US: House Returns To Dysfunction After Spending Plan B Collapses
Dec-20 11:27
Funding for US federal government agencies expires at 00:01 ET 05:01 GMT Saturday, with no clear route for passing a spending bill that will avert a government shutdown. Yesterday’s ad hoc negotiations to devise a Plan B spending bill were injected with fresh uncertainty after President-elect Donald Trump demanded that a suspension, or abolition, of the debt ceiling be included in a final funding package.
- With the collapse of the Plan B bill, the House of Representatives has returned to a state of dysfunction, puncturing a short-lived sense of optimism that Trump’s re-election and Republican control of both chambers of Congress in 2025 would compel an armistice between Republican factions, facilitating a smoother implementation of Trump’s agenda.
- Wednesday’s implosion of a 1,500-page-plus bipartisan funding bill - stuffed with last-minute policy add-ons - and a hastily cobbled together 116-page plan B package yesterday has dented House Speaker Mike Johnson (R-LA) and increased uncertainty surrounding the January 3 floor vote for speaker.
- The episode has also raised questions about Trump’s strategy and the level of influence his unelected advisor, Elon Musk, has over the direction of the incoming administration.
- Please find in the attached PDF article a summary of yesterday's events and a full round-up of the pathways to resolving the stand-off.
Full article: Spending Plan B Collapses
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STIR: Little Change In Near-Term Fed Rates, Fedspeak Eyed
Nov-20 11:25
- Fed Funds implied rates are little changed out to mid-2025, with likely focus on today’s Fedspeak amidst a very little data docket.
- Cumulative cuts from 4.58% effective: 15bp Dec, 21bp Jan, 36bp Mar and 55bp June.
- From a monetary policy angle, permanent voters Cook and Bowman are of particular interest before ’25 voter Collins. Following last week’s hawkish Fedspeak, including from a previously dovish Gov. Kugler (recap here), we watch for both openness to a pause in December and any views on neutral rate estimates.
- Leading hawk Bowman refrained from dissenting to the 25bp cut at the Nov 6-7 FOMC meeting having objected to the 50bp cut in September, but these will be her first comments since both the US election and the Nov FOMC. Recall that Dallas Fed's Logan mused last week that the Fed had
perhaps already reached neutral rates. Gov. Cook meanwhile last spoke early Oct/late Sept. - 1000ET – VC Supervision testifies on prudential regulator oversight (text + Q&A).
- 1100ET – Gov Cook on economic outlook and mon pol (text + Q&A)
- 1215ET – Gov Bowman on the approach to agency policymaking (text + Q&A)
- 1600ET – Collins (’25 voter) speaks on mon pol (text + Q&A)
LOOK AHEAD: Wednesday Data Calendar: Fed Speak, Tsy 20Y Bond Auction
Nov-20 11:24
- US Data/Speaker Calendar (prior, estimate)
- Nov-20 0700 MBA Mortgage Applications (0.5%, --)
- Nov-20 1000 Fed VC Barr testimony to House Fncl Services Comm (text, Q&A)
- Nov-20 1100 Fed Gov Cook economy/mon-pol outlook (text, Q&A)
- Nov-20 1130 US Tsy $64B 17W & $50B 40D CMB auctions
- Nov-20 1215 Fed Gov Bowman on policymaking (text, Q&A)
- Nov-20 1300 US Tsy $16B 20Y Bond auction (912810UF3)
- Nov-20 1600 Boston Fed Collins moderated discussion on policy (text, Q&A)
OUTLOOK: Price Signal Summary - Bear Flag In EURUSD
Nov-20 11:21
- In FX, short-term gains in EURUSD are considered corrective - for now - and the trend direction remains down. The latest pause appears to be a bear flag - a bearish continuation pattern. Note too that moving average studies remain in a bear-mode position, highlighting a dominant downtrend. Sights are on 1.0484 next, the 1.00 projection of the Sep 25 - Oct 23 - Nov 5 price swing. Initial firm resistance to watch is 1.0728, the 20-day EMA.
- The trend condition in GBPUSD remains bearish and the pair is trading at its recent lows. Moving average studies are in a bear-mode set-up, highlighting a clear downtrend. A recent support at 1.2665, the Aug 8 low, has recently been cleared, paving the way for a move towards 1.2568, the 76.4% retracement of the Apr 22 - Sep 26 bull cycle. Initial firm resistance to watch is at 1.2844 the 20-day EMA. A short-term bounce would be considered corrective.
- The USDJPY trend condition remains bullish and the latest pullback appears corrective. Price has remained above support at the 20-day EMA, at 153.20. Moving average studies are in a bull-mode position highlighting a dominant uptrend and sights are on 156.88 next, a 2.236 projection of the Sep 16 - 27 - 30 price swing. On the downside, a clear breach of the 20-day EMA would signal the start of a stronger corrective phase.
