Reducing shutdown risk

Daily update

In the US, the official leaders of Congress have agreed to a spending limit. This reduces the risk of a government shutdown although no legislation has been passed and details still need to be agreed. The spending limit has been denounced by the hard right Freedom Caucus, which presents a challenge for House Speaker Johnson. When another Republican leaves the House on 21 January, the Republicans will hold 219 seats to the Democrats’ 213.
Last Friday’s US employment report offered something for everyone in the data although the subsequent political spin offered few surprises. Inevitably, preconceived ideas of the direction of Federal Reserve policy remain intact. We hear from the Fed’s Bostic today, and it will be interesting to see if the coordinated resistance to Fed Chair Powell’s comments continues.
German November factory orders were weak (in theory weaker than consensus, but the consensus range is wide and an unreliable indicator). Exports were stronger (the consensus here is based off too few forecasts to be meaningful). The picture is consistent with consumers favoring fun rather than physical goods.
Eurozone November retail sales data is due—reported in real terms. The winding down of profit-led inflation may have tempted some consumers back into stores.