As we enter the final week of 2020, we remain hopeful that 2 major pending issues of 2020 are to be finalized – the stimulus out of the U.S. and Brexit agreement between the EU and the U.K.
Legislative package offering a relief to millions of Americans and businesses was passed by both chambers of Congress with bipartisan support, only to be vetoed by President Trump. The bill comes at a critical time – two pandemic support programs expired last week. The first provides benefits to the so-called gig economy workers and the other to long-term unemployed workers. As of early December, there were around 14 million people receiving such benefits, according to WSJ. Approximately 10 million workers are estimated to lose their benefits at the end of December. Moreover, another 4 million Americans will follow suit in the next weeks, according to Brookings Institute issued report. The proposed bill extends the period unemployed people are eligible for benefits to 50 weeks. Also, the bill offers support of US$ 25 billion to tenants in arrears of their rent, on top of assistance programs to airlines, entertainment establishments, as well as vaccination related programs. On top of that, Americans would receive US$ 600 dollars as a direct coronavirus-related relief payment. The latter point has been vetoed by President Trump who called the lawmakers to increase the payment to US$ 2000. The Republican Party, being in control of the Congress, has not yet disclosed whether the proposal would get a vote. What’s certain though is that time is running out – the deadline for the approval is on Tuesday in order to avoid a government shutdown.
The EU and the U.K. have finally come to an agreement that would govern the rules of trade and other policies, following a historic referendum in June 2016 to leave the bloc. The agreement, that has forced two U.K. Prime Ministers – James Cameron and Theresa May to resign, has proven to be almost unsurmountable task. The final deadline, albeit postponed for a number of times, was set as December 31, 2020. The leaders of both the EU and the U.K. have expressed their satisfaction with the agreement. The most important aspect of the agreement is tariff-free trade between the two counterparts, although importers and exporters are still expected to submit pages worth of document. Around 43% of British exports go to the EU, making the latter the most important trading partner for the Britons, according to WSJ. Free movement of people will come to a halt, while trade in services will decrease significantly, damaging London’s position as a pan-European financial capital. An exception was made to Northern Ireland that will remain in the EU’s customs area, whilst being part of the
The markets have been stale during the week of Christmas – S&P500 closed the week up 48 bps at 3,703.07, while Nasdaq100 was up 1% at 12,711.01. Gold was flat at 1,879.55, while US dollar (measured by DXY) was up 32 bps, closing near 90.22
Have a great trading week ahead!