Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. The Fed is once more extolling the virtues of patience, Brexit is reaching yet another critical point and tensions between the U.S. and China are teetering on the edge once more. Here’s what’s moving markets.
A Patient Fed
The Federal Reserve doesn't see any interest rate hikes coming in 2019, so take a look at the new “dot plot.” “Patient means that we see no need to rush to judgment,” Fed Chairman Jerome Powell said, adding it could be “some time” before the jobs and inflation outlooks provide a reason to change policy. The verdict? Treasury yields dropped to the lowest in more than a year. The central bank’s unexpected move to scrap its forecast for rate hikes this year has led to increased bets that a cut will happen. Dollar bears may be pleased, but for the most part the decision has left folks scratching their heads.
Zero Hour
Now that folks have had the chance to calm down after Theresa May’s speech on Wednesday evening, the full mess of Brexit can come into sharp focus. The prime minister has begrudgingly accepted an inevitable delay to the exit day but is showing few signs of delivering anything substantively different for Parliament to vote on. That’s pushed the U.K. to the brink of crashing out without a deal, to the dismay of British business and JPMorgan's boss, unless May betting on a short delay forces lawmakers to act. The EU, meanwhile, was somewhat shocked by May asking for only a short delay.
Hard Bargain
Tensions between the U.S. and China have come roaring back this week. U.S. President Donald Trump says the tariffs his administration slapped on Chinese exports will stay in place until incontrovertible proof emerges that China is keeping up its end of the bargain, a requirement China is reportedly uneasy with. Investors, however, are now more worried about China’s economy than the trade war. The U.S. isn’t China's only concern either. It’s working on sealing a big deal with Italy.
Not Just Brexit
It’s not just Brexit that is keeping European leaders up at night and there is plenty to catch up with. France has started jockeying for positions at the European Central Bank and the European Commission, with a particular focus on how important Mario Draghi’s job is. The ruling coalition government in the Netherlands has lost its majority, again highlighting the challenge posed by surging populist parties in Europe. And Hungarian Prime Minister Viktor Orban was suspended from Europe’s biggest political family, sharpening the divide between mainstream and euroskeptic parties ahead of EU Parliament elections in two months.
Coming Up...
The Fed’s decision meant most currencies that are not the dollar rose, with China’s yuan hitting the strongest level since July. Stocks were mixed and there’s little direction to speak of in European futures. The Bank of England is likely to stay still on rates, particularly after the Brexit fog got a little thicker this week. Britain’s high street will take center stage as bellwether clothing merchant Next Plc reports results, followed later by retail sales figures for the country. We’ll have a trio of central bank decisions from the Philippines, Taiwan and Indonesia plus Norway’s Norges Bank and this afternoon we’ll get jobless claims data from the U.S.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- How a brutal quarter is harshing investment banks’ buzz.
- Central banks kill volatility and Wall Street fears a trap.
- The happiest and the most miserable countries on Earth, ranked.
- The firm making a play to be the astrology app supremo.
- Salt Bae’s owner is trying to fix its debt problem.
- Volvo is planning cars that will self-police drunk drivers.
- Inside the world of competitive water drinkers on YouTube.
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
©2019 Bloomberg L.P.