Five Things You Need to Know to Start Your Day
Good morning. Brexit continues apace, albeit with a new political party getting involved. The U.S. wants a stable Chinese currency, the Fed's ahead and Britain’s banks are reporting. Here’s what’s moving markets this morning.
Prime Minister’s Questions in the U.K.’s House of Commons will have a slightly different look as the seven former Labour MPs who have jumped ship to form The Independence Group are pushed off the opposition benches and into a cosy new corner. It’ll be those left in the Labour seats most closely watched for any indication that the defections will shift the party’s Brexit policy. And keep an eye on the attorney general, Geoffrey Cox, who is apparently key to Theresa May’s strategy for getting a deal through Parliament even as the European Union shows no sign of yielding. Good advice to pound traders, then, to stop worrying about the date.
Yuan for the money
The U.S. wants China to agree to keep the yuan stable as part of the demands being put forth in the trade negotiations between the two, according to people familiar with the talks. Structural changes to the Chinese economy have been the stumbling block preventing a deal from being done so far, but sources say both sides have tentatively agreed that yuan stabilization will be part of the package. The talks got back under way in Washington on Tuesday. Markets remain on tenterhooks.
Back to the Fed
The European Central Bank has eaten up plenty of headlines in the past few weeks as policymakers signal a retreat into dovish territory. The minutes from the Federal Reserve’s latest meeting will bring the focus squarely back to Jerome Powell and company. After the communications misfire in December, extra care is likely to be taken on forward guidance and the minutes could mean a comeback for the yield-curve inversion trade. And watch too for discussion on unwinding the balance sheet after Loretta Mester, president of the Federal Reserve Bank of Cleveland, said she would favor ending the run-off this year.
HSBC Holdings Plc’s numbers on Tuesday were given the cold shoulder but the focus was squarely on the U.K. group’s big Asian business. That won’t be the case for Lloyds Banking Group Plc where results are likely to provide a keen insight into the state of mortgage and business lending across the U.K., ahead of Barclays Plc putting out results a day later. Watch too for the numbers due from mining and commodities trading giant Glencore Plc for the state of metals markets around the world.
Waiting for the Fed minutes – which come after the European market close --- could keep investors in a holding pattern until they arrive. Also watch out for South Africa’s budget, being delivered as the country contends with the cash needs and debt pile of its state-owned power company. Elsewhere, Russian President Vladimir Putin will deliver his annual state-of-the-nation address and later Samsung Electronics Co. will unveil its latest Galaxy S10 smartphone.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Equities vs Bonds is back, just as analysts predict the rally in European stocks is nearing its end.
- The Spanish and the French are fretting about retirement more than Americans.
- Twitter unveiled a series of new political advertising policies ahead of European elections.
- Self-driving cars may herald the death of insurance as we know it.
- Forecasts for emerging currencies look grim, with one exception.
- How the late Karl Lagerfeld built the modern day house of Chanel.
- The lab working on discovering DNA from old books.
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