Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Boris Johnson is setting the EU an ultimatum, Citigroup is cutting jobs and everyone is waiting for the Fed. Here’s what’s moving markets.
Ultimatum
The U.K.’s new prime minister told the European Union that talks on reaching a new Brexit deal won't start again until the previously rejected divorce agreement is reopened, something the EU has consistently said it has no intention of doing. That is raising the chance of a no-deal Brexit and that risk is being heartily reflected in the pound, which dropped to the lowest in more than two years and sent the multinational-dominated FTSE 100 higher. The Bank of England could put yet further pressure on the currency too when it makes its rate decision this week.
Fed Starts
The Federal Reserve starts its policy meeting on Tuesday with yet more sustained criticism from President Donald Trump. After a Twitter rampage in which the president made clear his view on whether the Fed should cut rates, now it’s up to Jerome Powell and his colleagues to manage expectations in the bond market, which may be pushing for quicker cuts if the first one does emerge on Wednesday. Emerging markets are awaiting the outcome just as eagerly. Some strategists are even saying the Fed should hike. Consider, too, the dark side of rate cuts.
Job Cuts
Citigroup Inc. is preparing to cut hundreds of jobs from its trading arm, a worrying sign for banks that the industry-wide slump in revenue this year may be more permanent than previously thought. Citi is looking to cut the jobs in its fixed-income and stock-trading operations over the course of the year, including trimming about 10% of its equities division. Little wonder given this has been the worst first half for Wall Street trading desks in a decade. That all puts stark focus on Europe’s banks, with the likes of Credit Suisse Group AG and BNP Paribas SA due to report on Wednesday.
Japan Holds
For an indication of how important that Federal Reserve decision is this week, look no further than the Bank of Japan. The central bank kept monetary policy unchanged at its meeting on Tuesday and cut its inflation outlook, taking a wait-and-see approach ahead of the Fed decision. In addition, it may indicate that the BoJ hopes that markets may have already reacted to expectations of additional stimulus from both the Fed and the European Central Bank, meaning there is limited upside for the yen. Note that Japan too is seeing pain in its factories from a slowdown in the global economy and pressures from trade tensions.
Coming Up...
Stocks in Asia edged higher and European futures are again pointing to a mixed open as investors await more detail on the trade talks between the U.S. and China. Still to come on the earnings front we’ll have oil major BP Plc, consumer goods giant Reckitt Benckiser Group Plc and vegan sausage roll behemoth Greggs Plc, coming after U.S. vegan hot stock Beyond Meat Inc. sank. Euro-area economic confidence data is due, as is inflation from Germany and GDP from France.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The U.K. notched up its hottest day ever last week.
- To understand Gen Z, look at Gen X.
- Cracks are showing in the elite club that runs the diamond business.
- More Indians eating meat is sending chicken-feed prices surging.
- A rising wealth gap has killed one stockpicking strategy.
- How Venezuelans are using cryptocurrency.
- How to cope with rejection at work.
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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