Mar 20, 2019, by Lorcan Roche Kelly
The Federal Open Market Committee publishes its latest monetary policy declaration at 2:00 p.m. Eastern Time, along with updated economic forecasts that are expected to show policy makers now see only one rate hike this year. No change in interest rates is expected today. Investors will be intensely focused on the Fed’s perspective on its inflation-targeting goal and the balance-sheet runoff, with Chair Jerome Powell holding a press conference 30 minutes after the decision.
How much longer?
It is 1,000 days since the U.K. voted to leave the European Union, and the biggest question remains when will the country actually exit the union. Prime Minister Theresa May’s office said that she will not ask for a “long” extension to the current March 29 deadline at the summit of leaders tomorrow, with European Commission President Jean-Claude Juncker already suggesting there might be need for another meeting next week if an agreement cannot be reached in the coming days on the length of the Brexit delay. EU officials are playing hardball, saying that if the U.K. doesn’t take part in European elections, it will be ejected in July.
Some U.S. trade negotiators are growing concerned about China’s shifting stance on trade talks, according to people familiar with the situation. Chinese officials would like stronger assurances about the lifting of tariffs after the country agreed to change their intellectual-property policies. China’s threat to cut the Boeing 737 Max from its list of U.S. imports, citing safety concerns, challenges its proposed plan to reduce the trade surplus. The change in tone comes as investors are growing increasingly concerned about the health of the Chinese economy, with the slowdown there, rather than the trade war, now seen as the bigger risk.
Overnight, the MSCI Asia Pacific Index slipped 0.1 percent while Japan’s Topix index closed 0.3 percent higher as investors in the region digested the latest trade news ahead of the Fed decision. In Europe, the Stoxx 600 Index was 0.3 percent lower at 5:45 a.m. with metals and energy stocks giving back some of yesterday’s gains. S&P 500 futures pointed to a relatively flat start to the session, the 10-year yield was at 2.596 percent and gold was lower.
Shares in Bayer AG slumped more than 12 percent in trading in Frankfurt this morning after the company suffered another defeat in U.S. litigation over claims that its Roundup weedkiller causes cancer. UBS Group AG is also trading lower this morning after Chief Executive Officer Sergio Ermotti said the first quarter was “one of the worst” in recent history. In the U.S., the completion of the Walt Disney Co. acquisition of 21st Century Fox Inc.’s entertainment assets is likely to lead to thousands of layoffs.