October 20, 2017 / 8:17 AM / a year ago

Daily Briefing: Trumpflation trade rears its head

LONDON (Reuters) - The Trumpflation trade may be back as the U.S. President's drive to overhaul the tax code cleared a critical hurdle.

U.S. President Donald Trump speaks to the Heritage Foundation’s President’s Club Meeting in Washington, U.S., October 17, 2017. REUTERS/Joshua Roberts

The dollar, global shares and Treasury yields gained after the Senate approved a 2018 budget blueprint that will pave the way for Republicans to pursue a tax-cut package without Democratic support.

Asian currencies retreated as the dollar strengthened, helping Japan’s Nikkei to achieve its best winning streak since 1961 as expectations remain strong that Prime Minister Shinzo Abe will win Sunday’s general election.

U.S. and European stocks showed a rare wobble on Thursday as signs emerged of weak demand for Apple’s iPhone 8. European shares, also weighed down by concerns over political upheaval in Spain and disappointing results from consumer giant Unilever, ad agency Publicis and forklift truck maker Kion, notched up their largest drop in two months.

European shares rebounded on Friday, with the euro lower against the dollar. Sterling fell despite German Chancellor Angela Merkel having offered one of her most positive assessments of Brexit talks in months.

Euro zone bond yields are higher, as are oil prices, supported by signs of tightening supply and demand fundamentals. German producer prices, euro zone current account figures and UK public-sector borrowing data will be in focus.

The MSCI World index of global stock markets came slightly off its record high. Hong Kong shares rebounded after China’s central bank governor’s reference to a “Minsky moment”, a sudden collapse of asset prices, was viewed by some as overdone and triggered bargain-hunting.


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China summons British official over Hong Kong remarks

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Russian warships dock in Philippines as Manila cultivates new ties

U.S. carrier patrols off Korean peninsula in warning to Pyongyang

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Reporting by Georgina Prodhan; editing by John Stonestreet

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