Five Things You Need to Know to Start Your Day
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It's Fed day. Here are some of the things people in markets are talking about today.
At 2 p.m. ET the Federal Reserve will announce what's expected to be the first rate hike of 2016. With every economist surveyed by Bloomberg calling for a 25 basis-point hike, attention is likely to focus on Chair Janet Yellen's post-decision press conference. While market-implied probabilities put the chances of an increase at 100 percent, they also imply an 8 percent possibility of a 50 basis-point increase.
Jeffrey Gundlach, chief investment officer of DoubleLine Capital, called President-elect Donald Trump's policies unfriendly for bonds, and predicted that yields on 10-year Treasuries may climb to 3 percent next year. BlackRock Inc. is also predicting rising bond yields in 2017, as global growth spurs inflation and investors become "more constructive on the global macro economy.” A Treasury Department research unit has issued a warning about corporate debt, as the ratio of company debt to gross domestic product surpasses 2007 levels, and said the biggest buyers, including mutual funds, pension funds and life insurers, should be stress-tested to prevent instability in the event of a market downturn.
Brexit, just not yet
Almost six months on from the vote to leave the European Union, Brexit seems no closer. Chancellor of the Exchequer Philip Hammond said the U.K. would probably need longer than the two years set out in treaties to negotiate Britain's future relationship with the EU, arguing in favor of a 'transitional deal' that allows for a longer negotiating process. Data released by the Office for National Statistics this morning showed employment falling for the first time in more than a year, an outcome described by Alan Clarke, an economist at Scotiabank in London, as "the first genuine disappointment we have seen in the hard data since the Brexit vote.”
Overnight, the MSCI Asia Pacific Index rose 0.1 percent, while in Japan the Topix index dropped 0.1 percent as investors awaited today's Fed decision. In Europe the Stoxx 600 was 0.5 percent lower at 5:21 a.m. ET after rising in four out of the last five sessions. In the U.S., S&P 500 futures were broadly unchanged as market participants dusted off their Dow 20,000 hats.
President-elect Donald Trump's transition team picks are leading to some corporate promotions as David Solomon and Harvey Schwartz are to succeed Gary Cohn at Goldman Sachs Group Inc., according to the Wall Street Journal, and Darren Woods appears set to take the helm at Exxon Mobil Corp. Turning to Trump's personal business dealings, the head of the U.S. ethics office said the plans he's outlined for his companies don't meet standards. The PEOTUS is due to meet more corporate leaders today, with IBM Chief Executive Officer Ginni Rometty saying the company plans to hire about 25,000 people in the U.S. ahead of their meeting.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Trump says he expected to lose the election.
- Food prices are a drag on euro-area inflation.
- Finance titans face off over the $5 trillion London gold market.
- Venezuela won't exchange all bank notes in a currency swap.
- Fundamentals are becoming important again to the Trump-led stock market.
- When your hedge-fund manager buys a Ferrari, find a new manager.
- After Aleppo's fall, what's next in Syria?