Sep 13, 2018, by Lorcan Roche Kelly
One to watch
The Bank of England is expected to make no changes to monetary policy when it announces its decision at 7:00 a.m. Eastern Time today. Forty-five minutes later, the European Central Bank is also expected to stand pat when its decision is published, with some tweaks to the outlook possible when the projections for the economy are released later. Traders are looking for more action from Turkey’s central bank, where a rate hike of anything between zero and 725 basis points is predicted by economists surveyed by Bloomberg when the decision is announced at 7:00 a.m. President Recep Tayyip Erdogan said just hours ahead of the decision that Turkey should cut interest rates, sending the lira more than 3 percent lower.
Markets got a boost yesterday when Chinese commerce ministry spokesman Gao Feng said that the country had received an invitation and is working on the details of a new round of trade talks. Larry Kudlow, director of Trump’s National Economic Council, called it a “positive thing.” President Donald Trump has not yet imposed the extra tariffs on $200 billion of Chinese goods, something he is free to do since the public comment period on that measure expired last week. Elsewhere, negotiations between the U.S. and the European Union appear to be going well, with the administration seeking to fast-track Congressional approval for any trade deal.
Florence has been downgraded to Category 2, meaning it is no longer classified as a major hurricane. This does not mean the danger is over for large parts of the Carolinas coastline, where the hurricane is expected to dump heavy rain when it makes landfall early on Friday. As many as three million homes and businesses may lose power, with some places likely to take weeks to reconnect.
Overnight, the MSCI Asia Pacific Index rose 0.9 percent, snapping a streak of declines that was the longest in 16 years, while Japan’s Topix index closed 1.1 percent higher on optimism over trade talks. In Europe, the Stoxx 600 Index was unchanged at 5:45 a.m. Eastern Time as investors awaited a slew of central bank decisions. S&P 500 futures pointed to a small gain at the open, the 10-year Treasury yield was at 2.972 percent and gold was flat.
At 8:30 a.m., weekly initial jobless claims numbers are published, with expectations for a rise from last week’s post-1969 low of 203,000. At the same time inflation numbers for August are released, with headline CPI likely to have slowed slightly to 2.8 percent from a year ago. European Central Bank President Mario Draghi is also set to deliver a post-decision press conference at 8:30 a.m., so it may be a busy time for traders around the world. The Treasury is scheduled to sell $15 billion of 30-year bonds at 1:00 p.m., the same time as Atlanta Fed President Raphael Bostic is due to give a speech on the economic outlook and monetary policy.