Five Things You Need to Know to Start Your Day
Trade talks in China, everyone waiting for the Fed, and Brexit bashes pound. Here are some of the things people in markets are talking about today.
Talking for talk’s sake
Senior U.S. officials are travelling to China today for the first face-to-face talks since negotiations broke down in May. It’s hard to see how expectations could be lower, with neither side showing any urgency to reach a compromise as they air grievances ahead of tomorrow’s meeting. There was some signs of goodwill, though, as Chinese companies are expected to sign more deals to buy American agricultural products tariff-free.
Waiting for Powell
The event dominating markets this week is Wednesday’s Federal Reserve monetary policy decision. A 25 basis point cut is a near-certainty as bets on a bigger reduction have faded in recent days. Policymakers are expected to follow the first rate reduction in a decade with another one next month, so perhaps the thing most likely to move markets this week will be Chairman Jerome Powell’s post-decision press conference that should provide more guidance.
The British pound fell to another two-year low this morning as Prime Minister Boris Johnson’s new cabinet members made headlines over the weekend with Brexit pronouncements. Michael Gove, Johnson’s top aide, wrote that “no-deal is now a very real prospect” while a report in the Financial Times said that new Chancellor of the Exchequer Sajid Javid is prepared to spend 1 billion pounds ($1.2 billion) on plans to crash out of the EU . The U.K.’s biggest business lobby group published a study which shows that neither side of the deal is ready for a so-called hard Brexit.
Overnight, the MSCI Asia Pacific Index slipped 0.4% while Japan’s Topix index closed 0.2% lower as corporate results again disappointed. Protests in Hong Kong continue to hit shares there, with property stocks among the biggest losers. In Europe, the Stoxx 600 Index was unchanged at 5:50 a.m. Eastern Time amid M&A deals. S&P futures pointed to a small drop at the open, the 10-year Treasury yield was at 2.062% and gold was flat.
A busy week for the global economy gets off to a quiet start today, with Dallas Fed Manufacturing at 10:30 a.m. the only piece of economic news of note. Oil-market watchers might need to keep an eye on Secretary of State Michael Pompeo’s address to the Economic Club of Washington later after Iran seemed to reject his offer to travel to Tehran for talks. Market-darling Beyond Meat Inc. reports results after the close.
What we've been reading
This is what's caught our eye over the weekend.
- Odd Lots: Here’s how people are using cryptocurrency in Venezuela.
- China says Hong Kong protests ‘beyond scope’ of peaceful protest.
- U.S. firms feel the pinch from job market and trade.
- The lithium mine buildup is outpacing the electric-car boom.
- How the Beyond Meat sausage is made.
- Jack Ma’s $290 billion loan machine is changing Chinese banking.
- Quantum Darwinism could explain what makes reality real.
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