| Shutdown to be averted, inflation fears grow, and jobless claims are due. The Senate will vote today on a bill extending government funding until Dec. 3 to avoid a shutdown when the fiscal year ends at midnight tonight. The deal strips out Democrat demands to suspend the debt ceiling, meaning it should easily pass both chambers and go to President Joe Biden for his signature with only hours to spare. Avoiding the shutdown, however, was probably the easiest thing on the president's to-do list as the risk of a U.S. default in less than three weeks remains very real, while his economic agenda is caught in a battle between the progressive and moderate wings of the Democratic Party. Despite assurances from the world's leading central bankers yesterday that the current spike in prices would ultimately prove temporary, markets are getting more prepared for a longer period of inflation. A Citigroup Inc. survey of clients found most were braced for "sticky" inflation, while there are signs that European bond investors are growing increasingly concerned about a surge in yields. There is little to suggest that the rapid rise in energy prices is going to ease any time soon, with inflation rates in the euro area at decade-highs. After two weeks of disappointingly high readings, this morning's jobless claims data is expected to show the number of people signing up for unemployment benefits falling to 330,000. Employers saw few signs of the expected surge in applications after the expiry of enhanced payments on Labor Day. Federal Reserve Chair Jerome Powell said earlier this week that the difficulty employers have in hiring posed another risk to inflation. Trading continues to be choppy in global equity markets as the quarter comes to a close. Overnight the MSCI Asia Pacific Index was broadly unchanged while Japan's Topix index closed 0.4% lower. In Europe the Stoxx 600 Index was 0.4% higher at 5:50 a.m. Eastern Time with miners leading the gains. S&P 500 futures, while off their earlier highs, still pointed to green at the open. The 10-year Treasury yield was at 1.52%, oil was back over $75 a barrel and gold rose. Claims data is at 8:30 a.m. with Chicago PMI at 9:45 a.m. Powell and Treasury Secretary Janet Yellen appear before the House finance panel at 10:00 a.m. There are six regional Fed presidents speaking at various other events today. Colombia and Mexico central banks announce their latest monetary policy decisions. CarMax Inc., Paychex Inc. and Bed Bath & Beyond Inc. are among the companies reporting results. Here's what caught our eye over the last 24 hours. In discussions about the debt ceiling, a possible default, and minting a trillion dollar coin to avoid a crisis, there's a common rejoinder that needs to be addressed. It always goes something like "inflation or currency devaluation is just default by another name." Now, never mind the fact that minting the coin would likely not be inflationary (because it wouldn't result in any new spending), there's something really pernicious about this internet-wisdom-economics. The fact of the matter is that all of us live in a world of cash flows. We have bills to pay. And hopefully we have income coming in. And hopefully, whether you're a business or a household or just a random individual, the money you have coming in is greater than the money you have going out. This is why we get up in the morning. Were the Treasury to default -- by not making a coupon payment on a government obligation or not paying back the principal at the end of the bond's lifecycle -- some entity at the other end would not be receiving cash that it was expecting. And since that entity (quite possibly a bank) has its own bills to pay, you can immediately see how the lack of that expected cash flow could set off a a devastating chain reaction of missed payments. Financial chaos. Now, suppose the government were to somehow "devalue" the dollar. TBH, I'm not even sure how that would work or what that would mean, or what entity could do that in the first place. That might not be great. Inflation isn't fun. But that's very different than a chain reaction of missed payments. And again, going back to Treasuries, since these are seen as the absolute safest asset in the world, any default impact would be magnified. You know if some junk-bond energy company defaults, that's not great for the holders but they assume some risk and don't use the bonds to buttress an entire financial system. So going back to the coin for a second. Yes, it's kind of weird. But there's no reason to think it would induce inflation, since it doesn't induce new spending. And even if it did somehow, inflation or devaluation isn't default. Just because some aphorism fits in a tweet and sounds clever doesn't mean it's true. Follow Bloomberg's Joe Weisenthal on Twitter at @TheStalwart Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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