Bonds & Stocks
Treasuries are narrowly mixed with the curve steeper, as futures ease from near highs of the day into the early US session while still outperforming European bonds. Upcoming US government shutdown remains a focus for investors, hours before a midnight deadline along with potential for monthend extension/reallocations. Tuesday’s session is stacked with Fed speakers, along with some key labor market data. Treasuries cheaper by up to 1.5bp across the long end of the curve, with 2s10s, 5s30s spreads steeper by 0.5bp and 1.5bp on the day; US 10-year yields trade around 4.145% with bunds and gilts both lagging by 1bp in the sector.
Economy
President Donald Trump threatened to fire scores of federal workers as the US hurtles toward a shutdown with Democrats and Republicans at an impasse to fund the federal government. The White House directed agencies to draw up plans for mass firings if the government closed down, but so far, no agencies have explicitly called for terminations in their shutdown plans. A shutdown would paralyze many US government operations, causing the suspension of services for Americans and paychecks for federal workers, with political fallout possible for both Trump and Democrats ahead of next year’s critical midterm elections.
World
Russia's seaborne crude exports have stuck at a 16-month high in the past four weeks, with average shipments of 3.62 million barrels a day. Trump's efforts to convince buyers to ditch Moscow's oil have so far been unsuccessful, with countries including India, Turkey, Hungary, and Slovakia continuing to import Russian crude. China, the biggest buyer, has said it wants to deepen its energy ties with Moscow, while India shows no sign of cutting back on imports, with officials citing the need for replacement flows from other suppliers.