Today's news headlines: 

‘Democrats seek to avoid shutdown while they scramble on debt ceiling’. The US Senate is due to vote on the proposed increase in the debt ceiling before the Friday deadline after the House of Representatives passed the bill at a vote of 219-212. The Republican party is expected to block the efforts to lift this borrowing limit despite former President Donald Trump raising the ceiling three times during his tenure. The October 18^th deadline looms for the government, with Treasury Secretary Janet Yellen warning the money will run out and its obligations will not be met. Corporate America has started to prepare for a US credit default with the CEO of JPMorgan, Jamie Dimon, announcing that the company is putting contingencies in place. (Financial Times)

‘Fed’s Powell warns inflationary supply chain snags may persist’. The European Central Bank Forum was the platform for four of the world’s leading central bankers to warn that supply bottlenecks and inflationary pressures are likely to persist. Haruhiko Kuroda of the Bank of Japan; Christine Lagarde of the European Central Bank; Jay Powell of the Federal Reserve; and Andrew Bailey of the Bank of England all echoed comments pointing to container shipping and semiconductor sectors squeezing supply chains. Bailey made comments on the current UK fuel crisis—which is showing signs of easing—while pointing to the end of furlough as a potential solution to labour market shortages. In Japan, manufacturers continue to struggle with demand outstripping supply. According to Kuroda, this issue is likely to be prolonged. (Financial Times)

Today

European markets recovered on Wednesday after steep losses in the prior sessions; the Euro Stoxx 600 ticked 0.59% higher. The US 10-year Treasury yield continued its move higher during the Asian session, climbing to 1.54%. US Dollar strength maintains pace as we head for Friday, with the Dollar Index on track for a 1.00% gain on the week. Cable has been hit particularly hard, reaching its lowest levels since late 2020 yesterday. 

Events

Japan Preliminary Industrial Production m/m: -3.2% vs -1.5% last month
China Manufacturing Purchasing Managers’ Index: 49.6 vs 50.1 last month
UK final Gross Domestic Product q/q: 5.5% vs 4.8% previously
US final GDP q/q: 1:30PM
US Unemployment Claims: 1:30PM
Fed Chairman Jerome Powell testifies: 3:00PM
Federal Open Market Committee member John Williams speaks: 3:00PM
FOMC member Raphael Bostic speaks: 4:00PM
FOMC member Charles Evans speaks: 5:30PM

Interbank rates:

GBP/USD – 1.3444
GBP/EUR – 1.1591
EUR/USD – 1.1598
USD/CAD – 1.2733

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