Photographer: Tim Rue/Bloomberg
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BoJ and ECB decisions, U.S.-China trade talks take tumultuous turn, and Trump makes plea for Obamacare repeal before recess. Here are some of the things people in markets are talking about.
Out of Step
Two of the world’s biggest central banks have the opportunity to bolster or push back against the narrative of global monetary normalization on Thursday. First up is a decision from the Bank of Japan, which is expected to keep marching out-of-step with its major peers by reiterating its commitment to ultra-accommodative monetary policy. Inflation and growth forecasts will be in focus, as will any commentary or concerns about the sustainability of its ETF purchasing program. The yen has been one of the few currencies to depreciate against the greenback recently as the Bank of Japan showed its dovish resolve by acting to cap 10-year yields. That'll be followed by the European Central Bank decision, at which no change to rates or asset purchases is expected. However, traders will be looking for any hints from President Mario Draghi about how soon the central bank's bond buying program will be wound down. However, big news on this front may have to wait until the fall. But thanks to improving earnings among European companies, investors may no longer need this Draghi put.
Both governments canceled scheduled press conferences to conclude the U.S.-China Comprehensive Economic Dialogue after talks between the two parties got off to a rough start. U.S. Commerce Secretary Wilbur Ross lamented his nation's trade deficit with China, urging for measures to be taken to rebalance the trading and investment relationship between the world's largest economies. On Tuesday, Ross pushed for China to open its markets, with the White House likely seeking to export more agricultural products, electronics, and transportation equipment to the world's second-largest economy. The Chinese yuan -- an object of President Donald Trump's ire during the 2016 campaign -- dipped from a nine-month high Wednesday.
Don’t Leave Town
U.S. President Donald Trump urged Senate Republicans to remain in the Capitol until Obamacare is repealed as the traditional summer recess period approaches. Majority Leader Mitch McConnell said he's still planning on holding a procedural vote that could pave the way for a straight repeal of the Affordable Care Act early next week, despite public opposition from within his party that would keep such a bill from passing. After a lunch meeting with Trum, several Republicans expressed optimism that their prior plan to both repeal and replace Obamacare could be revived. Without a health care victory, Trump may go winless in his first year as president.
Fresh Records and Futures Up
Another day, another pair of all-time highs for the S&P 500 and Nasdaq Composite indexes. Shares of Morgan Stanley helped pace the advance with a 3.3 percent gain as second-quarter earnings showed resilience in trading revenues. This good news for U.S. equities might not be helping fund managers too much -- they're the most underweight U.S. stocks since January 2008. The Bloomberg U.S. dollar index, 10-year Treasury yields, and oil all moved higher Wednesday, to boot. S&P/ASX 200 and Nikkei 225 futures both appear to be taking their cues from the positive day in North America, trading to the upside ahead of the Asian open.
Besides the BoJ, the economic calendar for the Asia Pacific region is loaded Thursday. Japan's trade balance for June -- forecast to return to a surplus of 488 billion yen following May's 204.2 billion deficit -- kicks things off at 8:50 a.m. Tokyo time. The nation's all industry activity index for May is also due out, with economists anticipating a monthly decline of 0.8 percent. Meanwhile, it's jobs day in Australia, with the unemployment rate projected to tick up to 5.6 percent in June despite the addition of 15,000 jobs on the heels of a hefty 42,000 gain the prior month. Other events on the docket: June inflation data for Hong Kong, export orders for Taiwan, and the second quarter reading for the NAB's business confidence outlook survey.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- How the PBOC deals with the Chinese government.
- Banks may go the way of Kodak, warns former Barclays CEO.
- Fed Chair candidates endorse Trump's fiscal plan.
- Morgan Stanley picks Frankfurt as new post-Brexit trading HQ.
- Indian government not a fan of the RBI's proposed new tool.
- Grandma is safe from Trump's travel ban.
- Man who convinced Americans to eat trash fish now a billionaire.