Lawmakers vote stimulus package, mutant Covid strain isolate UK, and it’s a risky day in the markets.
Today!
The House and Senate will vote about today $ 900 billion pandemic relief package, with the White House saying President Donald Trump would sign it. The deal includes help for small businesses, the unemployed and direct payments to most Americans. The bill on which legislators will vote is appended to a $ 1.4 trillion measure to fund government operations through the end of the fiscal year. As part of the compromise needed to reach an agreement, the Democrats allowed a provision that would prohibit the Federal Reserve from restarting a program to support corporate bonds and small businesses, which expires on December 31.
Insulation
The UK is in chaos after government revealed a new form of the coronavirus “out of hand. Authorities effectively closed off the southeast of the country, including London, and restricted travel in and out of the region. Most European countries have banned flights and ships to Great Britain. In view of the freight travel ban, there is a risk of delays essential food supplies in the days before Christmas. A WHO official said it may take more than a week to find out what the new species is like responds to vaccines.
And this…
If being cut off from the rest of the world wasn’t enough of a headache for British Prime Minister Boris Johnson, he is also facing Brexit negotiations that drag without deal. With just days left until the UK leaves the European Union’s internal market, discussions on the issue of fishing rights continue to stall. The European Parliament, which has a veto over the entire agreement, warned that it will not be able to ratify any agreement in time for the end of the transition period on December 31. The bad weekend for the UK is most evident in the currency markets where the pound has fallen more than 2.2% against the dollar.
Take the risk
Investors are seeking safety as concerns over UK’s mutated Covid tribe and more travel restrictions grow. The MSCI Asia Pacific Index fell 0.7% overnight and the Japan Topix index closed 0.2% lower. In Europe, the Stoxx 600 Index was down 3.3% at 5:50 a.m. Eastern Time, with every industry sector clearly in the red. S&P 500 futures a decline of more than 2.5% and the yield on 10-year Treasury bonds was 0.888%. Oil also submerged and gold fell.
Shortly…
The Chicago Fed National Activity Index for November is at 8:30 am. Tesla Inc. shares are starting to trade on the S&P 500 Index, and the first signs are of a difficult start with the company’s stock. 6% lower in premarket trading. Because this is Christmas week, Wednesday has been a busy week for economic data with unemployment claims, durable goods orders and personal income, all published.
What we read
This is what struck us over the weekend.
And finally, here’s what Sid is interested in this morning
The world is rushing to cut connections with the UK, including air, ferry and train travel. Britons are again worried about the threat of food shortages. Overseas logistics companies cancel business plans, given the risk of stocks and equipment getting stuck on the island.
Welcome to the home of a new coronavirus mutation ending the free movement of people, goods and services – with or without a hard Brexit. All this means that the fact that the negotiators have just missed another deadline to conclude a new European trade deal is of diminished significance to the real world at this point. Still, it’s worth noting that the European Parliament now doesn’t have time to ratify a deal before the transition period ends this year. And the bloc’s 27 national governments will still need to have a say in an 11-hour deal that looks less and less likely.
One view, of course, will be that the UK has additional incentive to adopt a more accommodative stance, given already torn supply chains and growing economic hardship. Even before news of this new virus strain got out, households were rapidly increasing their savings.
Likewise, with the British so gloomy, the economy on the ground, supply chains already exhausted and Brexit expectations so low, a harsh exit from the European trading bloc may not feel like a material blow – adding to the incentive to to do alone.
Follow Bloomberg’s Sid Verma on Twitter at @_SidVerma
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