Five Things You Need to Know to Start Your Day
Shutdown deadlock continues, Venezuela now has two presidents and it’s PMI and ECB day. Here are some of the things people in markets are talking about today.
No end in sight
Two Senate votes today aimed at ending the shutdown are likely to fail, leaving the current deadlock in place. With neither side willing to give way on the substantial issue of funding for President Donald Trump’s border wall, prospects for a compromise remain dim. Trump said yesterday that he would postpone his State of the Union address until after the shutdown ends, as polls show his popularity dropping to the lowest level in more than a year. Some investors are becoming concerned about their dollar and Treasury positions as the shutdown drags on.
Who’s in charge?
Juan Guaido and Nicolas Maduro both say they are president of Venezuela. The list of foreign powers supporting Guaido’s claim is growing after the U.S. recognized him as leader. This may not change much on the ground as Maduro still controls the military and what is left of the Treasury and state oil company. Investors are squarely focused on the oil market where the risk of sanctions on an OPEC member would hit global supply, and some U.S. refiners.
The outlook for the euro area took a hit this morning when manufacturing PMI data for Germany and services PMI for France came in below 50, respectively, signalling a contraction. This latest data pointing to a weakening outlook is unlikely to change moods at the European Central Bank today, which is expected to hold policy unchanged when the latest monetary policy decision is announced at 7:45 a.m. Eastern Time. President Mario Draghi’s press conference begins at 8:30 a.m.
Overnight, the MSCI Asia Pacific Index added 0.3 percent, with Japan’s Topix index closing 0.4 percent higher as investors awaited further developments on China-U.S. trade. In Europe, the Stoxx 600 Index was 0.4 percent higher at 5:50 a.m. with all eyes on today’s ECB decision and any comments from Mario Draghi about the pace of tightening. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.737 percent and gold was lower.
At 8:30 a.m., weekly initial jobless claims are expected to rise to 218,000, up from last week’s 213,000. U.S. PMI data is published by Markit at 9:45 a.m. with the December leading index due at 10:00 a.m. Earnings today include Starbucks Corp., Intel Corp. and reports from several major airlines.
What we've been reading
This is what's caught our eye over the last 24 hours.
- What makes this standoff worse than other government shutdowns.
- Barclays chief Jes Staley says a new financial crisis is likely.
- Airbus threatens to leave U.K. over Brexit “ madness.”
- Fat finger blamed as centuries-old conglomerate briefly loses $42 billion.
- The new hedge fund manager flies economy and stays in hostels.
- Money managers have a reason to be excited about European stocks.
- Planetary collision that formed the moon made life possible on Earth.
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