US stock futures, bond yields and the dollar are rallying as Trump's tax reform moves one step closer

Photo by Christian Petersen/Getty Images

SYDNEY — The US dollar and stock futures are charging higher in Asia, boosted by news that the US Senate has passed a budget resolution for fiscal year 2018, opening the door for the passage of Republican leadership’s massive package to overhaul the tax code.

“The budget’s passage represents a key step because it contains instructions for the process known as budget reconciliation,” wrote Bob Bryan at Business Insider in New York. “Reconciliation will allow Republicans to eventually pass a tax reform bill through the chamber with a simple majority and avoid a Democratic filibuster.”

The news has sent the US dollar sharply higher, seeing the likes of the euro, the British pound, Japanese yen and Australian and New Zealand dollars fall by between 0.3% to 0.8%.

“An improving US fiscal policy agenda will add modest broad-based USD strength,” says Elias Haddad, senior currency strategist at the Commonwealth Bank of Australia.

“Specifically, the prospect of big corporate tax cuts and reform can lead to an upward revision to US interest expectations, an increase in foreign capital flows to the US and large capital repatriation by US multinationals.

Reflecting those benefits, US stock futures have rallied with the S&P 500 December 2018 contract currently up 0.35%.

Benchmark US 10-year bonds yields have also spiked, rising to 2.36% from a low of 2.32% earlier in the session.

Now read: The US Senate passes its budget, clearing a huge hurdle for Trump’s tax plan

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