By Lorcan Roche Kelly
The number of confirmed coronavirus cases in China grew to almost 6,000, surpassing the country’s total from the 2003 SARS outbreak. The death toll has climbed to 132, with the number of new countries reporting incidents of the illness continuing to climb. Restrictions on travel to China are widening, with several airlines including British Airways announcing they are suspending flights to the country. Economists now predict that China’s GDP growth could “materially drop” from the 6% pace seen in the last quarter of 2019.
At today’s decision from the Federal Open Market Committee, announced at 2:00 p.m. Eastern Time, it is all but certain there will be no change in benchmark rates, with the statement expected to reinforce the case for policy to stay on hold. There is a chance there could be a small tweak to a secondary rate called the IOER (interest rate on excess reserves). The fireworks, if there are any, will come in the post-decision press conference at 2:30 p.m. where Chairman Jerome Powell may speak about the rate of not-QE asset purchases, possibly flagging a reduction in the current pace as the repo market remains calm. He is also likely to be asked about possible changes to the bank’s inflation goal amid its ongoing policy framework review.
Senate Majority Leader Mitch McConnell told members that he does not yet have the 51 votes required to quickly wrap up the impeachment trial on Friday. Today’s session will see senators question both sides, with more of the same scheduled for tomorrow, ahead of the crucial vote on Friday over whether to acquit President Donald Trump or call new witnesses. Should that lead to an extension of the trial, Republican senators have threatened to call the son of Democrat presidential nominee leading candidate Joe Biden.
Global markets are generally trading higher this morning as the virus-related sell off pauses. Overnight, the MSCI Asia Pacific Index slipped 0.2% as the Hang Seng Index opened for the first time since the Chinese Lunar New Year to post a better-than-feared loss of 2.8%. In Europe the Stoxx 600 Index was trading 0.4% higher by 5:50 a.m., driven by a rebound in mining and banking stocks. S&P 500 futures pointed to further gains at the open, the 10-year Treasury yield was at 1.63% and oil continued its recovery from a three-month low.
December wholesale inventories and goods trade balance for the U.S. are at 8:30 a.m. with pending home sales data at 10:00 a.m. Goldman Sachs Group Inc. will hold its first ever investor day later. The Fed decision is at 2:00 p.m. It is a huge day for corporate earnings with Facebook Inc., Microsoft Corp., Boeing Co., Tesla Inc., McDonald’s Corp. and General Electric Co. among the many reporting results.