Stocks fell for the eighth consecutive on continued election concerns. The S&P 500 fell 0.40% to 2,089 and the Dow Jones fell 0.1% to 17,938. Economic data today showed that new jobless claims were 265k last week, on an upward trend from before but still near historic lows. Productivity also beat expectations rising 3.1% in the third quarter compared to an estimated 2.2%. The PMI Services Index and the ISM non-manufacturing index both came in strong at 54.8 each coincidentally. Factory orders also rose by slightly more than expected. The VIX jumped 15% to 22.22 as concerns about falling oil prices, the election, and a potential rate hike outweighed economic data. Rates in the US were little changed. The 2 year yield fell slightly to 0.81% and the 10 year rose 1bp to 1.81%. 2yr vs 10yr steepened to 0.998%. In FX markets the pound was the notable mover on the day although the dollar did finish lower to most peers. USD fell 0.1% against EUR to $1.1112. USD fell 0.3% against JPY to Y102.96. USD fell 1.3% against GBP to $1.2457 after the UK High Court ruled that Parliament will have to vote before invoking Article 50 and the BoE played down the possibility of another rate cut. Oil prices continued to fall. WTI fell 1.3% to $44.76 and Brent fell 0.9% to $46.45.
The British pound rallied today after a ruling by the UK High Court. The court decided that the British government won’t be able to invoke article 50 and officially leave the EU without a vote from the British Parliament. Theresa May, the current prime minister, had previously planned to invoke Article 50 in March. Once Article 50 is triggered it begins a two year exit process from the EU. May has indicated that she plans on taking a hard stance against the EU and would prioritize issues such as immigration over economic policies such as access to the tariff-free market. The British pound rose more than 1% immediately after the ruling, and extended further gains after the BoE indicated that it would keep rates on hold as opposed to another cut later in the year. This could be seen as a chance for groups to sway public and parliamentary interest as it relates to the Brexit and create a hangup in the exit process. There is a desire among the public and rival political parties for May to bring her negotiating terms to Parliament sooner rather than later since that would buy lawmakers more time to persuade May to take a softer stance if needed. The majority of Parliament members voted against the Brexit however now that the referendum results are in they may be hesitant to vote against those since that would be setting itself up against the vote of the people. Over the few days the pound may have some tailwinds as investors unwind short positions which have built up heavily since the June 23 vote. Analysts still expect that Parliament will vote to invoke Article 50 but this still introduces a bit of uncertainty into the mix, and it may extend the timeline.