Nov 28, 2018, by Lorcan Roche Kelly
President Donald Trump upped the ante in his long-running grumbling about Federal Reserve Chair Jerome Powell’s interest-rate policy. In an interview with the Washington Post, he said he is “not even a little bit happy” with his choice to lead the central bank. Treasury Secretary Steven Mnuchin has been canvassing bond dealers and investors on whether they want the Fed to tighten policy through rate hikes or through faster cuts in its securities portfolio, people familiar with the matter said. That’s a sign Mnuchin may be looking for a way of tightening policy without triggering the ire of the president. Investors will watch Powell’s comments in New York at 12:00 p.m. Eastern Time to see if he responds to Trump’s latest attack.
Dinner for two
The meeting on Saturday between Donald Trump and China’s Xi Jinping is shaping up to be a pivotal moment for the global economy as 2018 stumbles to an end. An eerie calm has descended on Chinese markets, with the yuan the least volatile in almost a year and the Shanghai Composite Index the most peaceful since May. Trump will arrive at the talks with a fragile coalition of international allies backing his position – even as European and Japanese officials say their cooperation with the White House could collapse should the U.S. proceed with new auto tariffs.
The Bank of England will today publish its analysis on what the proposed Brexit deal will mean for the U.K. economy, with separate analysis of the potential fallout from a no-deal exit from the European Union. The publication, at 11:30 a.m. Eastern Time, will be followed by a press conference with Governor Mark Carney at 11:45 a.m. Meanwhile, Prime Minister Theresa May continues to try to gain support for her deal in parliament, with her latest gambit being to allow amendments to the proposed text ahead of the vote. A Bloomberg survey of strategists and fund mangers sees a 55 percent chance that lawmakers will reject the deal.
Overnight, the MSCI Asia Pacific Index added 0.7 percent while Japan’s Topix index closed 0.6 percent higher as markets became cautiously optimistic about this weekend’s summit. In Europe, the Stoxx 600 Index was 0.3 percent higher at 5:50 a.m. with technology shares among the best performers. S&P 500 futures pointed to a small gain at the open, the 10-year Treasury yield was at 3.055 percent and gold was slightly lower.
At 8:30 a.m., the second reading of U.S. third-quarter GDP is due, with October wholesale inventories published at the same time. U.S. new home sales numbers for October are released at 10:00 a.m. and the EIA oil inventory report is at 10:30 a.m. While today’s big event will be Powell’s speech at 12:00 p.m., ECB officials Benoît Cœuré, Luis de Guindos and Peter Praet are all speaking at various European events.