US: Trump’s tax plans were laid out - SocGen

Kit Juckes, Research Analyst at Societe Generale, explains that US President Trump’s tax plans were laid out in a few bullet-points, which feeds unease about how much of this can really be passed into law by divided Republicans in Congress.

Key Quotes

“So, while plans to cut corporation tax rates, simplify the tax code and encourage repatriation of money from overseas look very positi8ve for the economy on the surface, market participants are holding back their enthusiasm until they see detail of how they will be funded. The one proposal that did more FX markets was that the assurance that NAFTA will survive. That meant that the MXN was the strongest major currency overnight, up by over 1% against the dollar, while the CAD was the strongest of the G10- currencies.”

“The MXN bounce speaks to the power of carry in this market, as almost half of the sell-off we saw in the previous couple of days has already been recovered. In that kind of a world, shorting the yen still makes sense.”