White House Says Federal Worker Layoffs Begin Amid Shutdown

Economic

Political

Summary:

Friday’s job eliminations mark the latest effort by Trump to make the shutdown as painful as possible for Democratic constituencies while deeming his own priorities as essential services.

The White House says it is making good on threats to fire thousands of federal workers amid a government shutdown now in its 10th day, with job cuts at agencies including the departments of Health and Human Services, Homeland Security and Commerce.

“The RIFs have begun,” White House Budget Director Russell Vought posted on social media Friday, referring to reductions in force, the federal government’s term for layoffs.

Thousands of people have been laid off as a result of the shutdown, according to a senior White House official. The scope of the cuts was not immediately clear.

Labor unions representing hundreds of thousands of federal workers asked a judge Friday to immediately halt the mass firings. The emergency request to a federal judge in San Francisco seeks to bar the Office of Management and Budget from ordering officials to carry out the firings and block agencies from issuing layoff notices before the judge holds a hearing on Oct. 16.

HHS employees were among those affected by the layoffs, according to HHS spokesperson Andrew Nixon, while spokesperson Tricia McLaughlin said DHS workers were included. Commerce Department workers were also terminated, according to a US official.

The firings mark the first large-scale layoffs of federal employees during a funding lapse in modern history, going beyond the furloughs that have characterized past temporary shutdowns. The move ups the stakes in a multi-week standoff with Democrats over federal funding and health-care subsidies.

Senate Majority Leader John Thune sought to lay blame for the layoffs at Democrats’ feet.

“To their credit, the White House has now for 10 days laid off doing anything in hopes that enough Senate Democrats would come to their senses and do the right thing and fund the government,” Thune said Friday before the layoffs were announced.

Democratic Senator Patty Murray of Washington cast the job cuts as being out of step with the priorities of voters — and even some of the president and Vought’s allies on Capitol Hill.

“Once again, when President Trump and his self-described ‘grim reaper’ decide to ignore the pleas of congressional Republicans and conduct more mass firings, they are choosing to inflict more pain on the American people,” Murray said in a Friday statement.

The job cuts come hours ahead of a court deadline for the Justice Department to file a report detailing any plans to terminate workers during the shutdown. A hearing is scheduled for Oct. 16 on a request by federal worker unions for an order blocking layoffs.

More than two-thirds of civilian federal employees have remained on the job this shutdown — either as essential workers or in roles that receive longer-term funding — with the rest being sent home. The vast majority of federal employees go without pay.

Federal Downsizing

The latest move is reminiscent of Elon Musk’s efforts through the Department of Government Efficiency earlier this year to slash the federal workforce. The Tesla Inc. chief executive officer gutted the federal workforce through voluntary resignations, retirements, and targeted firings of probationary employees.

About 150,000 of the voluntary departures took effect with the start of the new fiscal year on Oct. 1, but some other staffing reductions have been tied up by court challenges.

Friday’s job eliminations mark the latest effort by Trump to make the shutdown as painful as possible for Democratic constituencies while deeming his own priorities as essential services.

Hours into the shutdown earlier this month, the Trump administration paused $18 billion in infrastructure spending in New York City, $2 billion for Chicago transit and $8 billion for green energy projects in 16 states — all of which voted for Democrat Kamala Harris in last year’s presidential election.

The White House has previously admitted that the DOGE job cuts presented political risks. Trump has mused that Musk’s efforts weren’t politically popular and Commerce Secretary Howard Lutnick said DOGE got its attempt to cut federal spending “backward” by leading with mass terminations, rather than looking to create efficiencies.

But the tactic gives Trump a chance to talk tough to his MAGA base. He has often derided the federal workforce as being stacked with bureaucrats who he says oppose his agenda. But it also leaves less room for Republicans to blame the most enduring consequences of a shutdown on Democrats.

On Capitol Hill, bipartisan talks have continued in fits and starts, with a handful of Democrats crossing party lines to support short-term spending bills. But party leaders remain divided over whether to tie an extension of Affordable Care Act subsidies to reopening the government.

Democrats warned that Vought’s actions will make an agreement to end the shutdown even more difficult as they further erode trust. Reversing the cuts and layoffs will themselves become Democratic demands as part of any deal to stop the shutdown.

Source: Bloomberg

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Manuel

Cryptocurrency

Stocks

Strategy’s market net asset value (mNAV) compared to Bitcoin (BTC) its holdings dropped to 1.174 on Oct. 10, the lowest level in almost two years.

The company’s shares fell 3% to $307.95 amid broader weakness in the crypto market, translating to a market cap of $88.4 billion. Strategy is the 121st-largest US public company, holding 640,031 BTC, worth approximately $75.4 billion.

As of press time, Bitcoin traded at $117,824, down by over 3% in the past 24 hours. The narrowing gap between market capitalization and underlying asset value poses a threat to the sustainability of corporate Bitcoin treasury strategies.

Falling mNAV leads to a feedback loop

Geoffrey Kendrick, head of digital assets research at Standard Chartered, warned that maintaining a mNAV above 1.0 remains essential for digital asset treasury (DAT) companies to expand their holdings. Values below that threshold signal weaker balance sheets and potential consolidation.

Additionally, Strategy and similar treasury companies face mounting pressure from PIPE financing structures that funded their Bitcoin purchases.

According to a Sept. 25 CryptoQuant report, Bitcoin treasury stocks consistently gravitate toward discounted PIPE issuance prices, resulting in losses of up to 55% for current investors.

The pattern creates a feedback loop. PIPE investors purchased at substantial discounts and hold registration rights, allowing public sales after filing resale statements.

Once lockup periods expire, selling pressure weighs on share prices, compressing premiums to underlying Bitcoin holdings.

Why does it matter?

Consequently, companies trading below 1.0 mNAV face severe constraints. Without premium valuations, treasury companies cannot issue equity at attractive prices to fund additional Bitcoin purchases.

The model depends on maintaining premiums that justify dilutive capital raises, with CryptoQuant noting that only sustained Bitcoin rallies could prevent further stock declines.

As a result, Strategy’s falling premium to levels not seen since Feb. 8, 2024, raises an alert. Seeing the company that started the DAT movement with a compressing mNAV is not a bullish signal for the market.

Although not sufficient to put the company in any sticky situation, extended periods below 1.0 mNAV could trigger death spirals where companies cannot raise capital to service debt or fund operations.

This spiral would force asset sales, pressuring Bitcoin prices, and leading to further corrections.

Source: Cryptoslate

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Owen Li

Economic

Stocks

Wall Street's calm was shattered on Friday after U.S. President Donald Trump rattled markets with the threat of a "massive increase" in tariffs on Chinese imports over a rare earths dispute, sending indexes tumbling and volatility spiking.

In a Truth Social post, Trump also called off his planned meeting with China's President Xi Jinping in South Korea. He said Beijing had been sending letters to countries to tell them that it planned to impose export controls on every element of production related to rare earths.

The sharp selloff in indexes disrupted a relatively quiet week for markets, which had been gaining on hopes of dovish monetary policy, and underscored how sensitive investor sentiment remains to trade uncertainty.

A fresh flare-up in U.S.-China trade tensions could weigh on global growth and cloud the outlook for corporate America, which is already navigating higher costs.

"He's caught the market off guard again and he's thrown more question marks into it," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

At 12:11 p.m. ET, the Dow Jones Industrial Averagefell 554.58 points, or 1.20%, to 45,803.84, the S&P 500lost 105.34 points, or 1.56%, to 6,629.77 and the Nasdaq Compositelost 471.76 points, or 2.05%, to 22,552.86.

All three indexes were on track for weekly declines if current levels hold.

"We finally got through the worst of the tariff concerns, and now we find ourselves once again faced with another round of them," said Steve Sosnick, chief market analyst at Interactive Brokers.

The S&P 500 techsector lost 2%. Financialsfell 1.4% on the S&P 500, while energystocks declined 1.8%.

The Philadelphia SE Semiconductor indexdropped 3.7%, among the worst hit after Trump's announcement.

China produces over 90% of the world's processed rare earths and rare earth magnets, which are critical for products ranging from electric vehicles and aircraft engines to military radars.

Renewed tensions between the two largest global economies could trigger major supply chain disruptions, particularly for companies in technology, EV and defense space.

The CBOE volatility index, investors' fear gauge, spiked to the highest in a month.

U.S.-listed shares of Chinese companies dropped sharply, with heavyweights Alibaba Group Holding, JD.com Incand PDD Holdingsdown between 3.9% and 6.7%.

Qualcommfell 4.5% after China's market regulator said the country had launched an antitrust investigation into the semiconductor manufacturer over its acquisition of Israel's Autotalks.

Separately, a preliminary reading of the University of Michigan's consumer sentiment index for October came in at 55, compared with the estimate of 54.2, according to economists polled by Reuters.

Declining issues outnumbered advancers by a 2.73-to-1 ratio on the NYSE and by a 3.36-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 93 new highs and 82 new lows.

Source: TradingView

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James Whitman

Economic

Cryptocurrency

Citigroup Inc. is joining a group of nine European lenders developing a regulated euro-based stablecoin, the latest move by a large financial institution into the fast-growing area of digital money.

The New York-based bank intends to take part in the consortium as part of its broader efforts on blockchain and digital assets, a spokesperson confirmed on Friday.

The group — which includes ING Groep NV, UniCredit SpA and DekaBank — revealed late last month that they had formed a new company based in the Netherlands to manage the project and which aims to issue the token in the second half of 2026.

The move would make Citigroup the only known non-European bank to join the effort. Other firms part of the project include Banca Sella, KBC Group NV, Danske Bank AS, SEB AB, CaixaBank SA and Raiffeisen Bank International AG. The goal of the project is to “to provide a real European alternative to the US-dominated stablecoin market, contributing to Europe’s strategic autonomy in payments,” a statement by the banks said at the time.

Stablecoins — tokens designed to maintain a constant value against a traditional asset like the dollar — have surged in popularity over the past year as banks and other large financial firms see them as viable alternative payments methods. They could be used for more than $50 trillion in annual payments by 2030, Bloomberg Intelligence estimates. That would see the fiat-pegged tokens capture as much as 25% of consumer transactions, up from less than 1% now.

New stablecoins rules in Europe and the US have provided more regulatory clarity needed for large firms to enter the space, spurring a flurry of recent activity.

A group of banks including Citigroup, Goldman Sachs Group Inc and Bank of America Corp said earlier on Friday that they were joining forces to explore a stablecoin-like form of digital money. Earlier this week Citi’s venture arm made an investment in stablecoin infrastructure company BVNK. In July, Citigroup Chief Executive Officer Jane Fraser said on an earnings conference call that the bank was considering issuing its own stablecoin.

While the total amount of stablecoins in circulation has reached around $300 billion, the market is overwhelmingly dominated by dollar-denominated coins. Only about $477 million euro-tied coins are in circulation, according to crypto data tracker DefiLlama.

Big banks — including Citigroup — have also been developing other forms of blockchain-based payment services such as tokenized deposits. These are transferable digital coins that represent a deposit claim against a commercial bank. Proponents of the novel form of money suggest they could make transactions less costly and available 24/7.

Source: Bloomberg

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Adam

Commodity

The gold market has been unable to hold its recent gains above $4,000 an ounce, and while the market could be susceptible to profit-taking in the short term, it’s difficult to ignore the momentum that has driven prices to record highs, according to the latest commentary from the World Gold Council (WGC).

The WGC published its monthly report on gold-backed exchange-traded funds, which showed record inflows during the third quarter, with September accounting for more than 60% of the activity during the period.

According to the report, 145.6 tonnes of gold flowed into global ETFs last month, valued at more than $17.3 billion. For the quarter, ETF holdings increased by 221.7 tonnes, valued at nearly $26 billion.

The analysts noted that the sharp rise in gold prices pushed the value of assets under management to record highs; meanwhile, physical holdings were less than 2% below the record levels seen in November 2020.

In the regional breakdown, North American investors continued to lead the charge in the gold market. North American-listed gold ETFs saw inflows of 88.4 tonnes valued at $10.5 billion last month. The analysts said that investment demand throughout the month and the quarter was driven by similar factors.

“Dollar weakness persisted and now faces further pressure from the government shutdown. However, the dollar looks oversold technically and positionally, risking a short squeeze,” the analysts said. “Expectations of lower yields ahead, as the Fed delivered a 25bps cut during the month, also helped.”

European-listed funds saw their fifth consecutive month of inflows, with September marking the region’s third-strongest month ever for gold ETF activity. European holdings increased by 37.3 tonnes last month, valued at $4.4 billion.

“The ECB and BoE kept rates unchanged in the month, while inflation rose, lowering real rates and increasing policy uncertainty. Flows reflected both protection and momentum as investors sought a purchasing-power hedge and leaned into the breakout. Meanwhile, continued stagflation fears in the UK could be another key factor attracting gold ETF inflows,” the analysts said.

Asian-listed ETFs saw their holdings increase by 17.5 tonnes last month, valued at $2.1 billion.

“We believe the strong gold price performance in local currencies was a key factor. However, India led the region with inflows of US$902mn. We attribute this to favourable local currency dynamics and increased investment demand as investors look for safe havens amid weaker domestic equities and persistent geopolitical and trade risk,” the analysts said.

In a separate report, the WGC warned that robust investment demand — which drove prices to record highs last month — has pushed the market into significantly overbought territory. However, they added that while downside risks are growing, they still see strong fundamentals supporting prices through year-end.

Along with gold’s stretched bullish momentum, the WGC noted that the U.S. dollar is significantly oversold. However, one saving grace for gold could be a volatile equity market, as October is traditionally a turbulent month.

“While our analysis is only indicative, it leaves us somewhat confident that gold will hold its ground and perhaps see further uplift should equities experience a correction, given the plethora of supportive factors elsewhere,” the analysts said. “Perhaps only a major liquidity squeeze could upend both gold and equities, but there are no clear signs of fractures in credit or banking sectors…yet.”

Source: kitco

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Adam

Forex

The price has broken above the 100-day exponential moving average (EMA100, dark purple), which in March—amid trade-related uncertainty—initiated the strongest downward trend in the world’s leading currency since 2022. Pressure on the USDIDX began to stabilize after the index hit a 3-year low in June, but a sustained trend reversal seems unlikely given the direction of U.S. monetary policy, which could still turn more dovish.

Dollar at its strongest in two months 💲📈 Lack of U.S. data is suppressing the bearish trend_1

USDIDX broke above EMA100.

The swap market currently assigns a 75% probability to two interest rate cuts in the U.S. before the end of 2025. The Fed’s tone remains cautious, emphasizing a dual risk (potential increases in both inflation and unemployment), while the end of Jerome Powell’s term is approaching. Even if the Fed has ended the easing pause that began in December 2024, a truly dovish shift has yet to occur.

Dollar at its strongest in two months 💲📈 Lack of U.S. data is suppressing the bearish trend_2

Pricing of further U.S. interest rate cuts in the futures market.

Paradoxically, the dollar is strengthening despite the lack of major economic data releases (for instance, today’s weekly jobless claims were not published). This has shifted investors’ attention toward the “rest of the world,” particularly to politically chaotic France. It’s no surprise, then, that the euro has become one of the biggest losers in the dollar’s new bullish narrative. Over the course of the week, the common currency has weakened by about 1.5% against the USD, marking what could be its largest weekly drop since November 2024.

Dollar at its strongest in two months 💲📈 Lack of U.S. data is suppressing the bearish trend_3

EURUSD on weekly interval.

Source: xtb

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Thomas

Economic

The Bureau of Labor Statistics said it will publish the September consumer price index on Oct. 24, marking a rare exception to release data during the government shutdown.

The report will come out that day at 8:30 a.m. in Washington, compared to the original publication date of Oct. 15, the agency said Friday.

“No other releases will be rescheduled or produced until the resumption of regular government services,” BLS said in a statement. “This release allows the Social Security Administration to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits.”