Trump speaks to a joint session of Congress Tuesday night, and he's expected to discuss his bigger plans for defense and stimulus spending. He's also expected to address repeal and replacement of the Affordable Care Act, but markets are most interested in what he has to say about tax reform.
Until late last week, there were even higher expectations that Trump would provide an outline for his tax reform plan, since on Feb. 9 he had said he would have a plan in two to three weeks. But Treasury Secretary Steven Mnuchin damped those expectations in an interview with CNBC Thursday, saying the administration had not made up its mind on a key aspect of the House tax proposal — the controversial border-adjustment tax. Mnuchin also said the White House is working on a combined plan with Congress and would get something done by August, after it deals with the Affordable Care Act.
Marc Chandler, head of fixed income strategy at Brown Brothers Harriman, said Trump's speech could definitely move the dollar. For instance, if he sounds protectionist, that could boost the dollar even though real protectionist policies could be a negative in the longer term.
The markets will also be honing in on what Trump says about the Affordable Care Act, which Congress has been hoping to repeal and replace in the next month. If it seems there is progress on that front, it may be affirm that tax reform could be completed in a 2017 time frame. But if that remains sketchy, it may be a negative.
Reference: CNBC
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