Good morning,
USD: Big speeches
President Trump is set to rest from taking on the entire US sports industry and announce the Republican tax overhaul plan this afternoon. The main impetus of the plan will be reduce corporate tax down closer to the 15% that Trump campaigned upon; it currently sits at 35% and most reports suggest that Congress will eventually agree on a figure between 20/25%.
As we have seen in the 8 months of the Trump administration there is a distinct vacuum between a speech and the action; the Mexican border wall, the Obamacare repeal act and other regulatory battles have all fallen by the wayside.
The key with a Trump speech is what else he says. Speeches on the economy can veer into a broadside at Hillary Clinton, China, Mexico, hurricanes or North Korea; while we may be listening for detail on the tax plan, it is what we hear on other matters that may have the market impact.
Fed Chair Yellen gave a speech yesterday on ‘Inflation, Uncertainty, and Monetary Policy’ that they need to continue gradual rate hikes despite weak inflation. It “would be imprudent to keep monetary policy on hold until inflation is back to 2 percent”. Needless to say we see this speech and other comments as consistent with an interest rate increase in the United States in December.
UK: Doors still closed
Brexit rumbles on like a man standing still and waiting to eventually be mown down by a steamroller. There has been no real news out of the 4th round of negotiations that are currently taking place in Brussels except for another note, this time from EU President Tusk, that ‘sufficient progress’ has not been made and therefore the door to talks on trade remain closed.
Housing some problems
An Englishman’s home is his castle is a well-worn phrase in property circles and the UK’s property market is most certainly well worn.
In our October webinar we will take a look at the outlook for the UK housing market, how the softening of UK data in the past 6 months has impacted the industry and what the weakness in sterling and the uncertainty over Brexit may hold for residential and commercial property.
The webinar will take place this Wednesday at 2pm BST and you can register to attend here. If you are unable to attend a recording of the webinar will be available on Thursday afternoon and of course please feel free to submit any questions you may have in advance.
The Day Ahead
It really is quiet out there; we don’t have an exact time for when Trump will get up and speak but that will dominate what the USD gets up to following a few days of outright strength, especially against the EUR.
Have a great day