Treasury Yields Rise Ahead of Fed Meeting
September 19, 2017
Senators reach a tentative deal on Republican tax policy, overriding deficit hawk’s worries; The White House throws its weight behind last ditch Obamacare repeal; US homebuilding weak on input scarcity, Harvey; US Treasury yields rise ahead of Fed meeting.
- Senators reach a tentative deal on Republican tax policy, overriding deficit hawk’s worries. A number of Republican Senators working on tax policy seem to have settled on approximately $1.5 trillion in tax cuts, a departure from more deficit conscious figures from the conservative wing of the party. A number of senators, like Ron Johnson (WI-R), explain that the resulting economic growth from tax cuts will help to offset the revenue reductions, indicating the statically scored deficit increase figures are too high. Critics decried the high tax cuts, arguing that increasing the deficit this dramatically is “irresponsible” and that dynamic scoring and other policy adjustments only account for a fraction of the intended tax breaks. While a number of Republicans, including Majority Leader Mitch McConnell, have called for conservative fiscal policy that doesn’t increase the national debt, it seems other sections of the party have come to a less conservative consensus. [Bloomberg]
- The White House throws its weight behind last ditch Obamacare repeal. Last ditch efforts to repeal Obamacare have picked up steam, with a number of key Republican Senators warming to the idea. The Republicans only have 12 more days to deliver on their campaign promise of repealing the Affordable Care Act, and it appears that a final attempt to do so is gathering support. If the repeal does get considered, it will likely be without a full analysis from the Congressional Budget Office, which means Senators will be legislating without the benefit of premium estimates and full coverage numbers. The bill replaces the subsidies with block grants to states and eliminates the individual coverage mandate. While just last week it seemed bipartisan efforts to fix Obamacare were gaining traction, this movement appears to have taken precedence. Minority Leader Chuck Schumer criticized the efforts, saying “This bill is worse than the last bill. And it will slash Medicaid, get rid of pre-existing conditions [coverage],” said Senate Minority Leader Chuck Schumer of New York. “It’s very, very bad.” [Politico]
Economic Indicators & News
- US homebuilding weak on input scarcity, Harvey. US homebuilding fell for a second month in a row, as permits for single family homes, the bulk of housing, dropped. Less than stellar readings indicate homebuilding could pull down 3rd quarter economic growth. While rebuilding in the wake of hurricanes Harvey and Irma might have spurred growth, a scarcity of skilled labor will make the construction slow going. Home completions have also stalled in the wake of the hurricanes, depressing a market already dragged down by a lack of land, labor and higher priced building materials. [Reuters]
- US Treasury yields rise ahead of Fed meeting. The US’ central bank is meeting Tuesday and Wednesday this week to discuss plans to unwind the $4.5 trillion in assets it acquired in the wake of the financial crisis. Treasury yields rose as investors prepared for the selloff of some of these assets. The meetings will also discuss the possibility of a rate hike, and, though a rate hike would be shocking, one is quite possible later this year. Most investors are anticipating a rate increase in December, if inflation meets expectations. [CNBC]