Economist's Insights

Today’s Trading Activity – U.S. Assets Fluctuated as Markets Digested Details of Senate Tax Plan, House Passed its Version through Committee

Nov 9, 2017

As early futures trading indicated, equities opened weak with tech companies leading losses. Even so, Treasury yields held their overnight rise for the first couple of hours of trading. That changed around 10:45 a.m. CT after reports indicated the Senate’s tax plan would delay cutting the corporate rate until 2019. As that headline trickled out, stocks extended their losses, yields gave up their gains, and the Dollar sank; all quickly moved to their daily lows. A perfect alignment between the Senate and House plans was never expected but the reports were the latest reminder that tax reform can be a divisive and heavy lift. Around noon, additional details from the Senate plan began to emerge and stocks and yields climbed back off their lows. Shortly after 2 p.m. CT, the full Senate plan was released and the House Ways and Means Committee approved their version. The House Committee’s plan will now be put to a vote in the full House. When the dust had settled, the Dow closed down 101 points (-0.43%) but had more than halved its day’s worst 253 point (-1.1%) decline. The S&P dropped fell 10 points (-0.38%) after earlier losing as many as 28 points (1.1%) earlier. While Treasury yields also moved about, the magnitude of the shifts was more subdued than in equity markets. Longer yields recovered while shorter yields remained near their daily lows. The 2-year ended down 1.2 (1.63%) while the 10-year yield rose 2.1 bps (2.34%).