Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Outlook: Biden's Honeymoon

By MarketPulse (Jeffrey Halley)Market OverviewJan 21, 2021 04:42AM ET
Outlook: Biden's Honeymoon
By MarketPulse (Jeffrey Halley)   |  Jan 21, 2021 04:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

For all the noise about the Biden USD1.9 trillion stimulus package that we are writing about ad nauseum, and the follow-on remake America spending the new President also wishes to enact, one critical risk remains and is being totally ignored by financial markets everywhere. That is the inclination of the Republican minority in the US Senate to bipartisanship. Their silence has been deafening until now on how cooperative they intend to be with the new President.

Certain aspects of the Biden stimulus plan, and his follow-on spending wishes will almost certainly require a 60-vote majority in the Senate under the Byrd Rule. Otherwise, they will enter reconciliation, piece by piece in Senate committees to work around the filibuster. The net result will be a long drawn out process and risks momentum being lost on the Biden plan. It should also be noted that some Democrat Senators are more right of centre, making controversial passages potentially challenging to pass even within their own party.

With financial markets all in on USD1.9 trillion, it could be an unwelcome surprise when that number almost certainly gets put on a diet. The momentum has clearly swung back to the stimulus-driven, global recovery FOMO trade, notably the US dollar correction higher appears to have finished for now. However, don’t count out its reappearance once Senate Republicans make their positions clear.

We have a flurry of central bank decisions due today. The Bank of Japan should release an unchanged decision shortly with the main risk being a surprise tweaking of their quantitative easing programme. Bank Indonesia (BI) releases its latest rate decision at 1530 SGT. The re-imposition of partial Covid-19 lockdowns across the most populous parts of the country will slow the economic recovery. That raises the base case for more easing, but BI is likely to place more weight on the Indonesian rupiah, which had slid back above 14,000 versus the dollar. BI is expected to remain unchanged at 3.75%.

Bank Negara Malaysia (BNM) surprised markets by leaving rates unchanged at 1.75% yesterday. Although most of the country is now under Covid-19 movement control orders, BNM broke with market expectations and said it saw signs of domestic recovery, despite the short-term situation. The ringgit traced out a chunky rally in response, USD/MYR falling from a high of 4.0480 yesterday to 4.0330 this morning, and well off its highs near 4.0700 last week.

The European Central Bank (ECB) also releases its latest decision this afternoon, but it is unlikely to have much market impact. The ECB will hold pat while noting the downside growth risks associated with the pan-European Covid-19 restrictions. Potentially, the only surprise will be if it mentions elevated medium inflation risks. Given that they have been waiting for inflation to appear for about 15 years, they should be grateful. The euro underperformed versus the commodity-bloc overnight, and the technical picture suggests the recent correction lower is not out of the woods yet.

Weekly US Initial Jobless Claims is expected to print another dire number above 800,000 jobs lost this evening. Any market impact will be muted though unless the number seriously blows out to the topside. Markets remain target fixated on the Biden USD1.9 trillion stimulus plan as an instant panacea to America’s ills, and the claims data will be swept aside in that euphoric rush.

For now, Biden’s honeymoon in DC is the one ring to rule them all, with 1.9 trillion reasons to back it up. Unlike Honeymoon in Vegas, President Biden can’t rely on squadrons of Flying Elvis’ parachuting in to save the day in the Senate. That is a Return of King I’d love to see though.

Original Post

Outlook: Biden's Honeymoon

Related Articles

Outlook: Biden's Honeymoon

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email