Falling yields failed to lift risk appetite, and better-than-expected tech earnings couldn’t lure investors back on board. OpenAI even suggested that the US could warrant its trillion-dollar debt — I mean, it was a disaster.

But this morning, things look calmer. The news that the US government shutdown could finally come to an end lifts market sentiment, after the Senate put together the 60 votes needed to push the deal through its first stage.

It’s only the opening act in what could still be a drawn-out political drama, but investors are seizing on any sign of progress to end the longest US government shutdown in history and feed on data — data they need to understand where the US economy stands, where inflation and jobs are headed, and what the Federal Reserve (Fed) should do next.

Speaking of the Fed: some members are cautious, while others appear to be giving more weight to inflation than the weakening jobs market. Last week’s Challenger report printed the highest job losses in October since 2003, and Friday’s University of Michigan survey hinted at deteriorating sentiment, gloomy expectations, and a mixed inflation outlook, with 1-year inflation expectations rising to 4.7%. It’s a close call.

Yet the secured overnight financing rate (SOFR) tumbled last week below 4%, the lowest in three years. That’s not because the Fed decided to cut it — SOFR isn’t something the Fed fixes directly. It’s a market-driven rate reflecting what banks and investors charge each other for overnight cash secured by Treasuries.

When there’s plenty of liquidity sloshing around, the rate naturally drops. And there is excess cash in the system: nearly $7.5 trillion sits in US money-market funds, while US Treasury auctions have been thinner — partly because the looming government shutdown complicated issuance plans.

In other words, the Fed hasn’t pulled the lever — the market has, reacting to all the excess cash. This higher liquidity could give risk assets a lift this week, if the news flow remains calm.

Futures are hinting at an encouraging start, and if the US government can reopen, it would be the cherry on top. The S&P 500 has rebounded around 2% since rumours of a potential shutdown end broke last Friday.

Add to that Jensen Huang’s comments at TSMC’s annual sports day on Saturday — saying “the business is very strong, and it’s growing month by month, stronger and stronger,” and that they need more chips from TSMC — and investors are forgetting last week’s drama. TSMC is up more than 1%, SoftBank jumps 2.5%, Korean SK Hynix is up more than 5% and Nasdaq futures lead gains. Hopefully it lasts!

In FX, the US dollar is steady this morning. The greenback came under renewed selling pressure last week after failing to break the back of the 200-DMA. The end of the US shutdown should — in theory — give a positive jolt to the dollar and challenge some technical levels against major currencies. The EURUSD last week tested support near the minor 23.6% Fibonacci retracement on the year-to-date rally, around 1.1480.

Cable dived but returned above the 38.2% retracement on its own year-to-date rally and the USDJPY initially fell on the Finance Minister showing teeth to the bears. But JPY bears are back since Friday, helping support the US dollar, alongside a jump in US yields this morning that prints a roughly 1% rise across the curve.

US economic data is light this week due to ongoing shutdown, but earnings from Nvidia-backed neocloud provider CoreWeave, Cisco and Disney will be in focus, along with 13F filings due Friday. Michael Burry’s large position against Nvidia and Palantir contributed to last week’s risk-off sentiment. Investors will look for evidence of lower exposure or continued bets against tech giants.

Elsewhere, Chinese inflation unexpectedly rose last month, as factory-gate deflation eased. Unlike the West, which doesn’t need more inflation, this is good news for China — they’ve been trying to boost consumption for years, and production prices have been falling for almost three years. That said, the October surprise could be temporary, partly due to the Golden Week holiday lasting an extra day.

Still, US crude is better bid this morning, above $60pb, probably helped by encouraging inflation data from China. But US crude remains under pressure within a longer-term negative trend since summer, influenced by OPEC’s strategy to release more barrels. The cartel has now announced a pause in output increases between January and March, and this Wednesday’s monthly oil report should provide further clarity: will OPEC try to set a floor under prices, or continue letting them slide to gain market share?