- US House initially voted 227 vs. 203 to pass the tax reform bill. However, it was later reported that the House hit a procedural snag
- US Senate voted 51 vs. 48 to approve the Republican tax bill as expected and sent the bill back to the House for a final vote
- Looking ahead, highlights include the Riksbank rate decision, DoEs and NZ GDP
Asia equity markets traded with an indecisive tone after the Santa rally stalled on Wall St. where the majors retreated from record highs as participants sold the news of the House passing the tax reform bill, although the passage was later nullified after some provisions broke Senate rules. ASX 200 (+0.1%) and Nikkei 225 (+0.1%) eventually traded positive on what was a choppy session with corporate scandals clouding over Japan including the maglev bid collusion, while Subaru was the worst performer after allegations it may have falsified mileage data. Chinese stock markets fared no better as both Hang Seng (-0.1%) and Shanghai Comp. (-0.3%) traded with a lacklustre tone, amid mild profit taking from recent gains. Finally, 10yr JGBs were flat as prices failed to benefit from the sombre risk tone or Rinban announcement valued at JPY 840bln in maturities across the curve, as the BoJ also kick-started its 2-day policy meeting today.
PBoC injected CNY 40bln via 7-day, CNY 30bln via 14-day and CNY 10bln via 28-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.6066 (Prev. 6.6098)
UK PM May is set to water down her plan to enshrine the time and date of ‘Brexit day’ into UK law today. (FT)
UK PM May & US President Trump have agreed on the importance of a swift bilateral trade agreement post-Brexit. (Newswires)
UK PM May is facing calls from the European Parliament’s Brexit chief to condemn Poland’s autocratic government as a “test” of the UK’s commitment to the EU’s liberal, democratic values and the future relationship with Europe. (Telegraph)
BoE is expected to announce plans that will permit EU banks to operate in UK as normal post-Brexit. (BBC)
European Commission is expected to announce an injunction on Poland due to breach of common values and rule of law regarding a judicial overhaul. (FT)
USD was lacklustre as the House seeks to pass tax reforms and move on to the pressing issue of averting a government shutdown. This lack impetus in the greenback marginally benefitted its counterparts across the pond and saw EUR/USD hold near the prior day’s highs, while GBP/USD attempted a reclaim of the 1.3400 handle to the upside. Elsewhere, the rest of FX markets were relatively quiet heading into year-end, although NZD saw a bout of pressure on cross related flows in which AUD/USD broke above 1.1000 and after New Zealand Current Account and Trade Balance figures disappointed.
New Zealand Trade Balance (Nov) M/M -1193M vs. Exp. -550.0M (Prev. -871.0M, Rev. -843M). (Newswires)
New Zealand Current Account (Q3) Q/Q -4.68B vs. Exp. -4.290B (Prev. -0.618B).
New Zealand Current Account Balance To GDP (Q3) -2.6% vs. Exp. -2.5% (Prev. -2.8%)
Commodities saw mild gains overnight in which WTI crude futures benefitted from a larger than expected drawdown in crude stockpiles. In the metals complex, gold was marginally higher on a tepid greenback, while copper was uneventful and held near this month’s highs.
US API weekly crude stocks (15 Dec, w/e) -5.222M vs. Exp. -3.500M (Prev. 7.382M). (Newswires)
Goldman Sachs forecasts gold prices to decline to USD 1200/oz by mid-next year. (Newswires)
US Secretary of State Tillerson said pressure campaign against North Korea is to intensify. In related news, US reportedly gave China a draft proposal for tougher sanctions on North Korea. (Newswires)
South Korean President Moon stated that joint military drills with US may be postponed as a measure to ease tension in the peninsula. (Newswires)
North Korea is reported to have started tests to load anthrax onto ICBMs. (Newswires)
The treasury curve experienced some modest steepening through the US session following strong US housing data, a sizable 5s30’s steepener being implemented and on tax reform hope. At settlement, 2s30s were up by c.5bps, while 5s30s were wider by c.2bps. US 10-Year T-Note futures settle 18+ ticks lower at 123-28+.
US House initially voted 227 vs. 203 to pass the tax reform bill. However, it was later reported that the House hit a procedural snag and had to vote on the Tax Bill again today to comply with Senate rules. (Newswires)
US Senate voted 51 vs. 48 to approve the Republican tax bill as expected and sent the bill back to the House for a final vote. (Newswires)
US Senate Majority Leader McConnell said government shutdown will not happen and that there will probably be no Democratic votes for the final tax bill. (Newswires)
GOP aides stated that the House is no longer expected to vote on short-term spending bill on Wednesday and that Thursday is more likely. (Newswires)
House Republicans reportedly may settle for a stop-gap funding measure that would only fund the government until January 19th. (Politico)