US: Committee Chairs To Begin Work On Reconcilliation Package During Recess
House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) have tasked their committee chairs with using the two-week Congressional recess, which is underway now, to start bridging internal differences over items to be included in the mammoth Republican reconciliation package. House Republicans intend to begin marking up their version of the bill as soon as Congress returns to Washington. Note: Tax bills must start in the House of Representatives.
- Politico notes: “The joint budget plan approved Thursday orders committees to deliver their respective sections of the bill by May 9, though that deadline is not binding.”
- Punchbowl News reports: “The House committees expected to be among the first to mark up include the Judiciary, Homeland Security and Armed Services, three of the key authorizing committees. These markups will likely begin the week of April 28, GOP sources say.”
- Those committees should provide a temperature check on the process as they cover the more bipartisan defence items in the bill, rather than the more contentious tax reform and spending cuts that are likely to throw up major disagreement between conservatives and moderates.
- House Budget Chair Jodey Arrington (R-TX) warned if Senate Republicans “materially change” the bill the House sends to the Senate, “that’s only going to imperil the ‘America First’ agenda, and it’s only going to prolong the process.”
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
