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U.S. Tax Reform Fails to Enthuse Markets

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House Republicans push stop-gap bill to avert shutdown, what’s next on Trump’s reform plan, and another headache for Theresa May. Here are some of the things people in markets are talking about today.

Holiday cover

The House is set to vote on a stripped-down funding plan which would avert a government shutdown in the coming days. The measure, which would only extend financing of federal spending until Jan. 19, is designed to give lawmakers a chance in the new year to hash out a longer-term spending plan. To stop automatic cuts to Medicare and other programs from taking effect, President Donald Trump may not sign the tax overhaul legislation until Jan. 3 .  

What’s next

Republicans are now looking for their next legislative target after the victory on taxes. House Speaker Paul Ryan sees a chance to build on the momentum to recast the country’s welfare programs, while some of the president’s advisors are prioritizing a less-controversial infrastructure spending plan. Front-and-center for most Republican lawmakers next year will be the mid-term elections, and with the tax bill seemingly less popular among voters than hoped, the infrastructure plan may prove the easier sell. 

Gone Green

U.K. Prime Minister Theresa May suffered another blow late yesterday when her effective deputy, Damian Green, resigned after he was found to have made misleading statements to investigators. He becomes the third member of her cabinet to quit since the beginning of November. The prime minister is in Poland today as she seeks allies in the EU ahead of the second round of Brexit negotiations. There she may find a sympathetic ear, as the Polish government was on the EU’s naughty step yesterday for controversial judicial reforms in the country. 

Markets ready for vacation

Overnight, the MSCI Asia Pacific Index fell 0.2 percent, while Japan’s Topix index closed 0.1 percent higher in thin trading after the Bank of Japan held monetary policy unchanged. In Europe, the Stoxx 600 Index was unchanged at 5:50 a.m. Eastern Time as volumes remain low ahead of the holiday break. S&P 500 futures climbed 0.1 percent, the 10-year Treasury yield was at 2.484 percent and was broadly unchanged. 

Coming up...

At 8:30 a.m. initial jobless claims data is expected to show an increase to 233,000 for the week. At the same time the third reading of third-quarter U.S. GDP is published. The big event for markets today is in Europe, where the outcome of a critical regional election in Catalonia is being closely watched for a repeat of earlier independence calls.

What we've been reading

This is what's caught our eye over the last 24 hours.

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