Just two weeks before the curtains are drawn on 2020, and investors are still being made to wait on the ultimate fate of market-defining events.

US politicians continue to jostle over the fate of the next fiscal stimulus package, while the EU and the UK have yet to reconcile their differences surrounding a Brexit trade deal. A common feature between proceedings on either side of the Atlantic: time is running out.

Although such major uncertainties refuse to vanish, that isn’t stopping markets from already making their assumptions.

Fiscal stimulus deal to boost US stocks higher

US stocks climbed to fresh record heights once more on Thursday on the hopes that Congress can seal a deal by the weekend. However, recent commentary out of Congressional leaders have doused such expectations, even hinting at a brief federal government shutdown. US stock futures are dipping during the Asian morning session.

Investors are willing to believe that more fiscal stimulus will arrive; it’s just a matter of ‘when’, not ‘if’.

After all, the current state of the US economy clearly warrants more financial support. Thursday’s initial jobless claims were worse than expected, while consumers were shown to have reined back their spending in November. The pandemic is still claiming lives at an alarming rate, and the total number of US Covid-19 cases has exceeded 17 million.

The fresh injection of government funds into the economy would serve as justification for the already-lofty valuations in US equities. Otherwise, the longer risk assets are made to wait, the bigger the risk of a pullback as ‘fiscal stimulus fatigue’ sets in.

Plenty of support for risk sentiment

Still, risk assets should have enough reasons to patiently wait for a positive outcome, despite having endured multiple false dawns after months of negotiations that yielded naught. The expected FDA approval for Moderna’s vaccine, which could happen by today, is set to tide risk sentiment over while waiting for the political impasse to be resolved. Also, stock markets can continue taking heart by the Fed’s latest pledge to continue supporting the US economy and financial conditions, which ultimately translates into a conducive environment for further equity gains.

Brexit’s umpteenth ‘last-chance saloon’

Brexit trade talks have been issued a fresh deadline by the European Parliament who said that an agreement must be reached by this Sunday in order to allow enough time for its ratification. The Pound is still willing to cling on to hopes that a deal can be struck, going by the fact that GBPUSD continues to trade around its highest levels in over two years.

Yet, despite there being only two weeks left before the Brexit transition period ends, both sides continue to harp on about the “big differences” between the UK and EU’s respective stances. The Pound’s performance of late indicates that more of the trade deal optimism has been baked in compared to the risk of a hard Brexit. This Brexit finale could bring either sweet confirmation or a rude shock for markets, while leaving investors on tenterhooks in the interim as we see out this tumultuous year.