Five Things You Need to Know to Start Your Day
It was all about the Fed on Wednesday, but Trump tried to steal the spotlight by saying tariffs will stay on Chinese goods until a trade deal sticks. Here are some of the things people in markets are talking about.
The U.S. Federal Reserve surprised markets by signaling it won’t raise rates this year, saying economic growth in the U.S. has slowed. Fed officials also said they would end the drawdown of central bank bond holdings in September. Together, the moves indicate how seriously policy makers take risks to their outlook, even as the domestic economy chugs along. Treasury yields tumbled to the lowest level in more than a year and rate cut bets for 2019 ratchet higher. “Patient means that we see no need to rush to judgment,” Fed Chairman Jerome Powell said in a press conference. “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”
Trump Says Tariffs Will Stay
President Donald Trump said he’ll keep tariffs on China until he’s sure Beijing is complying with any trade deal. Beijing has pushed the Trump administration to remove tariffs, and expectations had been that both nations would agree to roll back duties as part of a trade war truce. “We’re not talking about removing them, we’re talking about leaving them for a substantial period of time, because we have to make sure that if we do the deal with China that China lives by the deal,” Trump told reporters at the White House Wednesday. “They’ve had a lot of problems living by certain deals.” The president’s comments dim hopes that round-the-clock trade negotiations between the world’s two biggest economies could lead to them removing the roughly $360 billion in tariffs they’ve imposed on each other’s imports.
Shares, Dollar Decline
Asia stocks looked ready for a mixed open after U.S. equities turned lower into the close. The dovish tone of Wednesday’s Fed announcement unleashed a short rally that saw technology shares surge and energy stocks add to gains, lifting the S&P 500 Index out of a session-long funk and pushing the Nasdaq 100 to its highest level since October. But weakness in the financial and health-care sectors left the S&P lower for the day. The dollar slipped against major currencies. In Europe, a raft of negative corporate news dragged down the Stoxx Europe 600 Index. The pound fell as U.K. Prime Minister Theresa May sought to extend the Brexit deadline, while the opposition called for the public to have the final say over the country’s EU exit.
Dimon Sees ‘Huge Negative’ for U.K.
“There’s a growing risk that in 10 days you have what we would call a hard Brexit,” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said Wednesday, after announcing that U.S. executives are less optimistic amid greater uncertainty about global economic growth. British Prime Minister Theresa May has formally proposed delaying the U.K.’s exit from the EU until June 30. But the bloc warned this limited extension will only be possible if she can persuade members of Parliament to vote for her deal in the next nine days. If she can’t, the choice will be a prolonged extension or leaving the EU without a deal – the hard Brexit Dimon is worried about. The JPMorgan CEO told reporters that “If you do have one, it’s a huge negative to the U.K., not that big a negative to Europe, and far less negative to the United States.”
NBA Seeks Political Point Guard in China
Great news if you’re a basketball fan who also happens to be fluent in Mandarin with a “deep knowledge of legislative and regulatory processes in Mainland China” — the National Basketball Association Inc. is hiring its first head of government and public affairs in China. The country is the NBA’s most important international market, and the organization has already achieved the kind of success that other international sports leagues would love to emulate. The newly created position, based either in Beijing or Shanghai, will be in charge of “shaping the public narrative” of the league in the world’s second largest economy, at a time when U.S.-China relations are tense to say the least. “This role is fully responsible for managing and enhancing governmental relationships at all levels, coordinating and setting all relevant policy alignment and priorities,” said the posting.
What we’ve been reading:
This is what caught our eye over the last 24 hours.
- These are the world’s happiest (and most miserable) countries.
- Here’s what one of the worst quarters ever is doing to investment banking.
- Australia’s housing slump isn’t fazing mortgage bond investors.
- After Google, EU’s antitrust sights may turn to Amazon and Apple.
- Pilot who hitched a ride saved Lion Air 737 a day before crash.
- Apple launches new AirPods with longer talk time.
©2019 Bloomberg L.P.