Federal Government

After an early slide last night following the stunning news that Doug Jones had defeated Republican Roy Moore in the Alabama special election, becoming the first Democratic senator from Alabama in a quarter century and reducing the GOP's Senate majority to the absolute minimum 51-49, US equity futures have quickly rebounded and are once again in the green with the S&P index set for another record high, as European stocks ease slightly, and Asian stocks gain ahead of today's Fed rate hike and US CPI print.

After last week's payrolls report, the year is starting to wind down for economic events and capital markets, but not before one last hurrah for central banks: indeed, it is a very busy week dominated by central bank meetings for the FOMC, ECB, BOE, SNB and Norges Bank. We will also observe the controversial Alabama Senate elections and the EU Council summit on the state of Brexit negotiations. Data-wise, the most important economic update will be Wednesday's US CPI print, as well as industrial production releases in a number of countries including the US and China.

In an announcement that brings the federal government to the verge of a weekend shutdown, Nancy Pelosi said Democrats won’t support a Republican bill for a two-week funding extension because almost none of their demands have been met.

Speaker Paul Ryan, appearing at the same podium just minutes after Pelosi left it, said he’s optimistic the Republicans can win the GOP support to pass their CR on Thursday, the Hill reported. “I feel good where we are,” Ryan said. “It’s kind of basic governing.”

In an announcement that will provide some measure of relief for T-bill traders and others who are skeptical about Republican lawmakers' ability to compromise with their Democratic colleagues, the Republican House leadership said Tuesday they would bring a stopgap bill to extend funding at its current levels - and preserve funding for a popular child health-care program - until Dec. 22. Otherwise, the current continuing resolution would expire on Friday, tilting the federal government into its first shutdown since 2013.

Authored by Ryan McMaken via The Mises Institute,

The tax "reform" currently being discussed in Washington is mostly a political exercise for politicians who can use the process to extract more campaign contributions from supporters, and punish non-supporters. The actual tax burden imposed on Americans overall will change little.