Five Things You Need to Know to Start Your Day
ECB decision day, Trump’s trade-deal rally may never come, and Brexit pessimism rises. Here are some of the things people in markets are talking about today.
At 7:45 a.m. Eastern Time, the European Central Bank will announce its latest monetary policy decision. While there is no expectation for a change in rates, officials may be poised to cut their economic forecasts enough to allow room for additional stimulus. The most likely form, should it come today, is an extension of the TLTRO program that attempts to incentivize banks to increase lending to the real economy. The announcement will be followed by a press conference with ECB President Mario Draghi at 8:30 a.m.
Evidence is growing that the trade war between the U.S. and China is doing real harm to the global economy. Some analysts warn that some of the damage could be permanent -- effectively meaning any rebound from a deal would not lead to a full recovery. This suggests that having raised expectations on the likelihood of a breakthrough, President Trump may not get the stock market rally he wants from an official end to the standoff.
Time is short
Brexit negotiators in the European Union are becoming increasingly pessimistic that sufficient progress can be secured this week to allow British Prime Minister Theresa May to win a crucial vote in Parliament next week. The EU believes that unrealistic expectations have built up in London, and that U.K. negotiators are asking for the impossible. The country’s auto industry risks more damage in the event of a disorderly Brexit, with Toyota Motor Corp. warning it may end manufacturing there, joining other carmakers reviewing their U.K. operations.
Overnight, the MSCI Asia Pacific Index dropped 0.5 percent while Japan’s Topix index closed 0.8 percent lower for a third day of losses amid concerns over the global growth outlook. In Europe, the Stoxx 600 Index was down 0.5 percent at 5:45 a.m. with some larger company shares trading ex-dividend while investors await today’s ECB decision. S&P 500 futures also pointed to a loss at the open, the 10-year Treasury yield was at 2.684 percent and gold was flat.
Following yesterday’s disappointing ADP number, investors get one last chance to adjust payrolls forecasts this morning when weekly jobless claims are released at 8:30 a.m. Fed Governor Lael Brainard is due to speak later on the economic and monetary outlook. Away from markets, Paul Manafort, who is facing up to 24 years in prison for eight felonies, will be sentenced today.
What we've been reading
This is what's caught our eye over the last 24 hours.
- U.S. sees rising Chinese military activity in the South China Sea.
- As growth picture darkens, Goldilocks makes every asset win.
- Easiest job in bonds turns exhausting as China defaults soar.
- Top stock fund manager bets emerging-markets surge will continue.
- Wall Street wants to reform CDS. Here’s why that will be tough.
- Alan Howard’s hedge fund slumps 8.5 percent in two months.
- Plastic from plants. Maybe.
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