COVID-19 Stimulus Fight Rages On Capitol Hill - Forex News by FX Leaders
Capitol Hill

COVID-19 Stimulus Fight Rages On Capitol Hill

Posted Thursday, December 24, 2020 by
Shain Vernier • 2 min read

It’s politics-as-usual on Capitol Hill for Christmas Eve 2020. At this hour, a partisan battle between Republicans and Democrats rages over the passage of a second COVID-19 relief bill. Practically speaking, there are three possible outcomes; passage, Congressional gridlock, and even a Trump veto. At the midway point of the abbreviated U.S. session, the DJIA DOW (+39), S&P 500 SPX (+9), and NASDAQ (+17) are all flat. Aside from limited holiday liquidity, stimulus uncertainty is the primary reason why.  

Much like Brexit negotiations, the stimulus saga has taken a multitude of twists and turns over the past six months. Unfortunately, politicians are very good at one thing ― doing nothing. As a result, here’s the current stimulus situation:

  • President Trump has threatened to veto the bill if $2000 direct payments are not instituted.
  • Republican leadership in the Senate has blocked a movement of “unanimous consent.”
  • Speaker of the House Nancy Pelosi has vowed to force lawmakers to take a recorded vote on the $2,000 provision next week.

All in all, the second COVID-19 relief bill was highly controversial. Of the $900 billion in relief funds, huge portions were allocated to programs not COVID-19 related. If it is put forth without the $2,000 direct payments to citizens, Trump will likely veto the bill next week. Subsequently, it could be back to the drawing board on Capitol Hill.

Amid Capitol Hill Conflict, Crude Oil Sells Off

The daily chart below will likely be our last look at January WTI crude oil. Although the volume has shifted to February WTI, investors continue to buy the dips in the soon-to-expire issue.

capitol hill
January WTI Crude Oil Futures (CL), Daily Chart

Overview: Today’s dip and buyback in WTI are indicative of growing positive sentiment. Despite the problems on Capitol Hill and a new strain of COVID-19 being discovered, energy traders continue to bid crude oil. As 2020 winds down, it looks like institutional money is going long energy for 2021.

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