US: Round and round the political mulberry bush - SocGen
Kit Juckes, Research Analyst at Societe Generale, explains that where the news that Michael Flynn will plead guilty to lying to the FBI took the dollar, Treasury yields and the market mood down, the news that the Senate passed its version of the tax bill has taken the dollar, yields and risk sentiment back up.
“Robert Mueller’s investigation into Russian involvement in the 2016 election continues and the tax focus moves to reconciling the House and Senate bills. As all that trundles away in the background, a choppy week seems likely, with the focus trying, perhaps, to return to economics. We get factory orders today, the non-manufacturing ISM tomorrow and the labour report on Friday. The 12-month NFP average gain has slowed from just above 200k a year ago to 167k now, and while GDP growth is fine and productivity has recovered somewhat, the US economy is still more likely to trundle along than to spring a significant positive surprise. Range-bound bond yields and a gradual dollar downtrend sill seem likely and days like today, when it’s bouncing, are a chance to sell.”