US stock markets and bond yields were higher, representing a relief rally driven by hopes that the US government shutdown would end this week. On Sunday, the US Senate voted 60-40 to advance a Republican-led bill that would fund the US government with a continuing resolution (CR) through January 30, 2026. After invoking the cloture vote, up to 30 hours of debate are allowed before a final vote happens. Once the Senate secures a simple majority of 51 votes, the bill will proceed to the House of Representatives for approval and then to US President Donald Trump for signature into law. Only then will the shutdown end.
However, the DXY Index consolidated in a tight 99.5-99.75 range. Even with the Senate deal and rebound in risk assets, the DXY’s consolidation reflects deeper market scepticism that this was a temporary truce, not a structural fix. The Senate compromise was driven by economic damage and political fatigue, not by a grand fiscal consensus. The CR date of January 30, 2026, is politically awkward, as it comes just days before the President submits the federal budget to Congress on the first Monday of February each year. Placing the CR on a collision course with the next budget cycle could result in another shutdown. Congress still needs to pass nine FY2026 appropriation bills before proceeding to debate the FY2027 proposals, with both the Republican and Democratic parties eyeing the midterm elections in November 2026.
The futures market has maintained a more than 60% chance of a Fed cut at the FOMC meeting on December 9-10. The other 40% believe the Fed has a stronger incentive to sit on its hands rather than cut, as the data releases that resume after the shutdown end will remain patchy amid above-target inflation and the scheduled end of quantitative tightening on December 1. On the other hand, Fed Presidents John Williams (New York) and Mary Daly (San Francisco) have kept the door open for a cut, citing weakening demand and a loss of momentum in the labour market. They noted that growth was lacking the kind of strength seen earlier in the year, with the Fed’s dual mandate tilting towards supporting employment as price pressures fade.
Unlike during the Covid-19 pandemic, when firms were engaged in mass layoffs and aggressive rehiring, today’s corporate response is defined by a “low hire, low fire” culture. More companies are also turning to AI and automation to preserve productivity without committing to new labour costs. The result is a labour market that appears tight on the surface but is quietly decelerating beneath, with job creation slowing even as layoffs remain contained.
Our bias remains for the USD to correct lower after its 1.5-month climb to 100.
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November 11 in history
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