfarm payrolls report, which showed private employers added 42,000 jobs in October. As the shutdown looks likely to end this week, the ending will allow for the release of US government data, including September’s nonfarm payroll report, which could shape expectations of how the Fed will move in December. Fed members have been increasingly divided over the interest rate path, as the shutdown has pushed hawks to pause rate cuts, while doves continue to press for a reduction in policy. Some officials view the December and January meetings as largely interchangeable, making the year-end feel like less of a deadline, which it should not be.

There will be a plethora of Fed speakers today, who could give markets a better clue on the opinions of how the Fed will move come December. New York President Williams (voter, centrist), Philadelphia President Paulson (nonvoter, hawkish), Governor Waller (voter, dove), Atlanta President Bostic (nonvoter, hawkish), Governor Miran (voter, dove), and Boston President Collins (nonvoter, dovish) all in chronological order. On the supply front, the Treasury will auction $42 billion in 10-year notes today and $25 billion in 30-year bonds on Thursday.

The spread between the two- and 10-year yields fell to 50.90 bps from 52.90 on Monday (bond markets were closed Tuesday), while the 2-year yield, which reflects interest rate expectations, fell to 3.576%.

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