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U.S. growth to drive Fed hikes from early next year, it’s a huge week for central banks, and Brexit deal already fraying at the edges. Here are some of the things people in markets are talking about today.
A Bloomberg survey of economists showed expectations for higher inflation next year, with predictions for the next Federal Reserve rate rise after the near-certain hike this week moving up to March. The pickup in global growth and the Republican tax plan were seen as the main drivers for the improved outlook for the U.S. economy. Speaking of the legislative agenda, President Donald Trump will give a speech on Wednesday on the fiscal overhaul as House and Senate negotiators iron out differences in the versions of the bill passed in their respective chambers.
The day after
It’s not just the Fed decision that central-bank watchers have to keep an eye on this week. On Thursday, the European Central Bank, the Bank of England and the Swiss National Bank are all poised to provide monetary-policy updates. While each bank is expected to keep rates unchanged, any forward guidance on the interest-rate path will be closely watched as economists forecast global growth to reach the highest level since the post-recession bounce in 2011.
Just days after the deal that saw the U.K. make progress on negotiations to leave the European Union, members of Prime Minister Theresa May’s cabinet have been saying that the British government wasn’t really committed to what it had signed up to. Brexit Secretary David Davis said the deal was “was more a statement of intent than it was a legally enforceable thing,” spurring the Irish Foreign Minister to hit back on Twitter yesterday. U.K. gilts rose and the pound fell as optimism over the deal faded.
Overnight, the MSCI Asia Pacific Index climbed 0.7 percent, while Japan’s Topix index closed 0.6 percent higher, with the Nikkei 225 Stock Average climbing to a 26-year high. In Europe, the Stoxx 600 Index was up 0.1 percent at 5:50 a.m. Eastern Time, with banks and materials stocks the best performers in a low-volume session. S&P 500 futures added 0.1 percent, the 10-year Treasury yield was at 2.374 percent and gold was slightly higher.
Oil cuts cuts
The oil ministers of the U.A.E and Kuwait both said over the weekend that OPEC and its allies could agree at a scheduled meeting in June to draft a strategy for ending global production cuts before 2019. Citing progress in rebalancing the crude market and pressure from Russia, Kuwait’s oil minister said commodity-producing nations may end the deal next year. A barrel of West Texas Intermediate for January delivery was trading at $57.11, down 25 cents, with data from Baker Hughes on Friday showing the U.S. rig count hit a three-month high.
What we've been reading
This is what's caught our eye over the weekend.
- Odd Lots: Two researchers explain how quants are going to revolutionize long-term investing.
- Brexit-battered pound as volatile as emerging-market currencies.
- World’s biggest container-shipping line warns on global trade recovery…
- ...As booming Baltic Dry rates give agricultural traders a headache.
- Bitcoin futures start trading.
- China audit finds provinces faked data and borrowed illegally.
- The yield curve is flatter! Remind me why I care.