Bond market awaits Powell testimony, Comcast enters battle for Sky, and stock rally comes to a halt. Here are some of the things people in markets are talking about today.
Federal Reserve Chairman Jerome Powell is due to testify before the House Financial Services Committee at 10:00 a.m. Eastern Time this morning, with the text of his testimony due for release at 8:30 a.m. Powell, in his first appearance in Congress since he took over as Fed Chair from Janet Yellen, is likely to say that the economy is stronger than expected, with fiscal stimulus working against attempts to use monetary policy to tap the brakes. It is unlikely that he will give many hints as to the pace of rate increases for this year, ahead of the FOMC update to its economic forecasts next month.
Shares in Sky Plc rose as much as 20 percent in London trading this morning after Comcast made a surprise bid for the U.K.’s biggest pay-TV company. Comcast’s bid of 12.50 pounds per share which values Sky at 22.1 billion pounds ($31 billion) is well in excess of the 10.75 pounds per share offered by Rupert Murdoch’s 21 Century Fox Inc. for the 61 percent stake it doesn’t already own. The market is pricing a battle for control of the company, with shares trading at 13.35 pounds at 5:40 a.m., higher than both bids on the table.
Yesterday’s decisive rally in U.S. stocks, which saw the S&P 500 Index, close 1.2 percent higher hasn’t carried over to global markets. Overnight, the MSCI Asia Pacific Index was 0.2 percent higher, with Japan’s Topix Index clocking a 0.9 percent gain, while Hong Kong’s Hang Seng declined 0.7 percent. In Europe, the Stoxx 600 Index was 0.1 percent lower at 5:40 a.m., with media companies the strongest performers in the wake of the Sky offer. S&P 500 futures pointed to a slightly lower open, the 10-year Treasury yield was at 2.871 percent and gold was unchanged.
Central banks are facing a new era of problems, according to Ray Dalio, the billionaire founder of the world’s biggest hedge fund. In an interview with Bloomberg Television in Beijing, he described the current situation where there is growth without inflation as the “goldilocks part of the cycle” with challenges looming as monetary policy makers struggle to maintain balance between the two. Dalio is not alone in worrying about the future, with Germany’s Bundesbank this morning announcing it is increasing the amount of money it’s putting aside to cover any future losses when the ECB starts to raise interest rates.
It is not just Powell that markets need to keep an eye on today, with U.S. durable goods orders, and wholesale inventories data released at 8:30 a.m., and consumer confidence for February due at 10:00 a.m. North of the border, it’s budget day in Canada, and with minimal room to entertain new ambitious spending measures. At 2:00 p.m., the Brookings Institute hosts a conversation between former Fed chairs Janet Yellen and Ben Bernanke.