America Under the Shadow of a Shutdown: Politics, Elections, and Monetary Policy Intertwined

Daily News

Summary:

The government shutdown in multiple departments may be extended; Trump has raised $483 million to enhance his odds in the Midterm Elections......

[Quick Facts]

1. U.S. Bipartisan immigration enforcement disagreements remain unresolved, and the government shutdown in multiple departments may be extended.

2. Zelenskyy: Ukraine–U.S. Bilateral Talks will also be held in Abu Dhabi.

3. Trump has raised $483 million to enhance his odds in the Midterm Elections.

4. Israel presents three "No"s for U.S.–Iran negotiations.

5. Due to a partial government shutdown, the U.S. Bureau of Labor Statistics has delayed the release of the employment report.

6. The French National Assembly formally passes the 2026 National Budget.

7. U.S. and India reach a Trade Agreement, and reciprocal tariffs on India are reduced to 18%.

8. Kuwait's January crude oil exports plunge sharply.

9. Bostic: Warsh as Fed Chair faces an arduous task.

10. Swiss National Bank: Can implement negative rates, but the threshold is higher.

[News Details]

U.S. Bipartisan immigration enforcement disagreements remain unresolved, and the government shutdown in multiple departments may be extended

The U.S. House of Representatives is embroiled in political turmoil over President Donald Trump's immigration raids, which could prolong the partial government shutdown that began last Saturday. House Speaker Mike Johnson faces a difficult path in advancing a bill already passed by the Senate.

The bill is the product of negotiations between Trump and Democratic Leader Chuck Schumer. It would fund most federal agencies through September 30th and provide funding for the Department of Homeland Security until February 13th. This arrangement retains appropriations for immigration raids while both parties continue consultations on adjustments to enforcement policies. However, the bill faces skepticism within both parties and may result in the originally expected brief weekend shutdown being extended.

Johnson expects the Rules Committee to hold a preliminary vote Monday and hopes for final passage Tuesday. If the shutdown continues into this week, it could delay the closely watched Labor Department employment report scheduled for Friday. The tax filing season, which launched last week, may also be affected. Over time, delays in pay and services for government contractors will spread further, and non‑essential federal employees may be forced to go on unpaid leave.

Zelenskyy: Ukraine–U.S. Bilateral Talks will also be held in Abu Dhabi

On February 2nd, Ukrainian President Volodymyr Zelenskyy posted on social media that the Ukrainian negotiating delegation is scheduled to attend the second round of trilateral Ukraine–U.S.–Russia talks in Abu Dhabi, the capital of the United Arab Emirates, on the 4th, during which they will also hold Ukraine–U.S. bilateral talks on multiple agreements.

Zelenskyy said he met that day with members of the Ukrainian delegation traveling to Abu Dhabi, including Secretary of the National Security and Defense Council Umerov, Head of the Presidential Office Budanov, First Deputy Head of the Presidential Office Kislytsia, Chief of the General Staff of the Armed Forces Gnato, and presidential advisor Alexander Bevz. Chairman of the parliamentary faction of the ruling Servant of the People party, Arakhamia, will also join the trilateral talks. Zelenskyy stated that during the second round of Russia–U.S.–Ukraine trilateral talks, the Ukrainian delegation will also hold bilateral talks with the U.S. side. He expressed Ukraine's readiness to take genuine steps and believes a dignified and lasting peace can be achieved.

Trump has raised $483 million to enhance his odds in the Midterm Elections

U.S. President Trump says his only concern is losing Republican control of Congress in November's election. The latest campaign finance filings show he has raised an unprecedented sum to prevent that from happening.

According to documents submitted to the Federal Election Commission, as of the end of December, Trump's political committee and the Republican National Committee had together raised $483 million. That amount is nearly triple the $167 million raised by Democrats. "Presidents, whether it's Republican or Democrat, when they win, it doesn't make any difference. They seem to lose the midterms," Trump said, adding that's the only concern for him.

Israel presents three "No"s for U.S.–Iran negotiations

Israel's Channel 12 reported on the evening of February 2nd local time that Israel will present three "No"s regarding Iran in its meeting today (February 3rd) with visiting U.S. presidential envoy Witkoff: in any possible U.S.–Iran agreement, Iran must agree to three red lines: Iran agree to have no nuclear program, no ballistic missile program, and to give no support to armed proxy groups, including terror groups threatening Israel.

Besides Prime Minister Netanyahu, Mossad chief Barnea and IDF Chief of Staff Zamel are also expected to attend the meeting with Witkoff. Reports say Israel still believes it is possible to topple the Iranian regime through military strikes.

Due to a partial government shutdown, the U.S. Bureau of Labor Statistics has delayed the release of the employment report

On February 2nd, the U.S. Bureau of Labor Statistics announced that due to the partial federal government shutdown, the January employment report originally scheduled for release on the 6th will not be published on time. Bureau official Emily Liddell stated in a declaration that the report will be rescheduled once government funding is restored.

The French National Assembly formally passes the 2026 National Budget

On the evening of February 2nd, local time, the French National Assembly successively rejected two noconfidence motions tabled by the leftwing camp and the farright National Rally party. With neither motion passing, the French parliament formally approved the 2026 state budget.

Earlier, the left's noconfidence motion garnered only 260 votes, short of the required absolute majority of 289. Subsequently, the National Rally's motion was also defeated. This allowed the French government to avoid being toppled, and the budget was passed. Prime Minister Lecornu earlier said the budget would be submitted to the Constitutional Council for review.

U.S. and India reach a Trade Agreement, and reciprocal tariffs on India are reduced to 18%

Trump posted that he spoke by phone with Indian Prime Minister Modi, discussing a trade deal and ending the Russia–Ukraine conflict. Trump said Modi agreed to stop purchasing Russian oil and significantly increase purchases from the U.S., and possibly Venezuela; the two sides immediately reached a U.S.–India trade agreement.

Under the agreement, the U.S. will lower reciprocal tariffs from 25% to 18%. India will work to reduce tariffs and non‑tariff barriers against the U.S. to zero. Trump said Modi also pledged to substantially increase "Buy American" efforts and committed to providing India with more than $500 billion worth of U.S. energy, technology, agricultural products, coal, and many other goods.

Kuwait's January crude oil exports plunge sharply

Affected by OPEC+ suspending plans to restore crude market supply and Kuwait's large Al-Zour refinery returning to full capacity after equipment failure, Kuwait's monitored crude oil exports declined in January. Tanker tracking data shows Kuwait's total January crude exports (including its 50% share of crude exports from the Saudi–Kuwaiti Neutral Zone) fell from 1.78 million barrels per day in December to about 1.52 million bpd, the lowest since August last year.

Bostic: Warsh as Fed Chair faces an arduous task

Atlanta Fed President Bostic said Monday that President Trump's nominee for the next Fed Chair, Warsh, faces a formidable task in leading the U.S. central bank, especially if he intends to persuade monetary policy committee members to align with him on decisions. He believed the Fed should not cut interest rates this year. Last week, Fed policymakers voted 10–2 to keep the benchmark rate in the current range of 3.5%–3.75%, signaling no urgency to cut.

Swiss National Bank: Can implement negative rates, but the threshold is higher

SNB President Schlegel said the central bank can cut rates below zero to negative levels, but the threshold is higher. Speaking Monday, Schlegel said the current SNB rate level is appropriate, and the bank has repeatedly signaled readiness to implement negative rates, but obstacles have grown larger. The current low inflation and near‑zero rate environment poses challenges for monetary policy.

He noted Switzerland's economy is growing moderately, but at a below‑average rate, and the central bank can tolerate several months of negative inflation, expecting inflation to rise in the coming months. Schlegel also said the SNB can act aggressively in foreign exchange markets if needed, and sees no alternative to holding U.S. Treasuries in its reserves.

[Today's Focus]

UTC+8 11:30 RBA February Interest Rate Decision

UTC+8 12:30 RBA Governor Bullock holds monetary policy press conference

UTC+8 15:45 France January CPI (MoM) Preliminary

UTC+8 22:40 Fed Governor Bowman delivers speech

UTC+8 23:00 U.S. December JOLTS Job Openings

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