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Senate's Ron Johnson Opposes Tax Plan as Now Written

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House gears up for tax vote, German government talks face deadline, and more bad news for the pound. Here are some of the things people in markets are talking about today.

Fiscal plan

Leaders in the House cleared the way for a vote today on their tax-overhaul bill, with President Donald Trump poised to rally Republican members ahead of the long-waited legislation. Lawmakers are trying to reduce the costs associated with Obamacare in order to help offset the revenue impact of large tax cuts for corporations and individuals. Treasury Secretary Steven Mnuchin, whose signature now adorns the $1 bill, is on a nationwide trip to sell the plan, which still lacks broad public support.

Government talks

German Chancellor Angela Merkel is struggling to form a coalition ahead of a self-imposed deadline at the end of this week. Disagreements over risk sharing in the euro area, curbs on carbon emissions and immigration have made the three-party negotiations particularly difficult as Merkel seeks to secure a fourth term as Chancellor. She doesn’t just face tricky deliberations at home: Brexit negotiations continue to vex euro-area officials, with Merkel wary of pushing Prime Minister Theresa May too hard on the bill for the U.K.’s exit. 

U.K. outlook

Options traders are seeing little reason to buy the pound as political discord and economic headwinds create a bearish outlook. In parliament, May is facing a showdown with her own party over a plan to enshrine the Brexit date – March 29, 2019 – into law. Meanwhile, retail sales declined 0.3 percent year-on-year in October, the first drop in more than four years

Bounce back

Overnight, the MSCI Asia Pacific Index climbed 0.8 percent, while Japan’s Topix index closed 1 percent higher for its first gain in five days, as investors focused on strong earnings growth. In Europe, the Stoxx 600 Index was 0.7 percent higher at 5:55 a.m. Eastern Time as markets in the region started to recover from the longest losing streak in a year. S&P 500 futures were 0.4 percent higher, the 10-year Treasury yield was at 2.361 percent and gold was unchanged. 

Coming up…

Weekly initial jobless claims data are due at 8:30 a.m., with expectations for 235,000 new claimants. Philadelphia Fed Manufacturing data will be published at the same time. There are several Fed speakers today, with Cleveland Fed President Loretta Mester at 9:10 a.m., Dallas Fed President Robert Kaplan at 1:10 p.m., and Fed Governor Lael Brainard at 3:45 p.m.

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