By Lorcan Roche Kelly
Close to a spy
President Donald Trump’s recorded comments at a closed-door gathering with U.S. diplomats seem set to add fuel to Democrats’ impeachment drive. Trump is seen describing the whistle-blower as “close to a spy” and demanded to know who the person is, in a video of the event obtained by Bloomberg News. The release of the complaint and testimony by acting intelligence chief Joseph Maguire yesterday raised the specter of a White House “cover up” according to House Speaker Nancy Pelosi. House Intelligence Chairman Adam Schiff said it gave “a pretty good road map of allegations we need to investigate.” The S&P 500 Index closed lower for the fourth time in five days as the political turmoil damped demand for risk assets.
The European Commission’s monthly economic sentiment indicator dropped to the lowest level since 2015, with the industrial confidence sub-index plumbing a six-year trough. A slowdown in Germany continues to be one of the biggest drivers of the worsening performance, with the DIW Institute forecasting the region’s largest economy is already in a recession. European Central Bank Chief Economist Philip Lane said policy makers still have room to cut rates further if needed.
Even by the standards of recent EU-U.K. meetings, expectations for a breakthrough at today’s meeting between the two sides are very low. European officials have all but given up hope of finding a way forward in the coming weeks as Prime Minister Boris Johnson’s inflammatory rhetoric against his domestic opponents is seen as a hindrance. There was some good news for the embattled prime minister as he won a High Court case in Northern Ireland which had sought to have a no-deal Brexit declared a violation of the Good Friday peace accord. The pound weakened after Bank of England policy maker Michael Saunders said a rate cut may be needed even if a no-deal Brexit is avoided.
Overnight, the MSCI Asia Pacific Index slipped 0.6% while Japan’s Topix index closed 1.2% lower after inflation data came in below expectations. In Europe, the Stoxx 600 Index was 0.5% higher by 5:45 a.m. Eastern Time with miners leading the gains, while London’s FTSE 100 Index was the region’s best performer due to the falling pound. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 1.71% and gold dropped.
The August PCE report, published at 8:30 a.m., is expected to show a jump in income growth to 0.4% from a month earlier, with spending growth softening to 0.3% and the PCE inflation gauge increasing to 1.8%. Durable goods orders, published at the same time, are forecast to drop 1.0%. Consumer sentiment figures for September are released at 10:00 a.m. with the latest Baker Hughes rig count at 1:00 p.m.