Morning Bid: Shutdown talks go to the wire as Q3 ends

By Mike Dolan

LONDON (Reuters) -What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

A looming U.S. government shutdown is casting a shadow over the final day of a stellar third quarter for most world markets. However, there appears to be little trepidation apart from fretting over a data vacuum that could be left by the likely postponement of the monthly jobs report. 

U.S. President Donald Trump and his Democratic opponents appeared to make little progress

at a White House meeting aimed at heading off a government shutdown that could disrupt a wide range of services as soon as Wednesday - with Trump also sidetracked by the announcement of a peace plan for Gaza. "I think we're headed to a shutdown," Vice President JD Vance said.

Budget standoffs have become relatively routine in Washington over the past 15 years and are often resolved at the last minute. But Trump's willingness to override or ignore spending laws passed by Congress has injected more uncertainty.

After another record high on Monday, Wall Street stock futures pulled back a little ahead of Tuesday's bell and Treasury yields drifted lower as a funding hiatus undercuts government spending at the margin and Fed easing hopes rest on other labor market data this week. The dollar edged down, but gold fell back too. Quarter-end book squaring may have as much to do with the day's moves, with Japan's yen a big gainer ahead of October's possible interest rate rise and the Aussie dollar up as the Reserve Bank of Australia left rates unchanged. 

* China's markets headed into the start of Golden Weekholidays there tomorrow in an upbeat mood, despite anotherdownbeat official business survey for September. Factoryactivity there shrank for a sixth month in September, suggestingproducers are waiting for further stimulus to boost domesticdemand and investors are now awaiting China's Communist Partymeeting October 20–23 for details on the next five-year economicplan. * Markets are also digesting fallout from President Trump'sframework peace plan for Gaza - with gold and oil prices downslightly on the proposals that have yet to get agreement on allsides. While the direct market impact remains limited for now,any escalation could affect energy prices and risk sentiment,especially as oil trades lower on OPEC+ supply expectations. * European markets also took a step back on the quarter end,with German states' inflation numbers coming in a little hotterthan last month and jobless totals there falling back. The eurowas firmer, while Spanish debt spreads to Germany's tightenedafter last week's credit rating upgrades there - basking in theglow of the fastest economic growth of the big euro zoneeconomies and a falling debt/GDP ratio.

In today’s column, I discuss how the U.S. economy is estimated to be growing at nearly 4% even though job creation appears to be waning - and whether AI is the missing link.

Today's Market Minute

* Trump and his Democratic opponents appeared to make little progress at a White House meeting aimed at heading off a government shutdown that could disrupt a wide range of services as soon as Wednesday.

* Trump said on Monday he would impose a 100% tariff on all films produced overseas that are then sent into the U.S., repeating a threat made in May that would upend Hollywood's global business model.

* China's manufacturing activity shrank for a sixth month in September, an official survey showed on Tuesday, suggesting producers are waiting for further stimulus to boost domestic demand, as well as clarity on a U.S. trade deal.

* While energy companies are retrenching in the face of a bleak near-term outlook for oil and gas, their investment plans suggest they believe the environment will shift dramatically by the end of the decade, writes ROI energy columnist Ron Bousso.

* How often should companies report their financial performance? This debate is back in the headlines, but Income Securities Advisor publisher Marty Fridson argues that the current discussion fails to highlight one key problem that reducing the frequency of reporting could magnify. 

Chart of the day

The combination of Federal worker cuts and this week's possible government shutdown make for a rough year for public sector employees, but their share of the overall workforce has been waning for decades.  

Today's events to watch

* U.S. July house prices (9:00 AM EDT) Chicago September business surveys (09:45 AM EDT) US Sept consumer confidence (10:00 AM EDT) August job openings (10:00 AM EDT) Dallas Federal Reserve September service sector survey (10:30 AM EDT)

* Federal Reserve Vice Chair Philip Jefferson, Dallas President Lorie Logan, Chicago Fed boss Austan Goolsbee and Boston Fed chief Susan Collins all speak; European Central Bank board members Piero Cipollone and Frank Elderson speak; Bank of England Deputy Governors Clare Lombardelli and Sarah Breeden and BoE policymaker Catherine Mann all speak

* U.S. corporate earnings: Nike, Paychex, Lamb Weston

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Mike Dolan; Editing by Alexandra Hudson)