Summary:
- Draft of GOP tax plan
- US Initial jobless claims falls to 229k
- Gold remains at finely poised ahead of major event risks
The much vaunted GOP tax plan has been publicised this afternoon with the main news being that the corporation tax is planned to be immediately lowered to 20% form the current 35% rather than phased in as was reported earlier this week.
Highlights from the draft documents are:
- Standard deduction doubled
- Brackets at 12%, 25%, 35% and 39.6%
- New tax on university endowments
- Double exemption for estate tax, would repeal state tax after six years
- Lower corporate tax rate to 20% form 35%
There’s nothing major that’s new here, apart form the aforementioned corporate tax. As such the markets have seen a limited reaction this release. Earlier on we had the only real economic data of the day from the US with initial jobless claims falling once more. The weekly data showed a fall to 229k compared to 235k expected and the previous reading was revised up marginally to 234k. After the sharp hurricane-induced rise seen in September this employment indicator has now seemingly fallen back into the prolonged downtrend seen in recent years.
US initial jobless claims have returned to the downtrend seen before the hurricane-induced rise seen in September. Source: xStation
Donald Trump is expected to announce his nomination for the next Fed chair at 7pm this evening but some newswires are already reporting that it will be Powell. Jerome Powell has been a fairly strong favourite for some time now and his appointment will likely not come as too much of a shock to the markets. Gold is one of the markets that will likely be the most sensitive to the Fed chair news and the current price is at an interesting level. After holding above the October lows of 1260 recently the market has attempted to recover and is now trading in between the 8 and 21 period EMAs. A break above the 21 (yellow line) would be a bullish development and if it is accompanied by a bullish cross then the recent downtrend seen since the early September high could be seen to be over.
Gold is currently trading at a potentially key level in betweent he 8 and 21 period EMAs. Source: xStation
In the last few minutes price has spiked higher due to reports that Powell will be the next Fed chair. The official announcement is expected to come at 7pm GMT.