US government on brink of shutdown

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Lawmakers will return to talks today in Washington to avoid a partial government shutdown after the latest version of a funding bill, backed by president-elect Donald Trump, was voted down by the House of Representatives.

Dozens of Republicans sided with Democrats to reject Speaker Mike Johnson’s proposed bill which would have extended government funding for three months and suspended the limits on federal borrowing for two years. The bill got just 174 votes in favour but 235 against. It needed a two-thirds majority to pass.

An earlier a stop-gap debt ceiling deal, which had bipartisan support, was torpedoed by Trump and his billionaire adviser Elon Musk.

The House and Senate will need to work quickly today to approve a new bill in order to get President Joe Biden’s approval in time to avoid a midnight deadline. A partial government shutdown would affect a wide range of federal programmes, including defence, regulators, national parks and air travel safety. You can follow developments throughout the day on our live blog.

• Opinion: Investors should note three key points about the latest brinkmanship in Washington, writes Gillian Tett.

And here’s what else we’re keeping tabs on today and over the weekend:

• Economic data: The personal consumption expenditures price index, a measure closely watched by the Federal Reserve for signs of inflation in the US economy, will be updated.

• Company results: Cruise operator Carnival Corp is expected to post a rise in fourth-quarter revenue.

• New York congestion charge: A judge will hear arguments over a challenge to New York’s plan to implement the $9 charge for driving in Manhattan which is scheduled to start on January 5.

• Nippon Steel-US Steel deal: Talks will continue over the weekend between US officials and representatives from the Japanese steel maker ahead of a Monday deadline.

How well did you keep up with the news this week? Take our quiz. And thanks to those who voted in yesterday’s poll. The majority of readers thought the Fed’s policy rate would remain above 3.75 per cent by the end of next year. Click here for the full results.

Five more top stories

1. US president-elect Donald Trump has warned the EU that it must commit to buying “large scale” amounts of US oil and gas or face tariffs. The EU is desperate to avoid a trade war with Trump and has spent the past month racing to draw up potential ways to avoid tariffs by increasing purchases of US goods such as liquefied natural gas (LNG) or agricultural products. Here’s more on the talks and the EU’s potential reprisals.

2. Shares in Novo Nordisk tumbled as much as 20 per cent after its next-generation obesity drug CagriSema missed its average weight-loss goal in a late-stage trial. The drug helped patients lose an average of 22.7 per cent of their body weight, Novo Nordisk said today, only marginally better than rival Eli Lilly’s Mounjaro treatment. Read more on trial results.

3. Donald Trump’s election win has handed a clutch of cryptocurrency-focused hedge funds a windfall, outpacing the broader industry. Brevan Howard Asset Management and Galaxy Digital, the cryptocurrency investment manager founded by billionaire Mike Novogratz, have been among the biggest winners from the recent surge in digital assets.

• Crypto crime: North Korean groups have stolen $1.34bn through cryptocurrency hacks this year, their highest level of such thefts on record.

4. Joe Biden has sent top diplomats to Damascus to meet Abu Mohammad al-Jolani, the leader of the Islamist rebels who toppled Syria’s dictator Bashar al-Assad. The meeting today will be the first formal in-person contact between the leaders of Hayat Tahrir al-Sham and the US, which has given the group a terrorist designation. More details on the planned meeting.

5. Big Tech’s spending frenzy on artificial intelligence will continue until the end of the decade, according to the head of Broadcom. Hock Tan told the Financial Times his clients in Silicon Valley were drawing up AI infrastructure investment plans spanning “three to five years in a very big hurry”.

Today’s big read

The European Commission has proposed hundreds of laws governing the green transition, the financial industry and the digital world. Now, rightwing lawmakers across Europe claim those rules are raising costs and punishing citizens and businesses. Donald Trump’s win has also sparked fears in Brussels of a race to the bottom on regulation. After wrapping itself in a web of rules, can the EU now reverse course?

We’re also reading . . . 

• Did Jay Powell steal Christmas? Investors have only themselves to blame for the festive shakeout in markets after the Fed’s latest remarks, writes Katie Martin.

• ‘Synthetic risk transfer’: FT Alphaville breaks down Wall Street’s latest three-letter acronym, a trillion-dollar phenomenon that has caused excitement and alarm.

• The TikTok era: The shift from traditional media to social media, and from text to video and audio has one big winner, writes John Burn-Murdoch: populism.

Chart of the day

Leading central banks this week warned that inflation is proving stickier than expected and that they will cut borrowing costs more gradually in 2025, triggering a shift in bond markets on both sides of the Atlantic. The yield on US 10-year Treasuries, a bedrock of global finance, yesterday hit the highest since May as investors rush to rethink their expectations for Fed policy over the next 12 months.

Take a break from the news

Over the past three months, Lucinda Smyth has watched 100 Christmas movies, a gruelling marathon that resulted in a stiff neck and an eye twitch. But she has emerged with a delightful deep dive into one of the most critically overlooked genres, just in time for the holiday.