US Shutdown Uncertainty Fuels Safe-Haven Demand, Drive Dollar Weakness

GLOBAL MOOD: Risk-off
Drivers: US Government shutdown, US jobs data, RBI Policy

Investors are cautious, favouring safe-haven assets as the US edges closer to a government shutdown that threatens key economic data releases and adds uncertainty to Federal Reserve policy.

TODAY’S WATCHLIST
 - RBI MPC Meet Outcome
 - India Sep Manufacturing PMI

THE BIG STORY
The dollar lingered near a one-week low on Wednesday as the US edged closer to a government shutdown, raising concerns over delays in the release of key economic data, including the monthly jobs report. With government funding set to expire at midnight Tuesday (0400 GMT) and no bipartisan agreement in sight, critical federal operations are expected to pause, leaving only “essential” services such as law enforcement operational. The failure of a Senate vote to extend funding by a 55-to-45 margin highlighted deep partisan divisions, with no clear path for compromise before the deadline.

The looming shutdown is creating uncertainty in both domestic and global markets. Investors fear disruptions to air travel, trade, and the timely release of economic indicators that guide monetary policy decisions. President Donald Trump’s threat to extend the federal workforce purge adds another layer of risk for businesses and households reliant on government services. Market participants are now weighing the economic implications of halted government functions alongside the Federal Reserve’s policy outlook, with the shutdown potentially affecting both financial market sentiment and the broader US economic trajectory.

Data Spotlight 
US job openings edged up to 7.227 million in August, but hiring fell 114,000, signalling a softening labour market that could prompt another Fed rate cut despite resilient consumer spending. Job openings per unemployed person slipped to 0.98, and consumer confidence in job availability hit its lowest since early 2021. Openings fell in construction and the federal government but rose in accommodation, food services, retail, and state/local government.

Meanwhile, US crude inventories dropped 3.674 million barrels in the week ending September 26, marking the third straight weekly draw and sixth in eight weeks.

Takeaway: US cooling labour market trends support the case for further Fed easing, while falling crude inventories point to tightening energy supply.

WHAT HAPPENED OVERNIGHT

• US Stocks edge higher amid shutdown fears, Wolf Speed surges
  • All three major US indexes closed higher on Tuesday despite concerns over a potential government shutdown.
  • Chip maker Wolf Speed shares jumped 29% after emerging from bankruptcy.
  • Firefly Aerospace fell 20.7% following a failed rocket test, while Lamb Weston rose 4.3% on strong revenue and profit.

• US Treasury yields pulls back amid shutdown fears 
  • Yield on the US 10-year note fell below 4.12%, retreating from Friday’s three-week high.
  • Investors assessed the Federal Reserve’s rate outlook alongside the potential economic impact of a government shutdown.
  • Mixed labor-market signals, including rising job openings and lower payrolls, added uncertainty to the rate path.
  • Declining consumer confidence and threats of federal worker firings provided further support for Treasuries.

• US Dollar index amid softer economic data, government shutdown fears
  • The US dollar fell as investors digested weaker-than-expected US economic data.
  • Concerns over a potential government shutdown delaying the monthly non-farm payrolls report weighed on sentiment.
  • The dollar index slipped below 98, nearing its lowest level in three and a half years.

• Crude oil prices slide on supply concerns from OPEC+ and Iraqi Kurdistan exports
  • Brent crude oil prices fell as investors anticipated a potential supply surplus from OPEC+ and the restart of Iraqi Kurdistan exports.
  • Brent crude for November delivery dropped 95 cents, or 1.4%, to $67.02 a barrel.
  • The December Brent contract settled at $66.03, reflecting tempered market sentiment.

<<<>>> 

Day’s Ledger

Economic Data

• India Sep Manufacturing PMI
• Euro Sep Inflation Rate
• Euro Sep CPI Flash
• India M3 Supply

 Corporate Actions

• Biocon to consider raising of funds
• Hexaware Tech to consider dividend
• Krishival Foods to consider fund raising
• Nagreeka Exports to consider right issue
• Panabyte Tech to consider fund raising
• Ritesh International to consider fund raising
• Utkarsh Small Finance Bank to consider fund raising

Policy Events

• RBI MPC Meet Outcome
• ECB Elderson Speech
• Fed Logan Speech
• BoC Rogers Speech
• ECB Guindos Speech
  
  

Tickers to Watch

• ADANI TOTAL GAS CFO resigns; company to appoint replacement in coming days
  
• Crisil upgrades APL APOLLO’s long-term bank facilities rating to ‘AA+’
  
• DLF CYBER CITY allots ₹11 bln worth of NCDs via private placement
  
• HDFC LIFE board to meet on Oct 15 to consider raising funds via NCDs
  
• NESTLÉ INDIA signs MoU with food processing ministry for greenfield investment
  
• NEW INDIA ASSURANCE receives ₹23.79 bln GST demand notice
  
• OIL INDIA inks MoU with GAIL to improve access to domestic gas
  
• PB FINTECH reappoints Chairman & CEO Yashish Dahiya for 5 years from Jul 2026
  
• POWER GRID CORP wins bid for Karnataka–Maharashtra transmission line
  
• RELIANCE INFRA says ED survey linked to 15-year-old case, not forex-related
  
• RITES inks MoU with UAE-based company to enhance mobility collaboration
  
• SEBI disposes of show-cause notice against PTC INDIA’s former interim CMD
  
• TATA MOTORS invests additional ₹1.2 bln in associate Freight Commerce
  
• VEDANTA extends demerger scheme deadline by six months to Mar 31 

Must Read

• Adar Poonawalla in talks with Diageo to buy Royal Challengers Bengaluru
• Low VC funding, regulatory hurdles challenges to biotech growth: BIRAC MD
• Rajesh Agrawal takes charge as commerce secretary from October 1
• Govt keeps interest rates on various small savings schemes unchanged
• RBI retains call rate as policy anchor in revised liquidity framework
• BOE Deputy Governor Sees Inflation Resuming Fall After ‘Hump’
• U.S. Labor-Turnover Was Steady in August
• ECB’s Lagarde Says Inflation Risks Are ‘Contained’
• Global FX Trading Soars to $9.6 Trillion Amid Tariffs, BIS Says
  
  

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

The RBI’s October policy review is about more than rates.

After front-loaded easing and mixed transmission, markets want clarity. This is the moment to recount what has been done, reset expectations, and set the compass for the year ahead. Monetary policy is not just about action—it’s about orientation and credibility.

BasisPoint Groupthink’s curtain raiser to the October Policy: Time for RBI to Recount, Reset