IBEX 35

Spanish stocks and the euro fell, while Spanish government bond yields hit their highest levels in over a month after Catalan secessionists delivered an unexpected blow to the government of Spanish PM Rajoy by winning the Catalan regional election. Meanwhile across the Atlantic, U.S. equity futures and the dollar rose on the last trading session before the Christmas holiday. The MSCI index of world stocks was flat.

Dow futures are up some 80 points this morning after early on Wednesday morning the Senate passed the Tax Reform bill in a party-line vote, and is now set to become law after a follow-up vote in the House and Trump's signature some time on Wednesday afternoon. The good news is that the biggest political drama of 2017 will then be over. The bad news is that once the bill becomes law, the market will no longer be able to "price it in" every single day as it has for the past year.

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.

A selloff which started in Asia, driven by renewed liquidation of Chinese and Hong Kong tech stocks and accelerated by weaker metal prices which pushed the Shanghai Composite below a key support and to 4 month lows...

Authored by Saxo Bank's Head of Macro Strategy, Dembik Christopher, via TradingFloor.com,

• We expect softer-than-consensus 2018 growth
• Lowflation structural, not transitory
• Housing bubbles remain a concern (Bitcoin not so much)

The year 2018 starts with four main questions:

1. Is economic growth on a solid footing?
2. Will inflation ever come back?
3. Should we fear higher bond yields?
4. What could go wrong?

Is economic growth on a solid footing?