The Nikkei 225 was down after Japan’s government lost a coalition partner.

In Europe, the Stoxx 600 and the U.K.’s FTSE 100 were both marginally down in early trading.

The backdrop is a negative vibe shift on Wall Street. The government shutdown now looks like it will be long, rather than short. Polymarket odds show more than 90% of traders betting on October 15 or later for an end to the shutdown.

“The mood music hasn’t been helped by the government shutdown, which is now entering its 10th day. And the fear is that the longer it lasts, the worse the economic impact will be, as increasing numbers of workers miss paychecks from here,” Jim Reid and the team at Deutsche Bank said in a note this morning.

The shutdown will marginally increase unemployment, according to Pantheon Macroeconomics: “September’s payroll report likely will be released about three working days after the shutdown ends. October payrolls will be unaffected by the shutdown, but the unemployment rate will be lifted by 0.2pp,” Samuel Tombs and Oliver Allen said in a note to clients.

The negativity is compounded by the release of minutes from the U.S. Federal Reserve’s interest-rate setting Federal Open Market Committee, which show that Fed members may not be as keen on delivering two more rate cuts this year as Wall Street had assumed. (Stock traders like interest rate cuts because cheaper money generally inflates stock prices.)

“Fed’s Barr said ‘the FOMC should be cautious about adjusting policy so that we can gather further data […] and better assess the balance of risks’ and suggested that the FOMC should be sceptical about calls to look through tariff induced inflation. Meanwhile, Fed’s Daly struck a different tone saying that the labour market is ‘worrisome’ and calls for ‘risk management’ amidst ‘modestly restrictive’ monetary policy,” RBC’s Peter Schaffrik noted this morning. 

Macquarie agreed: “Based on the FOMC Minutes, Fed officials were not very dovish in midSeptember. And since then, non-official inflation indicators don’t point to less inflation, but rather to more inflation. With stocks rallying, gold spiking, and corporate credit spreads remaining tight, the … implied probability of a Fed cut on October 29 – now at 96% – seems to be too high. The right ballpark should be a 50-75% probability,” Thierry Wizman and Gareth Berry told clients.

Looking forward, Pantheon noted that when the FOMC members are rotated next year, the new incoming members may be more hawkish on rates than the ones they replace.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

S&P 500 futures were down marginally this morning. The index closed down 0.28% in its last session.STOXX Europe 600 was down 0.2% in early trading. The U.K.’s FTSE 100 was down 0.14% in early trading. Japan’s Nikkei 225 was down 1.01%.China’s CSI 300 was down 1.97%. The South Korea KOSPI was up 1.73%. India’s Nifty 50 was up 0.51% before the end of the session. Bitcoin held at $121.4K.