Stimulus remains the hottest buzzword in terms of news from the United States at the moment. After Trump ordered his administration to stop negotiating with House Democrats, and after he also revealed he would support limited stimulus packages a day later, now the President appears to have lost control over his cabinet completely.
Treasury Secretary Steve Mnuchin is once again negotiating with House Speaker Nancy Pelosi, who previously criticized Trump’s stimulus plan for not offering enough funding to local governments. The Democrat leader seems to have revived the hopes of a more comprehensive stimulus bill, such as what her Party has been fighting for over the past two months.
The possibility of stimulus is leading a rally in US stock indices because the US economy is definitely in need of a push in the direction of economic recovery. In addition, the prospects of more fiscal stimulus are also increasing together with Joe Biden’s fight for the White House, as now most polls indicate he is leading Trump even in many of the swing states.
The renewed hope of stimulus comes on the back of higher than forecasted initial jobless claims this week, a testament to the blow that the US labor market has been dealt by the pandemic.
Speaking of coronavirus-related economic trouble, a flood of fundamental reports from the United Kingdom today massively disappointed investors. Two GDP readings, trade balance data, and both industrial and manufacturing production reports all came lower than anticipated, showing just how much the kingdom has been affected by the pandemic. Most of this data does not account for the latest Covid-19 outbreak in the UK.
Another interesting market development today was that the Chinese yuan reached its highest level in a year and a half. The rally was due to upbeat reports from China and the prospect of Biden winning the US election. Joe Biden is more likely to patch up America’s relationship with China that has only deteriorated during Trump’s presidency.
Later in the day we expect data on the unemployed rate from Canada, wrapping up this week’s fundamental events.
