EU grants flextension to UK amid Government push for General Election
US Trump confirms killing of ISIS leader
Argentinian opposition leader wins Presidential Election
The trading week starts off with risk appetite revamping and US Equities are once again printing new all time highs. The most interesting signals come from the safe haven space. Gold reverses all gains from last Friday technical breakout returning back below the 1500. Key week for Gold and Treasuries after this year remarkable rally parallel to the one seen in Equities. However, we have come to a cross road and the FED this week could be pivotal in hinting whether the worst is behind and markets can now get on without the need of further stimulus and cuts into next year. Whit no-deal Brexit drastically reduced and a de-escalation of trade tensions, a correction in safe heavens looks logical. However, although selling pressure is definitely building up, the correction in most the above asset classes has been relatively timid.
The Brexit saga enters another important week. Over the weekend, the EU has confirmed the "flextension" to the UK until January 2020 with the option of leaving earlier in case the deal could make it to the finish line of the Parliamentary process to turn the bill into law.After last week MPs historic approval of the deal at its second reading, but rejection timeline to finalise it by 31st October, the EU has granted an extension. At this point, the Government latest proposal is to allow MPs for further scrutiny in exchange of support for a General Election motion to take place on 12th December. The numbers are still mixed for both political and logistical reasons. Some MPs are not happy with the date, some scared to lose their seats, some want an election but only if no-deal is taken off the table. The Government motion can in fact be amended and with it the current deal can as well. SNP would back a general election as soon as possible. Labour would back it but only if "No Deal is taken off the table". Moreover, sources state some MPs won't back an election in fear of losing their job. Remember that according to the fixed-term Parliament act, the Government needs 2/3 of MPs approval to approve a General Election motion, making Labour support vital to approve it. However, the Government could be tempted to go for a "one line bill" such as "Notwithstanding the Fix-Term Parliamentary Act, there will be an election on 12th December". This would only require a simple majority in the Commons but would be subject to amendments and put the faith of the bill into Parliament. No scenario tree this time, only a GMO baobab would fit all possible outcomes.
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