According to Bill Diviney, senior economist at ABN AMRO, this week political event risk in the US will be more at the centre stage as compared to the UK.
“In all cases, the path of least resistance looks to be more can-kicking rather than any breakthroughs (or breakdowns) happening. First, US Trade Representative Lighthizer and Treasury Secretary Mnuchin will be in Beijing for a crucial week of US-China trade talks. With the 1 March deadline looming for the implementation of new tariffs, it looks more likely there will be an extension to this deadline than a comprehensive agreement being wrapped up beforehand – though we would not necessarily get confirmation of an extension this week.”
“Secondly, talks between Democrats and Republicans to avert another shutdown – which would happen on Friday without any agreement – appeared to stall over the weekend. We think that in the absence of an agreement over border security, another stop-gap funding bill is more likely than another shutdown, however.”
“Finally, there will be another Brexit debate and vote this week in the UK Parliament, on Thursday 14 February. Prime Minister May will make a statement tomorrow, where she is expected to update MPs on the progress in the attempted renegotiation of her Brexit deal. MPs will subsequently debate the issue and once again be able to vote on amendments on Thursday that could (for instance) require the government to seek an extension to the Article 50 deadline, or potentially to seek a softer Brexit (eg. one involving a permanent customs union, as the opposition Labour Party favours).”
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