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The US markets were rattled by a new portion of presidential loophole-exploitation by Donald Trump, who agreed to compromise last week on federal government spending, by signing a bill to circumvent another federal government shutdown.
On the surface, this came as a surprise move by the President, whose decision to surrender on his 5.7 billion US dollar initially proposed a budget plan for a Border Wall was seen as a surrender.
However, Trump decided to declare a state of national emergency instead, thereby getting the Defence Secretary to divert funding from civil construction to projects of national security.
BUILDING THE WALL!
— Donald J. Trump (@realDonaldTrump) February 17, 2019
The market reacted instantly to the news with all of the major US indexes registering gains during the Friday session. The Dow Jones Industrial Average (US30) added 461 basis points to the 1-month futures in a heavy day of trading marked by further speculation on Trump's policy. This was due to the perception that government spending, Border walls included, has an overall positive effect on industrial growth.
However, both the futures and bond markets in the US are currently driven mostly by political factors, while economics is downgraded to having a second - tier influence over the markets. Typically, under such circumstances, huge price fluctuations tend to occur, so it is not unlikely to see a corrective spike next week, should the US Justice Department declare the state of emergency not legal.
In any case, next week is going to be mostly influenced by trade negotiations between the US and China, as well as the developments of the current situation with the border wall.
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