News wires report that Romanian pro-EU parties reached an accord on the formation of a new government, which will see Prime Minister Marcel Ciolacu stay in office, while the new ruling coalition will support Crin Antonescu in the upcoming presidential election.

• Ciolacu told reporters that pro-EU parties "have a political agreement that is a precursor to a governing coalition and a parliamentary majority," as he announced the outcome of talks between his Social Democratic Party (PSD), National Liberal Party (PNL), the Democratic Alliance of Hungarians in Romania (UDMR), as well as representatives of other ethnic minorities.
• It should be noted that the UDMR has had close ties with Hungarian Prime Minister Viktor Orban and his Fidesz party, although it remained part of the European People's Party (EPP) even after Fidesz's ouster.
• PNL's acting leader Ilie Bolojan said that the three parties agreed to support ex-PNL leader Crin Antonescu as their joint candidate in the upcoming re-run of the presidential election. Bolojan had earlier said that the election would likely be held either just before or just after Easter.
• Despite relying on a narrow parliamentary majority, the new administration will face a difficult task of curbing its fiscal deficits. Fitch recently warned that it could cut Romania's credit rating to junk amid heightened political uncertainty.
• Our EM credit team flags that the political crisis has exerted significant pressure on ROMANI 5.75 Mar35 USD benchmark, which  @ z+320bp has widened some 70bp since its launch earlier in September. Whilst political uncertainty has triggered the recent sell-off, prudent and sustainable fiscal policy remains a key factor driving spreads long term.

Bloomberg reports that House Speaker Johnson says an agreement has been reached on government funding that will prevent a government shutdown that would have otheriwse started midnight tonight. The House will vote on the funding bill today. 

For further colour ahead, see here and here, from the MNI political risk team. 

Bloomberg reports that US allies say Biden’s strategy of slow-walking key weapons amid fears of a nuclear escalation with Russia cost Ukraine a chance of victory. Bloomberg writes: “Regardless of what Biden does in his final weeks, [officials in Ukraine and several allied capitals] said, Ukraine is heading toward a bitter settlement in which President Volodymyr Zelenskiy may have to leave swathes of territory in limbo in exchange for security guarantees that fall short of the NATO membership he’s pleaded for.”

• Former UK Defense Secretary Grant Shapps said in an interview, “[Biden’s] heart was undoubtedly in the right place — he understood the importance of standing with Ukraine against Russian aggression. “However, his approach was often too cautious and too hesitant, holding back on delivering the decisive support needed to tip the balance.”
• A new Gallup survey shows that Americans favour a quick end to the war in Ukraine, with Republicans backing less support for Kyiv and Democrats favouring a continuation of the current level of support.
• Gallup notes that fifty percent of respondents want to reach, “a quick end to the conflict, even if that means Ukraine does not recover all of its land. This marks a shift from prior readings, when the majority of Americans backed a fight for total victory.”

Figure 1: “How do you feel about the next 4 years with Donald Trump as president? (%)”

Source: Gallup, Semafor

Multiple reporters on Capitol Hill confirming that House Republican leadership will make a final decision on strategy for their government funding plan following a conference meeting at 12:30 ET 17:30 GMT.  

• Most reporters appear to agree that House Speaker Mike Johnson (R-LA) is likely to divide the package, torpedoed by President-elect Donald Trump and Elon Musk on Wednesday, into separate bills to be voted on independently.
• There is broad agreement that there will be a 'clean' Continuing Resolution to avert a shutdown, an aid bill for farmers, and a disaster relief supplemental.
• CNN reports there is likely to be a fourth bill to raise the federal debt ceiling - a key priority for Trump and his allies in Congress. Punchbowl News sources suggest there won't be a debt limit bill.
• It remains unclear if a vote can be held today, largely due to procedural technicalities, or if Johnson will be forced to wait until tomorrow for a voting session. Sarah Ferris at CNN notes: "Vibes shifting in the Capitol as members getting angrier by the hour and want to leave," suggesting that lawmakers will move quickly when a vote is scheduled.