One of the biggest political overhangs facing the market may have just been removed, when moments ago AP and other newswires reported that House Democrats and Republicans are said to have reached a $1 trillion spending deal to keep the government – which is currently operating thanks to a last minute one-week stopgap measure enacted on Friday – open until October 1.
BREAKING: Congressional Republicans, Democrats reach agreement on $1T measure to fund government until Oct. 1.
— AP Politics (@AP_Politics) May 1, 2017
According to Washington Post, negotiators from both parties reached an agreement on a spending package to fund the government through the end of September, alleviating fears of a government shutdown later this week. Congress is expected to vote early this week on the package, with the bipartisan agreement expected to include increases for military spending and border security, a major priority for GOP leaders in Congress.
The agreement follows weeks of tense negotiations between Democrats and GOP leaders after President Trump insisted that the deal include funds to begin construction of a wall along the U.S. border with Mexico. Trump eventually dropped that demand, leaving Congress to resolve lingering issues over several unrelated policy measures.
There is a non-trivial chance the Sunday night announcement is merely a trial balloon, because as the WaPo adds “the details of the agreement were not yet clear on Sunday night” which would suggest that there is a high likelihood that whatever tentative deal was reached, ultimately falls through.
For now, however, this is good news, and it has sent both the pound and yen sliding, and the dollar rising on hopes that politics will not be a major risk factor for at least 5 months.
House Republicans have struggled in recent weeks to keep their members focused on spending as White House officials and conservatives pressed leaders to revive plans for a vote on health-care legislation. The health-care fight became tangled last week with the spending talks as leaders worried that forcing a vote to repeal the Affordable Care Act risked angering Democrats whose votes are necessary to avoid a government shutdown.
Another possible threat is that the GOP pushes on with Obamacare repeal, a gambit which may prompt Democrats to withdraw any support they voiced for Sunday’s “deal.”
GOP leaders worked last week to determine if there are enough votes in the House to pass a revised health-care bill brokered by the White House, the head of the conservative House Freedom Caucus and a top member of the moderate Tuesday Group. House Speaker Paul D. Ryan (R-Wis.) and his top lieutenants announced Thursday that they did not have sufficient votes to be sure the health-care bill would pass but vowed to press on.
“We’re still educating members,” House Majority Leader Kevin McCarthy (R-Calif.) told reporters after a late-night health care meeting last week. “We’ve been making great progress. As soon as we have the votes, we’ll vote on it.”
And now, in the spirit of trial balloons everywhere, we await the denial from yet other “unnamed sources.”
via http://ift.tt/2qtH7af Tyler Durden