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Fischer joins the Fed hawks, European leaders meet to discuss the future of the continent, and there's a new chief at India's central bank. Here are some of the things people in markets are talking about today.
Fischer fires up the dollar
Federal Reserve Vice Chairman Stanley Fischer helped the dollar to begin the week trading stronger against all of its major peers, after he said U.S. economic conditions are close to hitting the central bank's targets in a speech in Aspen on Sunday. This upbeat assessment pushed the currency to a one-week high, as traders beef up bets that a rate hike may happen this year. Treasury yields also jumped to their highest since the U.K. referendum, with the 10-year yield climbing one basis point to 1.59 percent. Markets will be watching to see if Federal Reserve Chair Janet Yellen’s remarks on the economy concord with Fischer's when she delivers her address at the Jackson Hole symposium on Friday.
Patel promoted at the RBI
The Reserve Bank of India ends months of speculation with the announcement that Urjit Patel, deputy governor in charge of monetary policy, is to succeed current governor Raghuram Rajan when he steps down in the first week of September. The promotion is being read as signaling policy continuity for the bank, which is in the process of overhauling the way it sets rates, with Patel a key architect of the reforms alongside the outgoing governor. Seen as fiscally conservative, the 52-year old Yale graduate and inflation hawk will be expected to tackle a Consumer Price Index that's creeping above the central bank's recently instituted target, an exodus of FX deposits, and a March 2017 deadline for a clean-up of the banks. Markets were jittery in response, with benchmark 10-year yields headed for the biggest jump in six months, and equities declining for a second day as of 3:22 a.m New York time.
The world's second-largest biopharmaceutical company set to buy U.S. cancer drugmaker Medivation Inc. in a deal valued around $14 billion. Pfizer Inc., which has a market capitalization of $212 billion, would pay about a one-third premium to the drugmaker's Friday closing price of $67.16. The deal would give Pfizer ownership of a lucrative prostate-cancer treatment, and would represent its biggest acquisition since buying Hospira Inc. last year for $17 billion. Drug-company deals in the U.S. are being scrutinized with more intensity than those in other industries amid regulator fears that sector consolidation is hitting consumers with price increases. Pfizer shares have lost just less than 5 percent this month and traded at $34.98 as of Friday's close.
The leaders of Italy, France, and Germany will gather on board a vessel named for the man who unified Italy today to discuss the future of the Brexit-torn continent. Marking the second trilateral talk since the June 23 referendum, the leaders of the euro bloc's three largest economies are seeking to prepare a united roadmap for the U.K.'s withdrawal that will weather shifting political cycles. The Stoxx Europe 600 Index had added 0.7 percent by 5:21 a.m. ET. Meanwhile inside the U.K., the leadership contest for the opposition Labour Party begins today. The vote was triggered by the fallout from the referendum two months ago, with the incumbent Jeremy Corbyn the hot favorite even though he's lost the backing of most of his colleagues.
Yen rally fades amid policy shift
The yen weakened as markets price in the prospect of further monetary easing by the Bank of Japan next month. BOJ Governor Haruhiko Kuroda said in an interview published Saturday in the Sankei newspaper that there’s a “sufficient chance” the bank will add to its unprecedented easing at September’s policy meeting, after a majority of analysts surveyed in early August by Bloomberg News said they think an expansion of Japanese stimulus policies is likely.
What we've been reading
This is what's caught our eye over the weekend.
- Oil ended its longest run of gains in four years.
- Emerging-market investors are more cautious than they look.
- Pound-Euro parity's already a thing for some holiday makers.
- Shinzo Abe plays Super Mario at Olympics closing ceremony.
- Zimbabwe's freezing government hiring.
- The world's biggest bond funds find a way to make negative yields work for them.