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 Good morning. Here's what you need to know. - Markets in Asia were lower in overnight trading. The Japanese Nikkei 225 fell 0.9%, the Hong Kong Hang Seng dropped 0.3%, and the Australian S&P/ASX 200 gave up 0.5%. European markets are higher across the board, led by Italy, which is up 1.4%. In the United States, futures point to a positive open.
- President Obama has cancelled a diplomatic trip to Asia because of the government shutdown. "The president made this decision based on the difficulty in moving forward with foreign travel in the face of a shutdown, and his determination to continue pressing his case that Republicans should immediately allow a vote to reopen the government," said the White House.
- The government shutdown continues into its fourth day today with little hope for a quick resolution. Wall Street is coalescing around the view that a deal to end the shutdown won't be made before an agreement on raising the debt ceiling is reached, and that both are likely to be accomplished at once. Goldman Sachs economist Alec Phillips even assigns a 30% chance to a scenario in which the debt ceiling gets raised, but the shutdown persists after that.
- The Bank of Japan announced no change to monetary policy at its October meeting. BoJ governor Haruhiko Kuroda said in a press conference following the decision that "if [the U.S. government shutdown] continues for a long time, this could destabilize financial markets and worsen sentiment," saying the consequences to global markets would be "severe."
- German producer prices fell 0.1% in August from the previous month and 0.5% from a year earlier, both figures missing expectations for zero growth in prices. In July, prices were down 0.1% from the previous month but up 0.5% from July 2012.
- Eurozone producer prices were unchanged in August from the previous month, but fell 0.8% from a year earlier. As in Germany, both numbers were lower than expected by economists, and highlight the ongoing deflationary environment across the euro area despite signs of renewed economic growth.
- This morning at 8:30 AM ET, Dallas Fed president Richard Fisher will give a speech on the economy at the Central Arkansas Risk Management Association. There will be a Q&A afterward.
- Shortly thereafter, at 9:15, New York Fed President William Dudley will give opening remarks at a conference on systemic risk and the tri-party repo market in New York. At 9:30, Fed Governor Jeremy Stein will give the keynote address in a speech titled "The Problem with Fire Sales."
- Finally, at 1:45 PM, Minneapolis Fed President Narayana Kocherlakota will give a speech on monetary policy strategy at the Bank Holding Company Association Fall Seminar in Bloomington, Minnesota.
- The monthly nonfarm payrolls report was the only economic datapoint scheduled for today in the United States, but it will not be released today due to the government shutdown. BofA Merrill Lynch interest rate strategist Ruslan Bikbov cites the data blackout as a reason why the wrangling in Congress is actually leading to less volatility, rather than making markets more volatile.
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