Mid-week report Report 7th - 9th November
Good morning everyone,
The results of the US midterm elections have started to come in. The Democrats look to have wrestled control of the House from the Republicans, but the latter increased their majority in the Senate. The potential prospect of political gridlock may act more as a constraint on President Trump’s domestic policy than on foreign policy. If so, additional fiscal stimulus may be more difficult to pass, but the President has more leeway in trade policy, for example. The US dollar is weaker from the results.
Yesterday’s UK Cabinet meeting discussed Brexit negotiations, with the focus on options to resolve the Irish border puzzle without the risk of keeping the UK in the EU customs union permanently or the risk of Northern Ireland staying in the customs union without the rest of the UK. Reports suggest that the Cabinet may meet again on the matter later this week.
The Reserve Bank of New Zealand, meanwhile, is expected to leave interest rates on hold at 1.75% this evening (20:00GMT). In August, it no longer signaled higher interest rates next year. In fact, RBNZ Governor Orr’s most recent guidance suggests that policymakers may be considering loosening monetary conditions, although this looks less likely now that inflation is rising back towards 2%. Moreover figures released yesterday showed unemployment falling to a 10-year low of 3.9%.
Downing Street has dismissed the accuracy of a leaked document suggesting the government is planning to give MP's a vote on the final Brexit deal within three weeks. The timetable, said to have been drawn up by officials at the Brexit department, sets out how Theresa May will win public support for the agreement she hopes to bring back from Brussels. It proposes that the Commons would hold a vote on the deal on 27th November after a week in which the government would line up business leaders, foreign politicians and Westminster insiders to publicly endorse May's plan.
A government spokesperson said: "The misspelling and childish language in this document should be enough to make clear it doesn't represent then government's thinking. "You would expect the government to have plans for all situations - to be clear, this isn't one of them." The plan suggests the deal should have been agreed by the Cabinet on Tuesday. Dominic Raab, the Brexit secretary, would then have announced a "moment of decisive progress" on Thursday.