Advances In Treasury Yields, Tax Reform in Congress
September 11, 2017
Senate to take up annual defense policy bill this week; Trump pushes Congress towards tax reform; Treasury Yields advance as investors look to debt auction.
- Senate to take up annual defense policy bill this week. After several delays, the Senate will take up the annual defense policy bill in the coming week. Senate Majority Leader Mitch McConnell (R-Ky.) set up a procedural vote on the National Defense Authorization Act (NDAA) for Monday evening. Though typically passed easily with bipartisan support, the bill usually takes up days of floor time, so passage should occur towards the end of the week. The bill would authorize $640 million for the base defense budget and $60 billion for a war fund known as the Overseas Contingency Operations (OCO) account. [The Hill]
- Trump pushes Congress towards tax reform. After striking a surprising deal with Democrats to fund the government and raise the debt ceiling through December 15, President Trump is now pushing Congress to make major progress on tax reform. A tax code revamp with deep tax cuts is a major priority for the GOP, which desperately needs a big legislative win this year after the GOP’s failure to repeal ObamaCare. However, Republicans are divided over a pending budget resolution, which they would need to pass to help tax reform avoid a Senate Democratic filibuster. Currently, congressional Republican leaders and the White House agree on broad principles, but appear to still be divided on specifics. Democrats and Republicans generally both want to streamline the tax code and provide tax relief for the middle class. Many Democrats also support lowering the corporate tax rate, a major goal for the GOP, as long as it does not increase the government deficit. However, some of Trump’s tax goals directly contrast with the Democrats, supporting the wealthy and corporations. Another challenge is how to fund tax cuts without significantly increasing the government debt. Despite these challenges, GOP leaders say that the prospects of passing major tax legislation are still good. [The Hill]
Economic Indicators & News
- Treasury Yields advance as investors look to debt auction. U.S. Treasury yields increased on Monday, with no negative news from North Korea and a generally quiet weekend. Investors are now looking ahead to this week’s auction of government debt. U.S. long-dated yields, including those on two-year and three-year notes, climbed to one-week peaks. Treasury will auction $56 billion in debt this week: $24 billion in U.S. three-year notes later in the session, $20 billion in 10-year notes on Tuesday, and $12 billion in 30-year bonds on Wednesday. [Reuters]