White House shares details of Biden´s infrastructure plan
White House has released a statement related to Biden’s infrastructure plan. President Biden is expected to deliver a speech on the matter at 8:20 pm GMT today. However, statement from the White House provides some general overview of Biden’s plan. Key takeaways:
Infrastructure deal worth $2.25 trillion
$620 billion for transportation
$650 for initiatives aimed at improving quality of life at home
$580 billion for US manufacturing and R&D
$400 billion for improved care of elderly and people with disabilities
Financed over 15 year period with an increase in corporate tax from 21 to 28%
It was expected that plan will include massive spending therefore attention is likely to be focused on how it is financed. 7 percentage point increase in the corporate tax rate is likely to result in opposition from large companies and they will surely try to lobby lawmakers into rejecting it as Biden’s package will need to be approved by Congress. Keep in mind that the Trump administration has lowered corporate tax rate from 35 to 21% in 2017.
Market reaction to the statement has been muted. Equities barely moved while EURUSD moved slightly lower. However, move on the FX market can be reasoned with European CPI data that has been released at the same time.
US100 continues to trade sideways between 23.6 and 38.2% retracement of the upward move launched at the end of September 2020. Market has barely reacted to White House statement as the size of the package has been already rumoured by the media and it was also expected that it will be financed with rate hikes.