US MARKET WRAP – Tax legislation optimism drives equities and the USD higher

Optimism that the US will get Trump’s tax reform through Congress gave equity markets a lift on Friday as reports that Republican Senator Rubio will vote for the tax plan appeared to ease some concerns that bill would struggle to get enough votes in the Senate. Bear in mind, Bob Corker is again expected to vote against the legislation, meaning the Republicans can only lose one more vote before the slim majority is wiped out.

All the major indices were higher with Discovery Communications leading the NASDAQ after an insider buy in their shares sent the stock soaring. Meanwhile, CSX lagged the rest of the market after it was announced their CEO was taking unexpected medical leave.

The USD saw some love on the tax reform hopes, rising against most major pairs. GBP underperformed despite what appeared a positive update from the EU as they signed off on the first stage of talks, signalling that stage two (trade) can begin in earnest. However, President of the EU, Jean-Claude Juncker stated that these next talks will be “harder”, a worrisome thought for the UK Brexit Secretary Davis.

Treasuries fell after the news broke that Rubio will vote in favour of the tax legislation. The curve continued its flattening trend with 30y yields dropping to their lowest level since September.

Energy markets had a quieter day with the WTI/Brent crude spread narrowing slightly after the widening seen on the closure of the Forties pipeline. The rig count failed to have much of an impact, despite the drillers taking rigs offline in the latest week, ending a run of five consecutive gains.



15 Dec 2017 - 20:30- - Source: RANsquawk

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