Bond market screaming for a rate cut, weak European data, and China travel warning. Here are some of the things people in markets are talking about today.
Bond investors are positioned for at least two Federal Reserve rate cuts by the end of the year. St. Louis Fed President James Bullard says a cut may be needed soon to counter trade-war risks. Vice Chairman Richard Clarida said the bank is prepared to ease if needed. It’s no wonder then that today’s opening remarks by Chair Jerome Powell at a policy conference in Chicago, due at 9:55 a.m. Eastern Time, will be very closely watched for any pushback against the rising consensus.
There was disappointing data for the U.K. this morning, with retail sales declining the most on record in May, while the construction industry slowed the most in more than a year. The numbers come as President Donald Trump continues his visit to the country, where he urged his hosts to throw off the shackles of European Union membership and hinted at a trade deal. The euro area also failed to live up to expectations when the flash inflation estimate for May came in at 1.2%, which may increase the pressure on the European Central Bank to act at this week’s policy meeting on Thursday.
Authorities in Beijing have issued a travel advisory for its citizens planning to go to the U.S., citing frequent shootings, robbery and theft in America, according to the official Xinhua News Agency. A ministry spokesperson said “current circumstances” were the reason for the warning, with it coming after reports of increased U.S. scrutiny of Chinese academics and restrictions on study visas. On the face of it, this seems to be just the latest moves in the increasingly hostile trade war between the world’s two largest economies, one that JPMorgan Chase says investors are still not fully pricing-in.
Overnight, the MSCI Asia Pacific Index slipped 0.1% while Japan’s Topix index closed broadly unchanged after a session that briefly saw the gauge erase its year to date gains. In Europe, the Stoxx 600 Index was 0.3% higher at 5:50 a.m. with the world’s least-loved equity market starting to finally find some fans as opportunity is seen in the beaten-down valuations. S&P futures pointed to a higher open, the 10-year Treasury yield was at 2.102% and gold was flat.
As well as headliner Powell, we will also hear from New York Fed President John Williams and Fed Governor Lael Brainard today. April factory orders and durable goods orders numbers land at 10:00 a.m. President Trump’s meeting with British Prime Minister Theresa May will be followed by a joint press conference. After yesterday’s tech selloff, there should be interest in Salesforce.com Inc’s earnings after the bell, which are expected to show year-on-year growth of 20%.