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All eyes are on Trump's speech to Congress, odds of a March rate hike surge, and it's a busy day for Fed watchers. Here are some of the things people in markets are talking about today.
At 9 p.m. Eastern Time President Donald Trump will address Congress in a speech that markets will be parsing for policy specifics. With the Dow Jones Industrial Average posting gains in every session since the president promised a “phenomenal” plan to cut taxes, the risk of investor disappointment is high.
March rate hike
The odds of a rate increase at the Federal Reserve's March meeting jumped 10 points yesterday to 50 percent, though traders were unable to point to a single factor for the rapid rise. Voting FOMC member Federal Reserve Bank of Dallas President Robert Kaplan reiterated his view yesterday that policy makers should raise interest rates without paying too much attention to markets. Mohamed A. El-Erian said in his Bloomberg View column that a rate hike would show the central bank moving from tactical to a strategic posture.
Norway wins bigly
The world's largest sovereign wealth fund posted gains of 447 billion kroner ($53 billion) in 2016 for a 6.9 percent annual return, with the strong equity rally following Trump's election driving the results for the Norwegian fund. Elsewhere, hedge funds seem to be falling back in love with commodities, reacting to the prospect of accelerating inflation due to Trump's policies.
Overnight, the MSCI AC Asia Pacific Index retreated 0.2 percent while Japan's Topix index closed 0.1 percent higher. In Europe, the Stoxx 600 Index was unchanged at 5:36 a.m. following a four day decline. U.S. stock futures were also unchanged as investors across the world seem to be waiting on direction from Donald Trump's speech.
There is plenty to keep the market occupied before the big address in Washington later. At 8:30 a.m. Eastern Time the second reading of fourth-quarter U.S. GDP is released, with slight upward revisions expected. There are speeches from three Fed presidents due, with Philadelphia Federal Reserve Bank President Patrick Harker at 3:00 p.m., San Francisco Fed President John Williams at 3:30 p.m. and St. Louis Fed President James Bullard at 6:40 p.m.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Odd Lots Podcast: Could Buddhism save the global economy?
- JPMorgan software does in seconds what took lawyers 366,000 hours.
- The moment of truth for debt markets beckons.
- Worker shortage drives Japanese companies into childcare...
- ...While China is considering financial rewards to encourage second children.
- Shell's hydrogen problem.
- China's continuing credit boom.