For the Stoxx600, a 0.48% rise yesterday rounded off another productive month for the index with it banking an overall gain of 1.55% in September.

US equities also closed higher on Tuesday following a weaker-than-expected consumer confidence report, which reinforced rate-cut expectations. The Conference Board's headline consumer confidence index dropped to 94.2 in September, below both prior readings and consensus estimates of 97.8 and 96.0 respectively.

Fed funds futures now imply a 97% probability of a 25bp rate cut in October, up from 89% at the start of the week.

On the back of that, the Dow Jones added +0.18%, the Nasdaq rose +0.30%, while the S&P500 outperformed with a +0.41% gain.

Wall Street futures are more downbeat though with the US beginning its first government shutdown in almost seven years as lawmakers remained deadlocked over a temporary funding bill to keep the government open for seven weeks while negotiations on regular appropriations continue.

Unlike previous budget standoffs, the stakes are higher this time after President Trump signalled he may use a shutdown to push for sweeping bureaucratic changes, including permanent job cuts for tens of thousands of federal employees.

The shutdown is set to delay key economic releases including Friday’s payrolls report, creating a “data vacuum” that could complicate the Federal Reserve’s policy decisions.

That new has also weighed on Asian equities overnight, although Chinese equities were shut for the start of the Golden Week holidays.

Looking ahead to today, Sep Euro area inflation is expected to show a slight uptick in headline CPI, with the estimate at 2.20% YoY, up from 2% in Aug, while the MoM figure is forecast to remain steady at 0.1%.

Core CPI YoY is anticipated to hold at 2.3%, the same as the prior month, indicating persistent underlying price pressures even as overall inflation nears the European Central Bank’s (ECB) target.

These stable trends reflect continuing moderation in energy prices and robust but gradually easing services inflation, supported by resilient wage growth and recovering supply chains.

Manufacturing PMIs for European countries will also be closely watched today.

For more on latest developments see the European Breakfast Briefing.

Wednesday’s potential supply

A modest pipeline remains in place ahead of the midweek session, but a glut of issuance looks unlikely. That after single currency supply continued to tick over Tuesday with a mixture of opportunistic and previously pipelined names going live. Despite a softer backdrop at the open, investor demand remained strong, and issuers across all asset classes were able to get deals away at keen pricing levels. Having seen EUR5.55bn issued in euros on Monday, the pace picked up on Tuesday with EUR8.55bn pricing in the IG market, to put the weekly IG total at EUR14.1bn versus the average estimate of EUR24bn.

** Elenia Verkko EUR500m no grow Jun 2033 EuGB debut

** CCDJ inaugural GBP 5yr senior bail-in unsecured

** Bausparkasse Schwaebisch EUR500m no grow 10yr green covered

** Banco BPI S.A EUR500m no grow 5.5yr covered

** Muehlhan Holding EUR225m 4.6yr secured debut

** Stada EUR1.15bn 7NC1 FRN

Five borrowers raised USD6.15bn across ten tranches in the US Tuesday, keeping pace with Monday’s tally and broadly in line with syndicate desk expectations of USD23bn in new high grade supply this week. Yesterday’s activity also pushed September’s record ex-SSA total to USD211.3bn, eclipsing last year’s record-setting mark of USD172.55bn for the month. For more colour, see the THE ENDGAME.

What to watch Wednesday – EC CPI, Mfg PMIs & US ADP Employment Change

** Key Data: UK Sep Nationwide House Prices (07:00), SP Sep HCOB Manufacturing PMI (08:15), IT Sep HCOB Manufacturing PMI (08:45), FR Sep F HCOB Manufacturing PMI (08:50), GE Sep F HCOB Manufacturing PMI (08:55), EC Sep F HCOB Manufacturing PMI (09:00), UK Sep F S&P Global Manufacturing PMI (09:30), EC Sep P CPI (10:00), US Weekly MBA Mortgage Applications (12:00), US Sep ADP Employment Change (13:15), US Sep F S&P Global Manufacturing PMI (14:45), US Sep ISM Manufacturing/Prices Paid (15:00) and US Aug Construction Spending (15:00)

** Key Events: ECB’s Kazimir, Kocher, Simkus (all 08:15), Guindos (08:55) & Nagel (12:00), BoE’s Mann (10:55) and Fed’s Barkin (17:15) speak

** Auctions: UK to sell GBP1.6bn 2035 Linkers (10:00) and GE to sell EUR5bn 2035 Bunds (10:30)

** Holidays: China Golden Week begins