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Futures Jump On “Large-Scale” Deal Optimism

Just two days after a Trump tweet “crushed” hopes for any more fiscal stimulus talks, optimism for not just a stimulus deal but for a “large-scale” deal is back front and center, after the White House reversed again late on Thursday after media reports that Trump was concerned by the market reaction to him walking away from stimulus discussions, and signaled that the administration is again leaning toward a large-scale stimulus bill after House Speaker Nancy Pelosi pushed back on the idea of individual measures for parts of the economy hit by the Covid-19 crisis. According to a Pelosi spokesman, Mnuchin told Pelosi in a 40-minute call that President Donald Trump wants agreement on a comprehensive stimulus package, which was enough to send futures blasting higher, and hitting 3460 overnight, a level last seen on Sept 4 just after the market slumped from its all-time highs. The MSCI world equity index was up 0.1% at a more than one month high; yields and the dollar dropped, while the Chinese yuan and gold surged.

However, opposition remains among Senate republicans for a large deal with some saying that enough stimulus has already been injected, and so time is very tight for any legislation to reach the president’s desk before the end of October. As Politico notes, to “get a deal, the White House needs to empower MNUCHIN to get something done — something they haven’t done yet; TRUMP needs to expend serious political capital to get a big vote in House as a signal to the Senate that it has cover voting yes.”

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