{"id":152020,"date":"2019-07-23T11:22:15","date_gmt":"2019-07-23T15:22:15","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=152020"},"modified":"2019-07-23T10:57:46","modified_gmt":"2019-07-23T14:57:46","slug":"trump-strikes-unexpected-us-budget-deal","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/07\/trump-strikes-unexpected-us-budget-deal\/","title":{"rendered":"Trump Strikes Unexpected US Budget Deal"},"content":{"rendered":"
July 23, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

Focus at the start has\u00a0been on the US budget arrangements that have been under consideration recently.<\/strong><\/p>\n

Yesterday it was announced that, following tense negotiations, a deal had been made between President Trump and congressional leaders. The deal was regarding US debt and budget levels.<\/p>\n

The agreement is viewed as a relief due to the fierce level of opposition between republicans and democrats. The republicans are looking for increased defense spending whereas the democrats would rather focus on increased social spending.<\/p>\n

\u201cNo Poison Pills\u201d<\/strong><\/h2>\n

Using his typical medium, Twitter, Trump said:<\/p>\n

\u201cI am pleased to announce that a deal has been struck<\/strong>\u00a0with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy \u2013 on a two-year Budget and Debt Ceiling, with no poison pills\u2026.\u201d<\/p><\/blockquote>\n

Trump also added:<\/p>

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\u201c\u2026.this was a real compromise in order to give another big victory to our Great Military and Vets!\u201d<\/p><\/blockquote>\n

What is the agreement?<\/strong><\/h2>\n

The agreement outlines plans for $1.37 trillion in agency spending over 2020 and slightly more in 2021.<\/strong>\u00a0Pelosi and Schumer explained that the deal:<\/p>\n

\u201cwill enhance our national security and invest in middle-class priorities that advance the health, financial security, and well-being of the American people\u201d.<\/p><\/blockquote>\n

Further Shutdown Avoided<\/strong><\/h2>\n

On one hand, the deal has been viewed as positive as it has helped to avoid another potential government shutdown as well as possibly the first-ever federal default. On the other hand,\u00a0it has also drawn criticism from many. This is because it has come at a time when US budget deficits are rising to around $1 trillion.<\/strong>\u00a0This means that for every dollar the government spends it will need to borrow 25 cents.
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How Will This Impact Monetary Policy?<\/strong><\/h2>\n

Concerns over the impact of such a budget on the future of the economy will no doubt be present\u00a0in the mind of the Fed.<\/a>\u00a0The central bank is widely expected to cut rates at its meeting next month. They have cited the risks and uncertainty around Trump\u2019s ongoing trade wars as the need for such a move.<\/strong><\/p>\n

The prospect of increased US debt over the coming years will add further strain to the US economy. This means that an even higher level of caution from the Fed will be required.<\/p>\n

What Does the Deal Cover?<\/strong><\/h2>\n

The two key aspects of the deal are:<\/p>\n

1:\u00a0an increase in the debt limit to avoid the US defaulting on payments for the first time in history<\/strong><\/p>\n

2:<\/strong>\u00a0agreeing on an overall spending limit and preventing automatic spending reductions from taking place<\/strong>\u00a0at the pentagon and other domestic agencies in January.<\/p>\n

What About Trump\u2019s Wall?<\/strong><\/h2>\n

The issue of government spending has been a fiercely debated topic over Trump\u2019s presidency due to his push to secure funding to\u00a0build a wall along the US border with Mexico. It was this a dispute over funding for the project that<\/strong>\u00a0leads to the longest-ever US government shutdown over December 2018 and January 2019.<\/strong><\/p>\n

Following an appeal to the court\u2019s decision to rule against Trump\u2019s application for funding,\u00a0Trump is now waiting on a Supreme Court ruling by July 26th<\/sup><\/strong>. This will determine whether he can access a portion of funds within the defense budget to build his wall.<\/p>\n

Redirecting Funds<\/strong><\/h2>\n

Essentially, Trump aiming for approval to use a portion of funds ($2.5 billion) which were originally intended to fund salaries, expenses and retirement benefits for the Department of Defence. However, as these costs transpired to be lower than expected,\u00a0Trump is now looking to have the money \u201creprogrammed\u201d for us on his wall.<\/strong><\/p>\n

Technical Perspective<\/strong><\/h2>\n

\"us\"<\/a><\/p>\n

US equities have displayed a sense of relief over a further government shutdown having been avoided.<\/strong>\u00a0SPX500 trades 2993.08 last as price continues to move higher within the corrective bearish channel which has formed on the retracement from recent highs. Bulls will be looking for a break above the channel top, along with resistance at the 3000.39 level, to encourage fresh upside momentum.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Focus at the start has\u00a0been on the US budget arrangements that have been under consideration recently. Yesterday it was announced that, following tense negotiations, a deal had been made between President Trump and congressional leaders. The deal was regarding US debt and budget levels. The agreement is viewed as a relief due to […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-152020","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/152020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=152020"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/152020\/revisions"}],"predecessor-version":[{"id":152027,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/152020\/revisions\/152027"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=152020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=152020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=152020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}