Five Things You Need to Know to Start Your Day

(Bloomberg) --  Want to receive this post in your inbox every morning? Sign up here.

Trump hits China on trade directly, Powell keeps market guessing, and Facebook hasn’t silenced critics. Here are some of the things people in markets are talking about today.

Battle cry

President Donald Trump is set to announce about $50 billion of tariffs against China over intellectual-property violations targeting more than 100 different types of products. Trump’s first trade action directly aimed at China, which he has blamed for the hollowing out of the American manufacturing sector and the loss of U.S. jobs, is seen by some as a declaration of a trade war. China is preparing to hit back at Trump’s planned sweeping tariffs with levies aimed at industries and states where his supporters are concentrated, the Wall Street Journal reported. The predicament has left Europe scrambling to build defenses: EU leaders meeting in Brussels will be vying for an exclusion promised to Canada, Mexico and Australia. The damage inflicted on the world economy by a global trade conflagration would total $470 billion by 2020, according to Bloomberg Economics estimates.

Louder actions

In his first meeting as Federal Reserve chairman Jerome Powell delivered a much-anticipated 25 basis-point rate hike and held the dot-plot for rates to a total of three increases this year. For now, the dovish actions have drowned out some of the hawkish rhetoric, with the initial boost to Treasury yields and the dollar from the Fed’s improved economic outlook fading quickly. Policy makers raised growth expectations, reduced unemployment rate estimates and set out a path of steeper rate increases through 2020. In the forecasts, U.S. central bankers projected a median federal funds rate of 2.9 percent by the end of 2019, implying three rate increases next year, compared with two 2019 moves seen in December. 

Facing up

Mark Zuckerberg broke his silence on the crisis over a political-advertising firm’s access to data of Facebook Inc. users, outlining concrete steps the company is taking to make sure such a leak doesn’t happen again. The billionaire promised to probe the extent to which “rogue apps” are harvesting sensitive data on the social network. Zuckerberg told CNN that Facebook would inform every one of its two billion-plus users that they may have had their personal data compromised. It wasn’t enough to end the criticism from Democratic U.S. lawmakers and the European Parliament.

Policy pastiche

Not to be outdone by the Fed, China’s central bank raised the interest rates it charges on 7-day reverse-repurchase agreements by five basis points. The PBOC is expected to make modest increases in money-market rates in 2018 as it aims to keep up the pressure on deleveraging and prevent too much divergence with U.S. policy. The Bank of England also meets today. While no policy change or new inflation forecasts are expected, that doesn’t guarantee a non-event, as 2017 showed.  The statement and minutes from the March meeting will give traders the chance to validate -- or not -- growing odds being placed on a May rate hike.

Markets mixed

A stronger yen and tariffs did little to derail Asian markets, with the MSCI Asia Pacific Index 0.2 percent higher as of 5:57 a.m. Eastern Time. Japan’s Topix index closed 0.7 percent higher. But in Europe, the Stoxx 600 Index dropped 0.8 percent with every industry group in the red. S&P 500 futures pointed to a lower opening. Bonds rallied with the 10-year Treasury yielding 2.85 percent. Oil futures slipped 0.6 percent and gold fell.

What we've been reading

This is what's caught our eye today.

  • U.K. wants allies to hunt down Putin’s spies.
  • The billionaires are coming for German soccer.
  • Electric cars may be cheaper than ones run by gas in seven years.
  • Easy targets for China trade retaliation.
  • One of Europe's biggest funds is betting on the dollar.
  • Powell’s Fed debut shows shift away from theory, models.
  • Scientists discover the origins of gold in space.

To contact the author of this story: Cecile Gutscher in London at cgutscher@bloomberg.net.

©2018 Bloomberg L.P.