Deutsche Bank told clients this morning that Trump’s decision to halt stimulus package talks is a shock.
Particularly as America’s top central banker has been pushing for more fiscal support, fearing that the recovery could falter.
A major new package might not come for months now, depending how November’s election plays out. Deutsche told clients: “President Trump once again took control of the headlines yesterday when he tweeted late in the US session that he had instructed White House negotiators to stop further US stimulus discussions with Congressional Democrats until after the election.
“He argued that Speaker Pelosi was not arguing in “good faith” and that he wants Congress to focus on the Supreme Court nomination of Judge Barrett instead. This came as a surprise after relatively positive headlines from Pelosi and Treasury Secretary Mnuchin earlier in the week, and also represented a reversal in tone given comments late Monday from White House Chief of Staff Meadows, who said “There are a lot of people that continue to hurt, are waiting on stimulus, and the President’s committed to getting a deal done…He wants to make sure we move expeditiously, but also in a fiscally responsible manner.”
“The tweet also came just a few hours after Fed Chair Powell’s speech at the NABE’s annual meeting. While not much new information was proffered, Powell made one of his plainest cases for fiscal stimulus yet, saying “the risks of policy intervention are still asymmetric”, and that “the risks of overdoing it seems, for now, to be smaller” compared with the risks of offering too little support. If the current polling at both the national and state level holds, and former Vice President Biden were to win the election in November, fiscal stimulus may indeed come but will have to wait until Q1 of next year when a new government is seated.”