Senate vote

Markets were thrown for a loop in the past 24 hours, with the Dow first soaring nearly 400 points on Thursday on expectations that tax reform was a done deal, when drama emerged just after the close when the Senate tax bill came this close to falling apart when the proposed "Trigger" was ruled as invalid, pushing a Thursday tax vote to this morning, and as of this moment the bill appears in limbo with the GOP scrambling to find ways to appease the sudden loud opposition among budget hawks. UBS economist Paul Donovan summarized it best this morning:

Despite a Wednesday dive in high-flying U.S. tech stocks on worries their boom may have peaked following a MS downgrade, which presured Asian stocks leading to a slide in Hong Kong and South Korean share, on Thursday morning the dip buyers have emerged and both European stocks and US equity futures are once again solidly in the green as yesterday's tech selloff is quickly forgotten.

US equity futures continued their push higher into record territory overnight (ES +0.1%), and the VIX is 1.5% lower and back under 10, after yesterday's blistering surge in US stocks which jumped 1%, the most since Sept. 11, following Powell's deregulation promise, ahead of today's 2nd estimate of U.S. Q3 GDP which is expected to be revised up. U.S.

As part of the macro forecast in his just released 2018 Credit Outlook (more on that in a subsequent post), DB's Jim Reid first looks back at the almost concluded 2017 and muses that "whichever way you cut it, it’s likely that 2017 will go down as one of, if not the least, volatile year ever for the vast majority of asset classes. The recent sell-off in early/mid November has been a bit of a wake-up call but overall this remains a blip." In fact, it makes him wonder if 2017 was "the most boring year ever?"

The traditionally illiquid post-Thanksgiving week has started with a series of whipsaws across stocks and bonds, as European stocks turned positive after starting the day on the back foot, initially mirroring a slide in Chinese stocks and price action in U.S. equity futures as investors look to a possible - and absolutely critical - tax-plan vote in the Senate this week.