Trump restates demand for border wall funding, it’s a big week in European politics, and travel chaos in U.S. continues. Here are some of the things people in markets are talking about today.
No wall, no DACA
President Donald Trump warned in a weekend press conference that there would be no granting of legal status to young undocumented immigrants unless funding is granted for his proposed border wall with Mexico. Democratic lawmakers, who have already rejected the proposal, want the restoration of legal protection to young immigrants to be part of a spending bill that must pass by Jan. 19 in order to avoid a government shutdown. Elsewhere, former White House chief strategist Steve Bannon issued a lengthy apology to Trump, describing him as “both a patriot and a good man,” following the president’s angry reaction to comments attributed to Bannon in Michael Wolff’s book, “Fire and Fury: Inside the Trump White House.”
In the U.K., Prime Minister Theresa May is readying a cabinet reshuffle, with London’s Telegraph newspaper reporting that she may appoint a “minister for no deal” to prepare for a possible acrimonious exit from the European Union. In Germany, negotiations on forming a government are still at the exploratory stage, with analysts suggesting that the current round of talks may be the last chance to form an alliance between Chancellor Angela Merkel’s bloc and the main opposition SPD party. The Italian political landscape, meanwhile, looks set to see the return of Silvio Berlusconi – who cannot run for elected office following a 2013 tax-fraud conviction – after the March 4 election, with the alliance he leads potentially poised to hold the balance of power, according to polls.
U.S. weather-related travel problems intensified after flooding at New York’s John F. Kennedy International Airport caused fresh flight delays and diversions. The good news for travelers is that the recent cold snap is set to pass today, with temperatures returning towards their seasonal norms. On the other side of the world, by contrast, temperatures in Sydney, Australia reached 117 degrees Fahrenheit on the hottest day there since 1939.
Global equity markets continue their strong start to the year, with the MSCI Asia Pacific Index rising 0.2 percent overnight, while Australia’s benchmark S&P/ASX 200 reached the highest level in 10 years. In Europe, the Stoxx 600 was 0.2 percent higher at 5:45 a.m. Eastern Time as a gauge of economic confidence for the euro area climbed to the strongest level since December 2000. S&P 500 futures were flat, the two-year Treasury yield was still holding just below 2 percent, and gold was unchanged.
In what is shaping up to be a relatively thin week for economic data, the one nugget that may move markets is Friday’s U.S. CPI data, which are expected to show price pressures remained muted in December. Should the numbers match expectations, and following from Friday’s weaker-than-expected jobs print, market participants may moderate the projected pace of Federal Reserve tightening.