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It’s Risk On after President Trump Signs Pandemic Aid and Spending Bill

By:
James Hyerczyk
Published: Dec 28, 2020, 03:12 UTC

Global share prices ticked up in response to the news that Trump had passed the stimulus plan and backed away from a possible government shutdown.

It’s Risk On after President Trump Signs Pandemic Aid and Spending Bill

In this article:

A rally in the U.S. stock index futures and gold, and a weaker U.S. Dollar and 10-year Treasury Notes indicate that Monday is going to be a “risk-on” session after U.S. President Donald Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a federal government shutdown in a crisis of his own making.

At 02:48 GMT, the benchmark March E-mini S&P 500 Index is up 0.53% and February Comex gold is up 1.01%. The March U.S. Dollar Index is down by 0.16% and the March Ten-Year U.S. Treasury Note is off by 0.08%.

Reuters is reporting that Trump, who leaves office on January 20 after losing November’s election to President-elect Joe Biden, backed down from his threat to block the bill, which was approved by Congress last week, after he came under intense pressure from lawmakers on both sides.

The Republican president, who golfed on Sunday and remained out of public view even as the potential government crisis loomed, had demanded that Congress change the bill to increase the size of stimulus checks for struggling Americans to $2,000 from $600.

It was not immediately clear why Trump changed his mind as his resistance to the massive legislative package promised a chaotic final stretch of his presidency, according to Reuters.

White House officials have been tight-lipped about Trump’s thinking but a source familiar with the situation said some advisers had urged him to relent because they did not see the point of refusing.

“Good news on COVID Relief Bill. Information to follow!” Trump said in a cryptic message on Twitter earlier on Sunday evening But he offered no explanation.

Global Markets Like the News

Global share prices ticked up in response to the news that Trump had passed the stimulus plan and backed away from a possible government shutdown. Japan Nikkei Index gained around 0.4%, and spot gold prices rose nearly 1%.

“It is positive for markets that we no longer have a chaos over stimulus, considering there was a chance of a partial government shutdown,” said Masahiro Ichikawa, chief strategist at Sumimoto Mitsui DS Asset Management.

Democrats Sided With Trump, but Not His Method

Democratic-controlled House of Representatives planned to vote on Monday to increase coronavirus relief checks to individuals from $600 to $2,000, and said the Senate “will start the process” to approve higher payments.

U.S. Senate Majority Leader Mitch McConnell, a fellow Republican, said “I thank the President for signing this relief into law” but made no mention of any plans for a Senate vote on higher relief payments.

Many economists also agreed the financial aid in the bill should be higher to get the economy moving again but say that immediate support for Americans hit by coronavirus lockdowns is still urgently needed.

However, this comment opens the door for an even larger fiscal stimulus package once President-elect Joe Biden takes office on January 20.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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