Five Things You Need to Know to Start Your Day
Want to receive this post in your inbox every morning? Sign up here.
Trump mulls big-bank break-up, RBA to keep rates at record lows, and it’s PMI day. Here are some of the things people in markets are talking about.
U.S. President Donald Trump gave the banking sector a short-lived jolt of fear Monday when he told Bloomberg News he was “looking at” a break-up of the big banks. The KBW Bank Index hit the skids before resuming its upward trend. For his part, Citadel CEO Ken Griffin said he’d be “really excited” to see such a proposal enacted. Trump also floated the possibility of increasing the U.S. gas tax and said he’d be willing to meet with Kim Jong Un, dictator of North Korea. Meanwhile, Treasury Secretary Steven Mnuchin told Bloomberg that ultra-long bonds could “absolutely make sense,” sending 30-year Treasury yields higher.
RBA to Stand Pat
Economists are looking for the Reserve Bank of Australia to keep rates unchanged at 1.5 percent in a decision slated to be released at 12:30 p.m. Tokyo time. The potential for fiscal stimulus in the form of infrastructure spending diminishes the need for additional monetary easing to buoy activity. In addition, inflation data released last week showed pricing pressures have moved back towards the central bank’s target range. The robust rate of home price appreciation—which had raised concerns about financial instability among monetary policymakers—showed signs of abating in April, further bolstering the case for maintaining the status quo on rates.
From 9:30 a.m. to 10:45 a.m. Tokyo time, investors will be hit with a flurry of purchasing managers’ indexes for April out of Malaysia, Indonesia, Philippines, Thailand, South Korea, Taiwan, Japan, and China. The Caixin PMI from the world’s second-largest economy, forecast to edge up to 51.3 from 51.2, will be among the most closely tracked. China’s official manufacturing PMI, released over the weekend, dipped to 51.2 in April, falling short of expectations and pointing to a loss of economic momentum.
New Highs for Nasdaq
The Nasdaq Composite Index closed at a record high to start the week while the Dow Jones Industrial Average booked a small loss. Despite Trump’s comments on banking reform, financials were the third-best performing sector on the S&P 500 index, which edged higher on the day. West Texas Intermediate futures, meanwhile, sank to their lowest level in over a month amid news that Saudi Arabia’s state-owned oil company cut prices for its Asian customers in a bid to protect market share. A continued rise in Libyan output and U.S. active rigs also weighed on crude.
S&P/ASX 200 and Nikkei 225 equity futures are pointing to a higher open as of 5:30 a.m. Tokyo time. Both indexes booked gains to start the week. The yen hit its weakest level against the dollar in over a month and was the second-worst G10 currency on Monday, besting only the British pound.
What we’ve been reading
This is what caught our eye over the last 24 hours.
Would Buffett go for a $100-billion deal?
Macau’s casino revenue growth is on fire.
Abe looking to change Japan’s pacifist constitution.
China’s economy and financial markets are diverging.
Why everyone is talking about this tiny Canadian lender.
It pays to be on good terms with the White House.
Music festival gone horribly wrong faces “Hunger Games” lawsuit.