The Dollar Hits and 8-day High
The dollar continues to gain traction against most major currencies. This comes despite weaker US yields which have been underperforming most of its counterparts. Investors appears to be purchasing both stocks and bonds simultaneously. With the Federal Reserve out of the way, there is little reason for investors to sell fixed income assets.
A US Spending Deal May Not be Struck
The demonstrates are offering some money for a boarder wall but much less than President Trump demands. Press reports suggest the Dems are providing 2-billion but the sticking point centers around limiting the number of illegal immigrants that can be detained by ICE. Reports suggest that a deal today is needed to move any compromise bill through both houses before the Friday deadline. Another stopgap spending bill is possible. Congress is out next week, ahead of the Long President's Day weekend.
President Trump on Sunday in several tweets accused Democratic leaders of stymieing the efforts of their congressional negotiators to reach a budget deal and avert another government shutdown. He focused strictly on the border wall and not the fact that 800K Federal workers went 35-days without pay in January. The wall will only be part of the issue. If Trump wants something from this House of Representatives, they will make him pay. The agreement if it comes is expected to include spending deals for other agencies besides Homeland Security.
The UK Economy Contracted
The UK economy contracted by 0.4% in December pushing the Q4 GDP to 0.2% from 0.6% in Q3. Expectations were for a flat reading in December and a 0.3% expansion in Q4. Consumption held up, but business investment slid to 1.4% after a 1.1% decline in Q3. Government spending jumped. Exports slowed, and imports increased over the quarter. The dismal economic performance in December renders remaining data from the end of last year moot, but worse should be expected in Q2 19 if the UK leaves the EU without an agreement.
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