Euro Weakens As French Government Implodes, Macron Faces New Crisis

Technical Analysis

Summary:

Domestic politics dominated global markets today, driving sharp moves in both European and Asian trading sessions. In Europe, political instability in France rattled sentiment, while in Japan, optimism over new leadership sparked a broad equity surge and a dramatic selloff in the Yen. In European, CAC 40 slumped and Euro...

In European, CAC 40 slumped and Euro is sold off broadly, after French Prime Minister Sebastien Lecornu and his newly formed government resigned just hours after unveiling their cabinet lineup. The collapse, just 14 hours after formation, deepened France’s ongoing political turmoil and marked the shortest-lived administration in modern history.

Lecornu cited the impossibility of governing amid threats from both coalition partners and the opposition to topple his government. The fallout was immediate, with opposition parties calling on President Macron to resign or trigger early elections. The episode underscores growing public fatigue and political fragmentation that risk eroding investor confidence in French assets.

Yet, Yen’s dramatic selloff overshadowed Europe’s turmoil. The currency plunged below 150 per dollar for the first time since early August and touched a record low versus Euro, as Japanese equities soared. Traders rushed into risk assets, betting that Prime Minister-designate Sanae Takaichi’s incoming administration will prioritize fiscal expansion and encourage continued BoJ accommodation.

The move rippled across bond markets, sending short-term JGB yields to two-week lows as traders cut back expectations for further tightening. Market pricing for a BoJ hike by year-end fell sharply to near 40% from 68% at the end of last week, as confidence grew that the central bank will stay on hold through October.

Governor Kazuo Ueda’s cautious tone in recent weeks aligns with this view, suggesting that policymakers see little urgency to resume tightening. With political stability and fiscal stimulus prospects improving, investors appear comfortable re-engaging in carry trades, accelerating Yen’s decline.

For now, Dollar leads as the day’s strongest performer, followed by Loonie and Aussie. At the other end, Yen remains the weakest, trailed by Euro and Swiss Franc, while Sterling and Kiwi hover mid-pack in largely risk-driven trade.

In Europe, at the time of writing, FTSE is up 0.15%. DAX is up 0.25%. CAC is down -1.27%. UK 10-year yield is up 0.044 at 4.739. Germany 10-year yield is up 0.021 at 2.723. Earlier in Asia, Nikkei rose 4.75%. Hong Kong HSI fell -0.67%. China Shanghai SSE rose 0.52%. Singapore Strait Times rose 0.22%. Japan 10-year JGB yield rose 0.015 to 1.680.

ECB’s Lane: No pre-commitment on rate path, policy to stay data-driven

ECB Chief Economist Philip Lane reiterated in a speech today that monetary policy will remain data-driven and meeting-by-meeting, with “no pre-commitment to a particular rate path.” He emphasized said the ECB’s policy decisions will hinge not only on the baseline inflation forecast but also on “shifts in the risk distribution”.

The downside inflation risks outlined in September include a stronger Euro, weaker export demand caused by higher global tariffs, and the possibility of rising market volatility linked to trade tensions.

Conversely, Lane highlighted several upside risks that could keep inflation elevated. These include “fragmentation of global supply chains”; surge in defence and infrastructure spending that boosts medium-term demand; and climate-related disruptions.

He elaborated that persistent Euro movements tends to have “multi-year impact” on both inflation and growth, with the size of the impact depending on its source. Appreciation stemming from external weakness or capital flows tends to depress inflation more sharply. On the other hand, changes driven by domestic demand strength or domestic risk premiums carry a smaller inflationary force.

Eurozone Sentix rises to -5.4, mood brightens from exaggerated pessimism

Investor sentiment in the Eurozone improved in October, with Sentix Investor Confidence Index rising from -9.2 to -5.4, topping forecasts of -7.7. Current Situation Index advanced from -18.8 to -16.0, while Expectations climbed sharply from 0.8 to 5.8.

Sentix said the latest data initially looks like the long-awaited economic turning point, with strong improvements seen across Germany, Austria, and Switzerland as well. However, it cautioned that the improvement may not mark a lasting turnaround. Most country-level readings and the Eurozone composite still sit below August’s levels, implying that September’s pessimism was “negatively exaggerated”.

Meanwhile, Sentix also noted that inflation remains a key worry, with its related index barely rising to -17.75. Still, markets appear to expect that the ECB will maintain a steady policy stance, and perhaps even lean slightly supportive, despite mounting fiscal pressures. Sentix warned that such expectations may have a “limited half-life,” as growing debt levels and persistent inflation could restrain the scope for policy easing in the months ahead.

Eurozone retail sales edge up 0.1% mom in August, momentum muted

Eurozone retail sales rose 0.1% mom in August, matching expectations and signaling only a modest pickup in consumer activity. The increase was driven by 0.3% rise in food, drinks, and tobacco sales and 0.4% gain in automotive fuel, partly offset by a -0.1% decline in non-food product demand.

Across the wider European Union, retail sales were flat on the month. Among member states, Lithuania (+1.7%), Cyprus and Malta (+1.5%), and Sweden (+1.1%) posted the strongest gains, while Romania (-4.0%), Poland (-0.8%), and Luxembourg and Portugal (both -0.7%) recorded notable declines.

BoJ report highlights resilient recovery but tariffs cloud wage, capex outlook

The BoJ’s Regional Economic Report released today painted a mixed picture of recovery, with assessments for eight regions left unchanged and one downgraded. Most local economies were described as “recovering moderately” or “picking up” .

Businesses in some areas reported that they may scale back wage hikes if tariffs begin to bite into profits, a risk that could slow Japan’s nascent wage-led inflation. Still, several regions pointed to ongoing wage pressures from tight labor markets and rising living costs, suggesting that the underlying trend in income growth remains intact for now.

The survey also revealed continued commitment to capital investment, particularly in automation and IT-related projects, as firms seek efficiency gains. However, a number of companies plan to delay or reassess spending amid uncertainty over global demand and the evolving impact of tariffs.

WTI oil recovers ahead of 60 after OPEC+ opts for measured output hike

Oil prices recovered modestly in today after the OPEC+ alliance confirmed a small production increase of 137,000 barrels per day for November, matching the rise announced for October. The restrained decision eased fears of a larger supply boost.

Following Sunday’s ministerial meeting, OPEC+ said the move was made “in view of a steady global economic outlook and current healthy market fundamentals.” The statement emphasized low global inventories as evidence that supply-demand conditions remain tight enough to justify a gradual output approach.

The limited hike contrasts with speculation that major producers—particularly Saudi Arabia and Russia—might push for a faster restoration of supply to reclaim market share. Instead, the decision reflects caution amid volatile demand signals and lingering uncertainty over global growth.

Technically, for WTI oil, some consolidations would be seen above 60.62 temporary low for the near term. But risk will stay on the downside as long as 63.49 minor resistance holds.

Break of 60.62 will resume the whole decline from 78.87. Next target is 100% projection of 71.34 to 61.90 from 66.70 at 57.26. However, firm break of 63.49 will bring stronger rebound back to 66.70 resistance instead.

EUR/GBP Mid-Day Outlook

Daily Pivots: (S1) 0.8704; (P) 0.8717; (R1) 0.8727;

EUR/GBP’s fall from 0.8750 resumed by breaking through 0.8688 and intraday bias is back on the downside for 0.8631 support. Decisive break there will indicate near term reversal and turn outlook bearish. On the upside, though, above 0.8728 will bring retest of 0.8750 first. Firm break there will resume the larger rally towards 0.8867 fibonacci level.

In the bigger picture, rise from 0.8221 medium term bottom is seen as a corrective move. While further rally cannot be ruled out, upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Considering bearish divergence condition in D MACD, firm break of 0.8631 support will be the first sign that this corrective bounce has completed. Sustained trading below 55 W EMA (now at 0.8539) will confirm, and bring retest of 0.8221 low.

Source: ACTIONFOREX

Risk Warnings and Disclaimers

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Adam

Commodity

Market Overview

Gold and silver started the week on a strong note, supported by growing expectations that the Federal Reserve will cut interest rates sooner than anticipated.

The rally, which pushed gold to fresh all-time highs, reflects mounting investor unease over the U.S. government shutdown and persistent signs of economic strain in major markets.

Fed Rate-Cut Bets Lift Precious Metals

Market data indicate that traders are now pricing in a 95% probability of a 25-basis-point rate cut in October, with another move likely in December, according to the CME’s FedWatch Tool. Lower yields tend to enhance the appeal of non-interest-bearing assets such as gold and silver.

“The shift in rate expectations is the key driver behind the metals’ strength,” said a senior commodities strategist at JP Morgan.

Meanwhile, the U.S. government shutdown has raised fresh concerns about fiscal stability and potential delays in the release of economic data. Investors are turning to precious metals as a hedge against policy uncertainty and a possible slowdown in consumer and business spending.

Broader Macro Drivers Strengthen Safe-Haven Flows

Outside the U.S., policy shifts and geopolitical tensions have also buoyed safe-haven demand. Japan’s election of fiscal dove Sanae Takaichi as the ruling party’s new leader signals a likely delay in the Bank of Japan’s rate normalization, weakening the yen and adding support to gold.

In Europe, slowing manufacturing data and persistent inflation have reinforced investor appetite for assets viewed as reliable stores of value.

Silver, often seen as both an industrial and monetary metal, is benefiting from dual support—rising safe-haven demand and expectations for stronger industrial use in solar technology and electronics.

Outlook: Consolidation Before Next Move

While short-term technical indicators suggest both metals could pause after recent gains, analysts see continued upside in the months ahead. With the Fed expected to turn more dovish and global uncertainty intensifying, gold and silver remain firmly positioned as preferred assets for capital preservation.

As one market analyst noted, “Unless there’s a dramatic policy shift or a surge in economic optimism, the path of least resistance for gold and silver remains higher.”

Short-Term Forecast

Gold is expected to trade between $3,898–$3,977, with momentum favoring an upside break above $3,945. Silver remains bullish above $48.00, targeting $49.35–$50.00 amid strong demand for safe-haven and industrial purposes.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is consolidating near $3,932 after encountering resistance at $3,945, which is close to the upper trendline of its rising channel. The price remains well above the 50-day EMA at $3,828 and the 200-day EMA at $3,656, reflecting a steady bullish bias.

If buyers manage to push above $3,945, the following upside targets could appear near $3,977 and $4,010, aligning with Fibonacci extensions. On the downside, immediate support is seen at $3,898 and $3,868.

The RSI at 69 shows strong momentum but signals caution as gold nears overbought levels. Overall, as long as gold holds above $3,868, the broader trend remains positive, with pullbacks likely to attract fresh buying interest.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is consolidating near $48.60 after testing resistance around $48.70, staying within its rising channel. The 50-day EMA at $46.39 continues to provide solid support, while the 200-day EMA at $42.91 underpins the broader uptrend. A breakout above $48.70 could pave the way for $49.35 and $50.02, signaling renewed bullish momentum.

However, a brief pullback toward $48.00 or $47.74 wouldn’t be surprising before another push higher. The RSI near 69 suggests strong momentum but hints at near-term exhaustion.

Overall, as long as silver holds above $48.00, the technical structure favors buyers, with dips offering potential re-entry points in anticipation of a move toward the psychological $50.00 level.

Source: fxempire

Risk Warnings and Disclaimers

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Samantha Luan

Stocks

Forex

Economic

Several European companies have frozen hiring or cut jobs this year, citing difficult economic conditions exacerbated by U.S. tariffs.

Here are some of the companies that announced layoffs:

CAR AND CAR PARTS MAKERS

* RENAULT: The French carmaker confirmed it is planning cost cuts but said it has no figures to report yet, on Saturday after a newsletter reported it would cut 3,000 jobs by year-end in support services at its headquarters in the Paris suburb of Boulogne-Billancourt and other locations worldwide.

* BOSCH: The German home appliance manufacturer will cut 13,000 jobs as it battles sluggish demand, high costs and pressure from rivals, it said on September 25.

* DAIMLER TRUCK: The truckmaker confirmed media reports on August 1 that it would cut 2,000 jobs across its plants in the U.S. and Mexico, on top of the previously announced 5,000 job cuts in Germany.

* STELLANTIS: The automaker expanded its voluntary redundancy scheme for Italy, bringing the total planned workforce reduction to almost 2,500 in 2025, it said on June 10.

* VOLKSWAGEN: The company’s CFO said on April 30 it had cut headcount in Germany by around 7,000 since starting cost savings in late 2023.

* VOLVO CARS: The Swedish carmaker will cut 3,000 mostly white-collar jobs as part of a wider restructuring, it said on May 26.

BANKS

* COMMERZBANK: The German bank said on May 14 it had agreed with the works council on terms to cut around 3,900 jobs by 2028.

* LLOYDS: The British bank will consider the dismissal of around half of 3,000 staff to cut costs, a source familiar with the matter told Reuters on September 4.

ENERGY

* OMV: The Austrian oil and gas company plans to cut 2,000 positions, or a twelfth of its global workforce, the Kurier newspaper reported on September 4.

INDUSTRIALS AND ENGINEERING

* STMICROELECTRONICS: The French-Italian chipmaker’s CEO said on June 4 he expected 5,000 staff to leave the company in the next three years, including 2,800 job cuts announced in 2025.

CONSUMER GOODS

* BURBERRY: The British luxury brand will shed 1,700 jobs or around a fifth of its global workforce to cut costs, it said on May 14.

* LVMH: The Financial Times reported on May 1, citing an internal video, that the luxury group’s wine and spirits unit Moet Hennessy would cut its workforce by about 1,200 employees.

OTHERS

*JUST EAT TAKEAWAY: The food delivery company’s German unit Lieferando plans to cut 2,000 jobs from end-2025 to optimise the model of its delivery service, the company said on July 17.

* LUFTHANSA: The German airline group said on September 28 it would cut 4,000 administrative jobs by 2030.

* NOVO NORDISK: The Danish pharmaceutical company will cut 9,000 jobs globally, the company said on September 10.

Source: Investing

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Risk Warnings and Disclaimers

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Adam

Commodity

Market Overview

Crude oil prices advanced over 1% to around $61.7 per barrel as traders balanced OPEC+’s limited 137,000 bpd production increase for November against heightened geopolitical uncertainty. The modest supply adjustment—unchanged from October—signaled the group’s cautious stance amid fragile global demand.

Despite easing earlier output cuts totaling 3.85 million bpd, OPEC+ maintained flexibility to pause or reverse changes if market conditions shift. Meanwhile, natural gas prices held firm as investors weighed potential disruptions to energy flows against stable inventories and seasonal demand.

Overall, geopolitical tensions have reinforced oil’s risk premium, tempering the impact of new supply additions.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural gas is holding steady near $3.41 after bouncing from the 200-day EMA at $3.29, signaling short-term stability. The 50-day EMA at $3.37 now acts as immediate support, while resistance stands at $3.42 and $3.49.

A break above these levels could open the way toward $3.58 and $3.60, aligning with the upper boundary of the ascending channel. The RSI sits near 53, suggesting balanced momentum with mild bullish bias.

If buyers sustain control above $3.37, upward continuation looks likely, but a close below $3.33 could shift sentiment back toward $3.24. Overall, price action remains constructive as long as natural gas holds above its moving averages.

WTI Oil Price Forecast

WTI Price Chart

WTI crude oil is attempting to break above its descending channel after finding solid support near $60.41. The price has rebounded toward $61.87, testing the 50-day EMA at $61.82, while the 200-day EMA sits higher at $62.94, creating short-term resistance.

A sustained close above $62.57 could signal a shift in momentum toward $63.48 and $64.19. However, failure to clear the EMAs may invite renewed selling pressure back toward $61.55 and $60.41. RSI has recovered from oversold territory, now hovering around 59, suggesting mild bullish momentum but not yet confirming a strong reversal.

Brent Oil Price Forecast

Brent Price Chart

Brent crude oil is testing a potential breakout above its descending channel after rebounding from support at $64.02. The price now trades near $65.51, closely aligned with the 50-day EMA at $65.53. A sustained move above this level could open the way toward $66.60 and $67.48, where the 200-day EMA and prior highs converge.

On the downside, $64.81 and $64.02 remain key supports to watch if momentum weakens. RSI has climbed to around 59, reflecting improving buying interest but not yet signaling overbought conditions.

Source: fxempire

Risk Warnings and Disclaimers

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Michelle

Stocks

Economic

The S&P 500 is back to its glorious self this year, overcoming some challenges a few months ago to rise 14% year to date. It's resilient, like the U.S. economy, driven by the largest of its 500 components.

There are a number of ways to invest in the S&P 500, and one of the most popular methods today is investing in an exchange-traded fund (ETF) that tracks it. The largest one is the Vanguard S&P 500 ETF (VOO 0.01%), which has $1.4 trillion in assets, but there are several others.

You might think it's a great time to buy in as the market rises, but it's not that simple.

The best time

The S&P 500 has been a wealth-building machine for decades. It gains on average more than 10% annually; Compounded over time, especially with consistent additions, that turns into a lot of money for investors.

As the market rises, investors can benefit from increasing stock prices. And when you invest in an ETF that tracks the S&P 500, it takes all of the guesswork out of investing.

It also gives you exposure to the best companies on the market today, and since it's a weighted index, it's heavily skewed toward artificial intelligence (AI). The largest companies in the U.S. by market cap are the largest companies in the index, and today, these are all AI companies. The Vanguard ETF's top holdings are Nvidia, Microsoft, Apple, and Amazon, and they collectively account for 25% of the total portfolio.

These stocks have incredible long-term tailwinds. Investing in an S&P 500 ETF gives you access to these opportunities while minimizing the risk of investing in only one company.

The worst time

That being said, the best time to buy is on the dip, not at the top. The S&P 500 is breaking records all the time these days, and it's near its most expensive valuation. The average S&P price-to-earnings (P/E) ratio is almost 38, a five-year high. The cyclically adjusted P/E ratio, or CAPE ratio, which adjusts for inflation, is also near highs -- outside of a spike in 2021 right before the market crashed.

S&P 500 Shiller CAPE Ratio data by YCharts.

What does that mean for investors? Nothing concrete, but the nature of the market is that there are always going to be dips, corrections, and even crashes on the way to the top. The market has always recovered and gone on to bigger and better, but as the S&P 500 becomes more and more expensive, the potential for some kind of correction looks likely.

The verdict

No one knows when there might be a dip, or worse. You can't time the market, and even though it's heading higher today, it could keep that up for a long time. It would be a shame to miss out on the growth because of fear of a correction. Keep in mind the potential for some near-term rebalancing as the market becomes even more expensive.

I would caution anyone who might need their funds in the near future to invest in safe, perhaps dividend-yielding stocks and keep some distance from anything that looks overpriced, including an S&P 500 ETF. But if you're in it for the long term, and you have the ability to weather downturns, it's always a good time to invest in the market, and an S&P 500 ETF is an excellent way to do that.

Source: The Motley Fool

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Economic

OPENING CALL

U.S. stock futures pointed to a higher open Monday as the federal government shutdown approached its second week.

The impasse continuing means expected U.S. economic data this week will probably be delayed. Investors, therefore, will likely be closely watching the release of the Federal Reserve's minutes expected Wednesday.

The University of Michigan's preliminary consumer survey for October is due Friday.

Meanwhile, investors appeared to looked past the latest twist in France's political crisis , which roiled bourses across the Atlantic. The move weighed on the euro versus the dollar.

Stocks to Watch

Tesla shares rose 2%. The company last week set a quarterly sales record.

Palantir Technologies shares rose 3%, recovering some losses from Friday. The company has pushed back against claims of security flaws in a communications platform designed for the U.S. military.

Amazon shares edged higher by about 1% ahead of the company's second Prime sales event of the year.

Sony Group rose 3% after the conclusion of the leadership election of Japan's ruling party.

Constellation Brands rose about half a percent ahead of the company reporting its earnings.

Coinbase Global rose 2% as Bitcoin reached a new record price over the weekend.

Watch For:

The U.S. Employment Trends Index for September was due.

Today's Top Headlines/Must Reads

- Why Insurers Are Taking Your Money to the Cayman Islands

- Tariffs Are Making Copper Harder to Get. Recycling It Could be a Quick Fix

- Behind Chicago's Tense Week: Protester Clashes and Tactical Gear Downtown

MARKET WRAPS

Forex:

The dollar

rose against a basket of currencies and increased to a 10-day high as the Japanese yen weakened after Sanae Takaichi won the leadership election of Japan's ruling party.

"Takaichi is seen as pro stimulus and likely to pursue easier fiscal and monetary policies," Jefferies said, continuing to expect, however, that the Bank of Japan will raise interest rates again in early 2026.

The dollar is resilient but still faces downside risks , according to ING, as weekend news suggested very little progress toward ending the U.S. government shutdown.

The euro fell to an 11-day low against the dollar and 10-year French bond yields reach a 10-day high after the resignation of France's Prime Minister.

Bonds:

Treasury yields rose, particularly long-dated yields, as the U.S. government shutdown drags on into a second week. This means official U.S. data, including key monthly nonfarm payrolls numbers due last week, won't be released.

Focus this week will be on Wednesday's Federal Reserve minutes for clues on how fast interest rates are likely to fall.

Energy:

Oil prices

rose after OPEC+ agreed to a more modest-than-expected increase in monthly output for November.

"Once again, the actual volumes coming on the market will be substantially smaller than the headline number, as only Saudi Arabia has sizable spare capacity at this stage," RBC Capital Markets said.

Metals:

Gold prices

surged to a fresh record, topping the $3,900 mark on expectations that the Federal Reserve will cut interest rates further this year

According to the CME FedWatch Tool, markets now price in 95.7% chance of a cut in October and 84.1% possibility of another reduction in December, lending support to non-yielding gold.

Silver prices rose and the metal could emerge as a quiet outperformer

as gold surges toward the $4,000 mark, according to Phillip Nova.

"Historically, silver tends to amplify gold's moves during bullish phases, and that pattern seems to be playing out again."

Gold prices may need a "structural break"

to stay above the $4,000 level, Phillip Nova said separately as the metal looked set to reach the $4,000/oz mark. It added that gold ought to extend gains as a global economic slowdown, fiscal strain and policy fatigue fuel safe-haven demand.

"Investors should brace for heightened volatility as markets flirt with record territory."

TODAY'S TOP HEADLINES

Rio Tinto to Roll Out New Tech in Hunt For More Metals, More Cheaply

Rio Tinto has signed a five-year deal with Canada's Ideon Technologies to roll out technology that harnesses subatomic particles created by supernova explosions to help find and map deposits rich in minerals faster, cheaper and more accurately.

Under the multimillion-dollar agreement, the world's second-biggest miner by market value will initially adopt Ideon's technology at six sites around the world, said Gary Agnew, Ideon's co-founder and chief executive. That includes at a big U.S. copper mine and within its mammoth iron-ore business in Australia, Rio Tinto's profit engine, he said.

Elon Musk Gambles Billions in Memphis to Catch Up on AI

MEMPHIS-For Elon Musk, ground zero of the artificial intelligence arms race is a 114-acre tract of grass and swamp on the state line of Tennessee and Mississippi.

This once-sleepy plot of land, filled with groves of water-rooted tupelo trees at its western edge, is now part of a growing empire Musk is accumulating in the Deep South, just a few miles from Elvis Presley's homestead at Graceland.

Asahi Group Partially Restarts Beer Production, Shipments in Japan

Asahi Group has partially restarted beer production and shipments in Japan, after its operations were disrupted by a ransomware attack last week.

The Japanese maker of beer and other beverages resumed production at six domestic plants on Thursday and shipments began thereafter, according to an Asahi spokeswoman Monday.

Startups Are Eating Big Food's Lunch

As American shoppers buy less packaged foods, Big Food has leaned on a familiar excuse: It's the economy, stupid. True, inflation has forced some families to trade down to cheaper store brands, and stagnant wages have squeezed household budgets.

That explanation misses a crucial shift: middle- and high-income Americans are still splurging, just not on legacy labels. Their dollars are flowing to niche names with more cultural cachet, from fancy new protein bars to chewier candy.

Japan Stocks Surge After Takaichi Win

The Japanese stock benchmark posted its biggest percentage gain in half a year and the long-term government bond yield hit a 17-year high after fiscal expansionist Sanae Takaichi won the leadership election of Japan's ruling party, raising hopes for more aggressive government spending to support the economy.

Among other priorities, Takaichi favors government spending to strengthen Japan's manufacturing economy and food security, as well as investing in nuclear energy, artificial intelligence and other high-tech sectors.

Government Shutdown Drags On With Little Pressure to Break Impasse

WASHINGTON-The federal government shutdown is dragging toward its second week in a partisan staring contest, lacking for now the political or practical consequences that would create enough pressure to break the impasse.

All signs point to another week of posturing and repeat Senate votes that fail to get the 60 votes needed to reopen the government. Congressional leaders in both parties insist that they have the upper hand and that the other side bears the blame for the shutdown.

How China Secretly Pays Iran for Oil and Avoids U.S. Sanctions

U.S. sanctions make it nearly impossible to pay Iran for its oil. China has figured out how to do it anyway, in an arrangement that has largely been secret.

The hidden funding conduit has deepened economic ties between the two U.S. rivals in defiance of Washington's efforts to isolate Iran.

Tariffs Threatened to Be a Third Inflation Shock for Europe, But Have Had Little Impact

For Europe's central bankers, President Trump's tariff blitz has been a bit of a nonevent.

Since the tariffs were introduced in early April, the European Central Bank has lowered its key rate twice and to the point where policymakers judge it is no longer restraining economic activity, but gone no further.

Trump Praises Putin's Offer to Extend Nuclear Treaty

President Trump on Sunday praised a Kremlin proposal to continue the limits on long-range nuclear weapons for one more year, which would preserve a main element of the last major arms-control agreement between the U.S. and Russia.

"Sounds like a good idea to me," Trump said Sunday when asked about the Russian offer.

Judge Blocks Trump from Deploying to Oregon Any National Guard Under His Command

A federal judge in Oregon temporarily blocked the deployment of any National Guard under the Trump administration's control inside Oregon in an emergency hearing Sunday night.

Judge Karin Immergut had said on Saturday that the Trump administration had overstepped its authority and couldn't deploy Oregon's National Guard to Portland. She said the same reasoning held for Sunday's order, which came after the administration sent to Oregon 200 California National Guard troops that were under its command. The Trump administration also authorized the mobilization of up to 400 members of the Texas National Guard for federal protection missions in cities including Portland and Chicago.

Japan's Ruling Party, Following Global Trend, Veers Right

TOKYO-Sanae Takaichi's victory in a leadership election in Japan represents another notable win for a resurgent global conservatism that is drawing strength from voter anger over issues such as immigration and stubborn inflation.

From the U.S., where President Trump's protectionist America First agenda won him re-election in November, to Italy, France, Germany and the U.K., right-leaning parties with a populist vibe have turfed out centrist incumbents or are riding high in the polls as voters seek new answers on the economy and society after decades of market-led liberalism.

Trump to Send Witkoff, Kushner to Middle East to Seal Hostage Release Deal

Source: morningstar

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Risk Warnings and Disclaimers

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Glendon

Political

French Prime Minister Sébastien Lecornu abruptly resigned on Monday morning, just three weeks after his appointment, preempting what appeared to be an inevitable ousting. Lecornu was expected to unveil his policy agenda before the National Assembly on Tuesday, but both the Socialist Party and the National Rally had warned that without a drastic policy shift, they would trigger a no-confidence vote. French bonds and stocks slumped on the emerging political crisis.

President Emmanuel Macron's office issued a one-sentence statement, confirming that Macron had accepted the resignation of Lecornu. This comes amid turmoil over the composition of his cabinet, a coalition of centrists and conservatives.

Lecornu told reporters his resignation was primarily due to the inability to compromise across the political spectrum: "I was ready to compromise, but each political party wanted the other political party to adopt its entire program."

He told reporters in the courtyard of the Matignon Palace, the prime minister's headquarters, that he had spent weeks trying to forge a viable path forward with politicians, unions, and social partners from both political sides, but had achieved no breakthroughs.

Jean Garrigues, one of France's top political historians, told local media that Macron will likely be forced to dissolve the National Assembly once again.

"A fresh dissolution might lead to an increase of seats for the National Rally in the lower house, but it's unlikely that they'll get an outright majority," Garrigues stated in the interview.

UBS analyst Simon Penn provided clients with the three possible pathways for Macron to move forward:

He can try another technocrat type
He can call a general election
He can quit and call a full presidential election

The Bloomberg Economics team provided readers with the visualization.

Penn warned that France is entering a dangerous political environment:

French PM Lecornu has resigned less than a month after he was appointed (Sept. 9). On face value Lecornu looks to have quit before he was forced out. He was due to present his policy proposals to the National Assembly on Tuesday, but leaders of the Socialist and National Rally had already warned that unless there was a total change in direction they would call a vote of no confidence immediately after Lecornu stopped speaking.

Furthermore, the press and public reaction to the appointment of a near unchanged cabinet from the Bayrou administration has been somewhat scornful. President Macron has attempted three times to try for the same policies and failed three times. As the famous quote from Jean-Claude Juncker goes: "We all know what to do, but we don't know how to get re-elected once we have done it."

The latest failure puts French politics into very dangerous territory – more so than the markets seem to be pricing. The lessons of the UK in the 1970s are worth bearing in mind – a government in the early 70s attempting what today would be described as austerity; failing and being replaced by socialist policy, that today might be described as populist. It took mass strikes, power blackouts and an IMF bailout before UK voters were willing to accept the necessary medicine that came in the form of the 1979 Thatcher government.

Meanwhile, across other Wall Street desks this morning, analysts are desperately trying to make sense of the political turmoil and what comes next. Barclays analysts expect parliamentary elections, adding that a Macron resignation is "unlikely."

Political turmoil sent the CAC 40, the benchmark French stock market index, down 1.5% by early afternoon trading in Paris. French bonds also dropped.

More market commentary from UBS analyst Justinus Steinhors: "The Euro Stoxx 50 falls 80bp, retreating from highs. Yields jump on political turmoil: in France, PM Lecornu resigns after less than four weeks in office."

Alexandre Baradez, chief market analyst at IG in Paris, warned, "What's new this morning is the beginning of contagion from France to the rest of the European banking sector. The drop of the sector is 100% linked to France. Given that banks have outperformed the markets so much, all the elements are aligned for some profit-taking on these stocks."

Allianz CIO and Chief Economist Ludovic Subran told Bloomberg that it's not the time to panic.

Lecornu's resignation makes him the shortest-serving prime minister in the history of France's Fifth Republic, founded by Charles de Gaulle in 1958.

Source: Zero Hedge

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