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Mnuchin says China trade talks likely this week, good news and bad news for the U.K., and another cacophony of Fed speakers. Here are some of the things people in markets are talking about today.
Treasury Secretary Steven Mnuchin says there is a “good chance” he will travel to Beijing with U.S. Trade Representative Robert Lighthizer should talks by phone this week turn out to be productive. The conciliatory noises belie elevated rhetoric, as President Donald Trump claimed slowing growth in the Asian country is due to U.S. tariffs and is forcing Beijing back to the table. For its part, China is threatening sanctions of its own, although those ones have to do with military, rather than trade, disagreements.
Economics vs politics
There was some more good news for the U.K. economy – and believers in the Philips curve – this morning when data showed that wages grew at the fastest pace in 11 years while unemployment remained at the lowest level since the mid-1970s. Under normal circumstances, results such as this may lead to increased inflation expectations, projections for a central bank rate hike and therefore a higher pound. That the pound traded lower in the wake of the data only means that Brexit continues to be the sole driver of investor sentiment towards the country, and that is not going well.
Federal Reserve Chairman Jerome Powell speaks at a conference in Paris at 1:00 p.m. Eastern Time, with investors looking for any further clarification on the extent of his dovishness. Federal Reserve Bank of Atlanta President Raphael Bostic, Fed Governor Michelle Bowman, Dallas Fed President Robert Kaplan and Federal Reserve Bank of Chicago President Charles Evans all speak at separate events today. On the policy demand-side, JPMorgan Chase & Co., Goldman Sachs Group Inc., and Wells Fargo & Co. are all due to report earnings later.
Markets agree with yesterday’s price discovery
Overnight the MSCI Asia Pacific Index was broadly unchanged while Japan’s first trading session of the holiday-shortened week ended with a 0.5% loss. In Europe the Stoxx 600 Index was less than 0.1% lower at 5:50 a.m. as investors awaited bank earnings and economic data. S&P 500 futures were also pretty much unchanged, the 10-year Treasury yield was at 2.090% and gold was slightly higher.
Markets may stir into life at 8:30 a.m. when U.S. retail sales data for June is released, with headline growth expected to slow. At 9:15 a.m. industrial production numbers for June are expected to also show a slowdown. Facebook Inc.'s David Marcus testifies on Libra before the Senate Banking Committee today, while executives from Google, Facebook, Apple Inc. and Amazon.com Inc. are set to appear before the House antitrust panel investigating the market power of the biggest tech companies.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Central bankers are sick of saving the world economy alone.
- Stock investors go “all-in” with $6 billion bet on S&P 500 ETFs.
- Why (almost) everyone hates Facebook’s cryptocurrency Libra.
- Wells Fargo says big rush to bonds has ‘gotten ahead of itself’
- Top forecaster says world’s best currency rally is heading for a crash.
- Nestle invents new way to make chocolate – with no added sugar.
- Scientists unveil the first-ever image of quantum entanglement.
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