- Dollar Rises as Stocks Fluctuate Before Tax Reveal
The dollar rose while U.S. stock futures fluctuated with Treasuries as investors await details of the Trump administration’s tax cut plan that could breathe new life into flagging reflation trades.
French election results, strong first-quarter earnings and speculation Trump’s plan will further boost corporate profits sparked risk appetite this week, sending U.S. equities within striking distance of all-time highs and sinking the CBOE Volatility Index to a three-month low. Signs the rally is losing steam emerged Wednesday, with Treasuries halting a five-day slide and European equities dropping for the first time in six sessions. Oil languished below $50 a barrel.
President Donald Trump is expected to call for slashing the corporate tax rate to 15 percent and applying a 10 percent tax to earnings held overseas as part of the White House effort to overhaul the American levy system. The timing of the announcement has not been disclosed. The move comes days before the government faces a possible shutdown over funding and Trump celebrates his 100th day in office. Reviews by the Japanese and European Central Bank may also set the tone for rest of the week.
“Markets will take a breather today before embarking on a frantic end to the week with a flurry of central bank meetings,”” economists at Societe Generale SA led by Michala Marcussen wrote in a client note. “In the U.S., we see the risk of a government shutdown as low but also remain skeptical” that a “budget bill that funds the government only for an additional five months will bring” much relief.