LONDON (Reuters) - Today's parliamentary debate on Brexit marks the start of a process which over coming weeks should finally lift the fug of uncertainty over Britain's future place in Europe - at least, that is what voters, business and plenty of capitals around the EU hope.
Ahead of the decisive vote on Theresa May's Brexit proposal next Tuesday, the debate should give an accurate sense of whether that plan has any chance of being approved, while a series of major amendments will also be thrown into the mix by opposition Labour and others.
Genuine suspense over political developments as big as this is rare, but right now it is anyone’s guess whether the outcome will be Brexit of the softest or hardest varieties - or even no Brexit it all.
Ahead of today's scheduled meeting between Emmanuel Macron's government and representatives of the "yellow vest" protest movement, a source said authorities will suspend the fuel taxes that have triggered violent protests.
Such a move, if confirmed, would be Macron's first significant U-turn on a major policy since taking power in 2017. It would be all the more humiliating for taking place just as an international conference in Poland battles to salvage the landmark Paris Agreement on climate change brokered back in 2015 by France.
Italian Prime Minister Giuseppe Conte will present a new budget proposal in the next few hours, he told the Avvenire daily, aiming to avoid a disciplinary procedure by Brussels. Italy has drafted an expansionary budget that forecasts the deficit to rise to 2.4 percent of GDP in 2019 from 1.8 percent this year. Conte said the new proposal could reasonably include a deficit lower than previously forecast, but did not reveal details of his plan.
MARKETS AT 0755 GMT
The trade truce fillip in world markets has quickly run out of steam as scepticism about the success of new Sino-U.S. talks stayed high and investors refocused on the week’s other risk events.
The drop in the 2-to-10 year U.S. Treasury yield curve to its flattest in more than a decade – at just 13 basis points first thing Tuesday - was a reminder of the future economic slowdown and recession fears regardless of a breakthrough on trade. Sections of the yield curve even inverted overnight – between 3 and 5 years.
Attention now swings to the as-yet unrescheduled testimony of Fed chief Powell – postponed from Wednesday due to state ceremonies after the death of former U.S. President Bush – Thursday’s OPEC meeting and the week of parliamentary debate on Brexit ahead of the critical Dec 11 vote.
The euro extended its rally as a fall in Treasury yields encouraged further and broad selling of the dollar, while the yen and trade-linked currencies like the Chinese yuan also rose.
With much of Asia in the red, European stocks opened lower and U.S. stock futures were down too. China bucked the trend. The gap between Germany's two-year and 10-year bond yield was at its tightest in 17 months.
In corporate news, the Renault/Nissan saga continued with the Sankei newspaper reporting that Tokyo prosecutors are planning to arrest Carlos Ghosn on a fresh claim of understating his income.
UK trading firm IG forecast lower first-half 2019 revenue as regulation bites. Catering group Elior was also downbeat and sees slower sales growth in 2018/19. Ryanair managed to strike a deal with German pilot union VC.
In the pharmaceutical sector, Novartis is going after Roche asthma medicine Xolair with a new drug, Some M&A with Spain's Ferrovial exploring a sale of its global services business and Travis Perkins planning to sell its plumbing and heating division.
— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —