Credit Agricole: Trump may struggle to revive the " Trump Trade". He is expected to outline the progress made so far and urge lawmakers to follow up with legislation to maintain forward momentum. The list of topics is expected to be brad, including public safety, healthcare, tax reform and deregulation. Investors are likely to focus in particular on any details of the " phenomenal" tax package signaled earlier by the President, particularly as the Treasury Secretary and members of Congress have recently cautioned not to expect legislation to be implemented before next year. Give that Republicans control both houses, the optics of the President's appearance in front of the lawmakers are likely to be constructive but the last of significant policy detail in the speech will likely prevent a sustained revival of the long - USD and 'Trump Trade'.
Barclays: Policy announcement might not come - Although market attention will be keenly focused on the speech, it is unlikely that new details regarding fiscal stimulus, tax reform or trade policy will be provided. The administration intends to push forward fiscal reforms before August, according to Treasury Mnuchin, but details on tax policy are likely to come after March, when Congress finished working on repealing and replacing the Affordable Care Act.
BofA Merrill: Risk of lack of sufficient details - Anticipation is running high, and investors will be looking for clarity on the new administrations agenda. As we argued earlier this week, if fiscal progress is delivered, rates and the USD should move higher. The risk is that we do not get the level of detail on policies markets are waiting for.
Goldman Sachs: Political Picture a little less rosy - The difficulty congressional Republicans have had on Obamacare does not bode well for quick progress on tax reform or infrastructure funding. This reinforces our view that a fiscal boost worth about 1% of GDP (largely via tax cuts) is primarily a 2018 story. In the meantime, Mr. Trump's administrative actions on trade and immigration present downside risks to growth.
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