Tax Reform Effort Captures Market’s Attention

This insightful monthly market commentary will help you look beyond the headlines to better understand what is driving the current market trends that could impact your credit union’s investment portfolio.

In recent weeks, the two themes capturing the most attention from financial markets have been 1) the tax reform effort, and 2) the White House nominee for Fed Chair. In addition to fiscal policy (tax reform) and monetary policy (fed leadership), the narrative could be expanded to include inflation and real growth. These factors have generally provided a boost to financial markets over the last several weeks, but the tailwinds subsided somewhat in late October. The inflation component is really dependent on the other three factors, and while there have been flashes of reflationary pressures in the U.S. and abroad in recent weeks, the consumer price landscape remains mixed (e.g., tepid U.S. PCE report and disappointing Eurozone CPI for September). Domestic real growth has improved, including a better-than-expected initial estimate of Q3 GDP, and it is generally supportive of reflationary expectations. However, the boost from fiscal and monetary policy expectations has waned.


On the tax reform front, the first (and easiest) step was accomplished in mid-October when the Senate passed a budget resolution, which is a necessary procedural step in the legislative process. While this was largely expected, the Senate version did include some components that were preferred by House Republicans, which was a somewhat surprising gesture considering the current political climate. As such, the House was able to pass its version of the budget resolution the following Thursday, clearing the way for the much more contentious battle of deciding on the actual components of the bill. This debate will likely center on four primary components: the level of tax rates, the number of rate brackets, deductions, and the deficit impact.

Read more about the tax reform effort, the latest economic data and current market trends here.

This market overview is provided by ALM First Financial Advisors, LLC, the investment advisor for Trust for Credit Unions. Read more from ALM First about the latest economic data releases and overall market trends at

November 21, 2017

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