U.S.:
Trump’s Surprise Deal With Democrats Sets Up Christmas Showdown
President Donald Trump’s unexpected decision to spurn his Republican allies in Congress by striking a short-term debt-limit deal with Democrats leaves the GOP reeling and lawmakers bracing for a bruising battle in December. Trump’s move undercut GOP leaders in the House and Senate, as well as his own Treasury secretary, who had been arguing for a longer-term extension. It also left Republicans, who were blindsided by the deal, angry and disappointed with their own leaders and, to a lesser degree, Trump. “Democrats got exactly what they wanted,” House Freedom Caucus head Mark Meadows said Wednesday, adding that the deal “gives them the greatest leverage in the world to get exactly what they want later.” At a Bloomberg News breakfast Thursday, he said his caucus can’t stop the deal. During an Oval Office meeting Wednesday, Trump accepted a proposal by Senate Minority Leader Chuck Schumer and his House counterpart, Nancy Pelosi, to tie a three-month suspension of the debt limit to a Hurricane Harvey relief measure — and throw in a stopgap continuing resolution to fund the government into December. The episode provided the latest illustration of the bind Republicans find themselves in. Even though they control the White House and both chambers of Congress, they’ve been unable to set aside their own differences to get much done. Instead, this latest deal may have simply handed Democrats the upper hand heading into a confrontational end-of-the-year negotiation.
Europe:
Dollar Tumbles as Yen, Euro Rally on Irma, ECB: Markets Wrap
The dollar tumbled to its weakest level since the start of 2015 amid fading expectations of another U.S. rate increase this year. Havens including gold and the yen rallied as North Korea tensions and natural disasters unsettled investors. Stocks in Europe struggled for traction as the euro extended its march above $1.20, while S&P 500 index futures dropped. The dollar’s decline deepened as traders girded for economic damage to Florida from Hurricane Irma, set to make landfall on Sunday. The most powerful earthquake in a century shook Mexico, adding to investor anxiety. Ten-year Treasury yields were steady after inching closer toward 2 percent and gold headed for a third weekly advance ahead of a potential North Korean missile launch. Copper led a drop in industrial metals. A robust economic recovery amid stubbornly low inflation in the euro region is helping propel the common currency’s surge of more than 14 percent against the dollar this year. European Central Bank President Mario Draghi on Wednesday expressed concern about the euro’s strength without offering any suggestion on how to to address it as policy makers edge toward settling the future of their bond-buying program. “At its current level, the Euro is not a threat for the euro zone,” Philippe Ithurbide, global head of research at Amundi Asset Management, said in a report. “If the euro stabilizes, or continues a gradual appreciation path as in our base scenario, the ECB could announce — maybe in October — a reduction, starting in January 2018, of the quantitative easing program. Should the euro continue to appreciate rapidly, the ECB could become more dovish and postpone its tapering.”
South America:
Venezuela’s Maduro says bondholders invited to talks
President Nicolas Maduro said Venezuela would keep paying its foreign debt, despite an economic crisis and U.S. financial sanctions, but was also hoping to talk to bondholders soon. “Next week, all the holders of bonds with capital and interest due are invited,” he said in a speech late on Thursday to the new Constituent Assembly. “This week, we have already had some bilateral conversations (with creditors),” he added after emphasizing that Venezuela would honor all its debt commitments. Maduro did not give more details of what his government wanted to discuss with bondholders or where talks would be held. The government and state oil company PDVSA have to pay more than $4 billion in debt and interest during the rest of 2017. The OPEC nation is in the fourth year of recession, with its population grappling with triple-digit inflation and shortages of food and medicine. Calling Maduro a “dictator”, U.S. President Donald Trump signed an executive order last month that prohibits Americans from dealing in new debt issued by the Venezuelan government or PDVSA. That could complicate any possible debt refinancing attempt. In the same address, Maduro said cash-strapped Venezuela would seek to “free” itself of the U.S. dollar and “implement a new system of international payments” using currencies such as the yuan, yen, rupee, euro and ruble. The Venezuelan president did not, however, specify whether paying in a different currency was an option his government wanted to discuss with bondholders.