Daily Market Color December 15, 2017Stocks to Record Highs on Tax Bill Hopes Tax Plan Likely to Pass In the past 24 hours the Tax Plan picked up two key votes. Senator Bob Corker (R-TN) can be put firmly in the “Yes” column. Senator Corker was the only Republican Senator to vote “No” on the original Senate version of the bill, and his announcement was unexpected. Earlier, Senator Marco Rubio (R-FL) announced he would support the bill due to the increase in the refundable portion of the Child Tax Credit. With these votes now in place, the plan is almost certain to pass, and the equity market moved higher with the news. Stocks at Records Highs, Dollar up on the Day The news that the tax reform bill was likely to pass bolstered the equity market with all three major indices closing at record highs. The 10yr on-the-run Treasury rallied on the week closing up 6.25 ticks to yield of 2.353% (down about 2.3bps in yield). The 10yr US swap rate rallied roughly 4bps on the week closing near 2.34%. The dollar was also stronger on the day against most major currencies, also supported by the news of the Tax Reform bill’s likelihood of passing. Crude was up slightly on the day but ended the week off about 1.2%. Industrial Production Chugs Along US economic data from the Federal Reserve revealed factory activity cooling off in November (+0.2% MoM, +0.3% expected), after posting the highest monthly level since 2009 in the previous month (+1.2%). Manufacturing output similarly accelerated 0.2% from the previous month’s upwardly revised figure, driven by the increases in the primary metals market that helped offset a 0.4% weakening in consumer goods manufacturing. Also detailed in the report, capacity utilization edged higher to 77.1% as more factory resources are being put to use. Overall factory output has now risen in three consecutive months, a sign that US manufacturing has remained strong despite the negative impact from this summer hurricanes. It’s Official: Time for Phase 2 of Brexit Today European Union leaders officially agreed to move the Brexit talks past the initial phase of negotiations and onto the trade-focused second stage. The first phase, which included decisions regarding the financial settlement of the divorce and the treatment of the Irish border, took a total of six months. The next round of negotiations will officially begin in March and are expected to last until October. Prime Minister Theresa May announced her hopes to begin informal talks right away to ensure “rapid progress” and “give certainty” to businesses in the UK. Despite the progress, the British pound fell 0.8% on the day against the dollar, weighed down by the expectation that the next round of negotiations will prove more difficult for the UK and EU to reach a compromise.