Five Things You Need to Know to Start Your Day
Trump says the U.S. is very far from a recession, Fed minutes are due later, and Germany tests the bond market. Here are some of the things people in markets are talking about today.
No stimulus, yet
President Donald Trump said that he is open to a range of possible actions to stave off a recession, while also suggesting those actions are not needed as there is no recession coming. A payroll tax cut or a capital-gains tax break are among the options being considered by the White House, with the president keen to point out the U.S. is “very far” from a downturn. Federal Reserve Bank of San Francisco President Mary Daly agrees that the economy doesn’t appear to be headed for a recession, comments which might please Trump, if not for the fact that he also wants the Fed to cut rates by 100 basis points.
The minutes of the Fed meeting in July will be published at 2:00 p.m. Eastern Time today. Events subsequent to that decision may make the account seem a little stale but investors will as ever be on the lookout for fresh monetary clues. Economists are more likely to focus on Friday’s speech by Fed Chair Jerome Powell at the Jackson Hole symposium. With traders currently pricing in between 50 and 75 basis points of cuts by the end of the year, the possibility of a disappointment remains high.
Germany auctioned a 30-year bond this morning with a 0% coupon for the first time as the country tests the demand for haven assets with its entire yield curve in negative territory. The instrument sold with a record low yield of -0.11%. Authorities in Berlin have recently looked at increasing fiscal spending, although this would only likely be done in reaction to an actual recession, rather than to try to stop one happening. Elsewhere in Europe, Italian debt was among the best-performing sovereign bonds in the region after reports suggested the country’s president is ready to give Five Star and the opposition Democratic Party time to strike a deal to form a new government.
Overnight, the MSCI Asia Pacific Index slipped 0.3% while Japan’s Topix index closed 0.6% lower as fears over a prolonged trade war increased again after Trump said he is not ready to make a deal with China. In Europe, the Stoxx 600 Index was 1.2% higher at 5:45 a.m. with Italian shares among the best performing, while car makers surged amid reports of renewed merger talks between Renault SA and Fiat Chrysler Automobiles NV. S&P 500 futures pointed to a bounce at the open, the 10-year Treasury yield was at 1.589% and gold slipped.
U.S. existing home sales numbers for July at 10:00 a.m. will give more insight into a housing market that is giving mixed signals. In earnings, Lowe’s Cos Inc., Nordstrom Inc. and Target Corp. report results for the second quarter. One thing that is no longer coming up is President Trump’s state visit to Denmark, which he cancelled after his offer to buy Greenland was met with a flat refusal.
What we've been reading
This is what's caught our eye over the last 24 hours.
- From Biarritz to Jackson Hole, economic leaders debate stimulus.
- China confirms U.K. consulate staffer in Hong Kong detained.
- The one job in banking the robots can’t take.
- Switzerland has a new way to impose world’s lowest interest rate.
- Zimbabwe’s rulers find themselves in a trap of their own making.
- The cost of hydrogen from renewables to plummet in the next decade.
- Sextortion is lucrative and likely to become more widespread.
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