Staying the path
The minutes of the most recent Federal Open Market Committee published yesterday showed that policy makers at the bank are willing to raise rates again, so long as the U.S. economy remains healthy. The dollar is higher this morning against most of its peers as the central bank seems determined to stay the course on its tightening path. Fed Chair Jerome Powell speaks on monetary and economic policy tomorrow at the Jackson Hole conference in Wyoming. The European Central Bank publishes an account of its July policy meeting at 7:30 a.m. Eastern Time.
European growth remains robust, with IHS Markit’s composite index of manufacturing and services increasing to 54.4 from 54.3 in July. Composite PMI for Germany had its highest reading in six months of 55.7, with the growth driven by a strong increase in services which more than offset a slowdown in manufacturing. France’s economy also showed signs of regaining steam with composite PMI rising to a four month high of 55.1. Data for the U.S. economy is due at 9:45 a.m.
Saudi Arabia has formally put the initial public offering of its giant oil company on hold, with Saudi energy minister Khalid al-Falih saying the government was still committed to making the company public “at a time of its own choosing when conditions are optimum.” In the market this morning, a barrel of West Texas Intermediate for October delivery was trading at $67.76 by 5:45 a.m. after gaining $2 yesterday on data that showed U.S inventories declined more than forecast.
Overnight, the MSCI Asia Pacific Index declined 0.3 percent while Japan’s Topix index closed broadly unchanged as automakers remained under pressure due to continuing trade concerns. In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:45 a.m. as markets in the region fluctuated on low volumes. S&P 500 futures pointed to little change at the open, the 10-year Treasury yield was at 2.824 percent and gold dropped.
The U.S. and China imposed previously announced tariffs on $16 billion of each other’s goods as delegations from both sides meet in Washington. China said it would lodge a complaint with the World Trade Organization over the American actions. U.S. Treasury Undersecretary for International Affairs David Malpass and Chinese Vice Commerce Minister Wang Shouwen continue their talks today. No senior policy makers are expected to attend and only a joint statement on productive discussions is expected at the end.