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Trump's Fed pick looms, Bank of England hike expected, and a veritable metals mania. Here are some of the things people in markets are talking about.
The Real Fed Decision
The Federal Reserve upgraded its assessment of U.S. growth in its Wednesday decision and left rates unchanged at 1 to 1.25 percent, keeping the central bank on track for a December hike. Economic activity was described as "solid" for the first time since January 2015 -- a meeting at which the two most recent GDP figures policy makers had seen showed growth of 4.6 and 5.2 percent. But the real Fed decision comes on Thursday, when U.S. President Donald Trump will announce his pick to lead the central bank. Trump said Chair Janet Yellen is "excellent," but that doesn't look like enough to get him to reappoint her. The president plans to nominate current Governor Jerome Powell as her replacement, three people familiar with the decision have told Bloomberg News.
Unreliable Boyfriend?
The Bank of England is widely expected to deliver its first rate hike in a decade Thursday despite the overhang of Brexit uncertainty. The pound's plunge has fueled a pick-up in inflation, while the the nation's longer-term growth outlook has dimmed. If Governor Mark Carney doesn't follow through with an increase, it'll affirm his reputation as an "unreliable boyfriend," a moniker bestowed upon him by a U.K. lawmaker. The British Chamber of Commerce has urged the central bank to hold off on a hike for now, joining a chorus of commentators who fear monetary tightening would constitute a policy mistake. At the Bank's last meeting, two monetary policy makers dissented in favor of higher rates.
Commodities Comeback
A marginal retreat in West Texas Intermediate futures belied the positive news for crude on Wednesday: one of the most concrete signs that the effort to rebalance the oil market has borne fruit. The six-month spread for WTI futures is now in backwardation, a move which should deter shale producers from locking in production for 2018 via futures contracts, as these longer-dated contracts are now also lower-priced. Metals remain on a tear, with nickel up more than 9 percent in the past two sessions. Whether these raw materials can maintain such lofty gains in the face of a moderation in Chinese manufacturing growth – historically a leading indicator for the space – is an open question.
Tax Rollout Delayed
The Russell 2000 Index slumped on Wednesday as Congressional Republicans delayed the release of their tax overhaul plan, while the S&P 500 Index and Dow Jones Industrial Average moved higher. House Budget Chairman Diane Black said the rollout will come on Thursday. A pair of high-profile tech companies reported earnings after the close of trading. Tesla Inc. was forced to push back production targets for its Model 3 sedan amid record quarterly cash burn, sending shares as much as 5 percent lower in the after-hours session. Facebook Inc., for its part, soared to fresh all-time highs after posting a big top-line beat. More major reports are on the way, with Apple Inc. and Alibaba Group Holding Ltd.'s results due out on Thursday.
Futures Up
Nikkei 225 and S&P/ASX 200 futures are trading to the upside ahead of the open after both benchmark gauges rose on Wednesday. Over in China, policy makers have managed to quell recent market angst linked to soaring domestic bond yields with a series of injections to boost liquidity. A fairly light day for economic data in the region awaits, with Australia's trade surplus forecast to swell to A$1.2 billion in September while building approval contracts by 1 percent on a monthly basis. We'll also get the weekly update on Japanese international securities transactions.
What we've been reading
This is what caught our eye over the last 24 hours.
- Bitcoin futures euphoria conjures bad memories for one firm.
- A North Korean defector fears a U.S. strike would trigger automatic retaliation.
- Visa green-lights a cryptocurrency card for Singapore residents.
- New Zealand's housing boom is over.
- Silicon Valley skewered for slow response to Russian interferencein U.S. election.
- Hong Kong office tower sells for a record $5.2 billion.
- Tesla delays its Model 3 production target.
To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net.
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