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Congress Republicans worry about spending, May faces Brexit revolt, and risk-off takes hold. Here are some of the things people in markets are talking about today.

Balancing the books

After weeks negotiating a tax overhaul that will add $1 trillion to the federal deficit over the next decade, a faction of conservative Republicans is raising warnings over spending as attention in Washington turns to avoiding a government shutdown. With September legislation that suspended the debt limit set to expire on Friday, a plan is in place for a two-week extension. That moves the deadline forward to Dec. 22, with a lot of work left to do between now and then to avoid a disruption to Washington's work. 

Brexit revolt

British Prime Minister Theresa May is facing a revolt in her cabinet over plans to keep U.K. regulations aligned with European Union rules after Brexit. May has been backed into a corner by the Irish border issue, and apparent leanings towards a so-called ‘soft Brexit' have drawn the ire of Foreign Secretary Boris Johnson and Environment Secretary Michael Gove, who campaigned for Brexit. Adding to pressure on the prime minister, a poll published this morning showed that most Brits still want Brexit, while also expecting it to end badly. 

Risk-off 

Global equity markets are falling while bonds rise with investors looking to lock in profits for the year as the global risk backdrop worsens. Overnight, the MSCI Asia Pacific Index was 1.3 percent lower, with Japan's Topix index closing down 1.4 percent while stocks in Hong Kong fell the most in 13 months. In Europe, the Stoxx 600 Index was 0.9 percent lower at 5:50 a.m. Eastern Time as the region's indexes followed the Asian lead. S&P 500 futures dropped 0.2 percent, the 10-year Treasury yield was at 2.342 percent and gold was slightly higher.

Jerusalem

President Donald Trump is expected to formally declare Jerusalem as Israel's capital and direct the State Department to start the process of moving the U.S. embassy there in an announcement scheduled for 1 p.m. today. The plan to move the embassy, which would probably take years to complete, has been condemned by leaders in the region, with U.S. allies in Europe warning that the move would inflame tensions in the Middle East. Some investors see this latest diplomatic standoff as a catalyst for today's market moves. 

Oil 

A barrel of West Texas Intermediate for January delivery slipped to $57.18 by 5:50 a.m. as U.S gasoline inventories data showed the first rise in four weeks. After last week's OPEC meeting, demand is seen as the biggest driver of the oil price over the coming year. The threat from shale also seems to be waning somewhat as major producers in that space switch to generating cash returns rather than increasing investment. All signs are pointing to crude prices remaining stuck in a narrow range in the short term. 

What we've been reading

This is what's caught our eye over the last 24 hours.

• Anglo-Saxon capitalism gets the blame for financial crises.
• It looks like another rough year for the dollar in 2018.
• Trump's latest pick for the Fed is no fan of paper money.
• China mounts a fresh defense of globalization.
• Blame quants, not taxes, for the tech selloff. 
• Bitcoin passes $12,000.
• The best books of 2017.

To contact the author of this story: Lorcan Roche Kelly in Dublin at lrochekelly@bloomberg.net.

To contact the editor responsible for this story: Cecile Gutscher at cgutscher@bloomberg.net, Natasha Doff

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