GERMANY: CDU Motion Urging Closure Of Borders Passes w/AfD Support
The Bundestag has approved a conservative Christian Democratic Union (CDU) motion regarding a five-point plan to end illegal immigration by 348 votes to 345 with 10 abstentions. The motion passed with the support of the far-right Alternative for Germany (AfD) and the pro-business liberal Free Democrats (FDP). The motion is not legally binding on the gov't of Chancellor Olaf Scholz.
- A more consequential vote is set to come on Friday 31 Jan. As The Guardian reports, the passage of the motion will "greatly escalate tensions between the CDU and Scholz’s government and would give Merz the upper hand in terms of trying to push the motion into law, the process of which could start as early as Friday."
- Friday's 'Influx Limitation Law' looks likely to pass given that the left-wing nationalist Sahra Wagenknecht Alliance (BSW) - whose 10 deputies abstained today - has indicated it will support the legislation.
- Once passed by the Bundestag, backing from the Bundestrat (upper house) would be required. The Guardian reports: "The earliest date for a next sitting of that house would be 14 February, nine days ahead of the general election. However, they are not likely to approve it because the CDU/CSU does not have a majority there."
- Post-election, with the CDU/CSU likely to be in a position to lead the next gov't the legislation could make a return. The CDU's coalition partners - likely the centre-left Social Democrats or Greens - could look to dilute the legislation.
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FED: US TSY 13W BILL AUCTION: HIGH 4.230%(ALLOT 95.14%)
- US TSY 13W BILL AUCTION: HIGH 4.230%(ALLOT 95.14%)
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FED: US TSY 26W BILL AUCTION: HIGH 4.135%(ALLOT 61.57%)
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US DATA: Stronger Dallas Fed Manufacturing Only Partly Offsets Wider Weakness
December's Dallas Fed Manufacturing Survey beat expectations with a headline reading of positive 3.4 vs -3.0 expected and -2.7 prior. That's the first positive reading in 32 months and the highest in 33, highlighted by a much stronger new orders reading (up 11 points to -0.9, pointing to unchanged demand from the prior month but still the best reading in 31 months).
- Other readings were mostly stronger vs November, including production, capacity utilization, shipments, expectations, though the employment subindices were a little softer.
- Notably though, there were much lower inflationary pressures evident in the survey, with raw materials prices falling 18 points to a 17-month low 10.5, with finished goods falling 12 points to -3.4, the first negative reading this year.
- Dallas is the 5th regional Fed to publish its December manufacturing report, and overall they were very mixed: Empire fell to 0.2 from 31.2 and Philly to -16.4 from -5.5, with Kansas City to -4 from -2, more than offsetting the improvements in Richmond (-10 from -14) and Dallas.
- That's not to mention the December MNI Chicago PMI which fell to 36.9 vs 40.2 prior, and the preliminary S&P Global PMI dipping to 48.3 from 49.7.
- As such despite an apparent improvement in some regional survey optimism immediately following the November elections (and again, this was quite mixed - the range of survey scores was the broadest since April 2020), the overall theme of the manufacturing sector remaining steady at a weak level generally remains intact.
