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D.C. machinations intensify over Russia probe, geopolitical risks rise and Fed strikes slightly hawkish note. Here are some of the things people in markets are talking about today.

D.C. drama

President Donald Trump is taking an increasingly combative posture toward Special Counsel Robert Mueller’s ongoing Russia probe after FBI agents raided the home of his lawyer Michael Cohen on Monday. Trump discussed firing Deputy Attorney General Rod Rosenstein with White House aides on Wednesday, a person familiar with the matter said. The president took to Twitter to deny a December report he planned to fire Mueller even as he continues to attack the Russia investigation and the Justice Department. Congressional Republicans, meanwhile, have moved to head off any attempt to eject the special counsel. A bill is in the works to ensure he can only be fired for “good cause,” a move that would likely paralyze Trump’s administration.  

War drums

The commander-in-chief is mulling options for military action against Syria after he met with Defense Secretary Jim Mattis on Wednesday. Using Twitter as a sounding board for policy, he tweeted this morning: "Never said when an attack on Syria would take place. Could be very soon or not so soon at all!" Middle Eastern tensions are rising: Saudi Arabia intercepted a ballistic missile in Riyadh while shooting down two drones in another part of the country yesterday, in the latest attacks by Iranian-backed Yemeni rebels with improved military capabilities. U.K. leader Theresa May called an emergency Cabinet meeting for Thursday afternoon to discuss how the government will respond. Oil soared to the highest in three years before steadying on concern over disrupted supplies.

Fed faster

Federal Reserve officials moved toward a “slightly steeper” pace of interest-rate increases over the next few years as the outlook for growth and inflation brightens, according to minutes from the March meeting. At the same time, a "strong majority" of Jerome Powell's colleagues expressed concern a trade war would harm the economy. Still, they are likely to be sanguine over any increase in inflation from protectionist policies given the transitory impact. Most Fed officials penciled in two or three more hikes this year, with traders now pricing in an 80 percent chance of an interest-rate increase in June. The minutes underscore the Fed’s well-telegraphed bid to normalize policies rather than constituting a fresh shift in a hawkish direction, according to Bloomberg Economics. 

Markets struggle

Investors are grappling with geopolitical risks, trade tensions and a hawkish Fed as U.S. stock volatility proves relentless. Overnight, the MSCI Asia Pacific Index slipped, while Japan’s Topix index closed 0.4 percent lower with losses led by glass, rubber and coal producers. In Europe, the Stoxx 600 Index was little changed by 5:57 a.m. Eastern Time, while the ruble extended its rebound from the lowest level in 15 months. S&P 500 futures pointed to a higher open and the 10-year Treasury yield increased to 2.788 percent. 

China trade

Beijing will “unquestionably” retaliate if the U.S. ups trade tensions, with a detailed, comprehensive counter-punch plan on stand-by, according to a Commerce Ministry spokesperson. He added that the government hasn’t conducted any negotiations at any level with American counterparts recently. Even as protectionist counter-threats intensify, China on Wednesday unveiled plans to open parts of its financial sector by June 30, stressing they have nothing to do with pressure from the White House. The country is also considering a relaxation of curbs on stock-futures trading, introduced in the aftermath of the 2015 crash, people familiar with the matter said.

What we've been reading

This is what's caught our eye over the last 24 hours.

  • Low-volatility stocks go global as boring comes into vogue. 
  • The World Cup just got 10 percent cheaper as ruble tumbles. 
  • JPMorgan sued over cryptocurrency fees
  • Tesla once again blames human driver for fatal crash
  • House prices around the world are moving together like never before. 
  • Hong Kong dollar touches key level for first time since 2005. 
  • SpaceX plans passenger rockets within a decade. 

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