August 16, 2017
U.K. unemployment, European growth and Fed minutes. Here are some of the things people in markets are talking about today.
Unemployment in the United Kingdom fell to 4.4 percent in the second quarter, the lowest since 1975, with basic wages rising 2.1 percent — more than economists had forecast. While the Bank of England expects pay growth to remain below the rate of inflation for months to come, the outlook is for price rises to peak later this year. The British government has also published another Brexit position paper, this time on the Irish border, saying it wants no physical infrastructure on the 310-mile crossing.
The euro-area economy expanded 0.6 percent in the second quarter, in line with expectations, as continued growth in Germany and a strong Spanish performance showed the recovery has spread across the region. Italian growth extended into a tenth quarter, while the Dutch economy expanded by 1.5 percent in the period, the most since the end of 2007. The euro currency remained broadly unchanged at $1.1735 following this morning’s data.
Investors looking for clues as to the timing of the start of the unwind of the Federal Reserve’s $4.5 trillion balance sheet will be closely reading the minutes of the July FOMC meeting when they are published at 2 p.m. Eastern Time today. The minutes should also provide a guide as to how many policy makers agree with Federal Reserve Bank of New York President William Dudley that another rate rise may be needed before the end of the year. The dollar remained steady and the U.S. 10-year Treasury yield was at 2.282 percent this morning.
Overnight, the MSCI Asia Pacific Index added 0.2 percent, while Japan’s Topix index closed little changed. After Asia markets closed, Chinese tech heavyweight Tencent Holdings Ltd. reported net income of 18.2 billion yuan ($2.7 billion), far ahead of the 13.48 billion yuan expected. In Europe, the Stoxx 600 Index was 0.7 percent higher as of 5:35 a.m., rising for a third day with miners leading the gains. S&P 500 futures pointed to a higher open.
President Donald Trump is facing growing criticism within his own party for remarks equating neo-Nazis to counter-protesters in Virginia. In a heated press conference on Tuesday, he also criticized CEOs who are quitting his advisory council. AFL-CIO President Richard Trumka announced his decision to leave the president’s manufacturing council shortly after the press conference, saying Trump’s remarks were “the last straw.” Trump’s slow initial response to the deadly events over the weekend saw the gap between his approval and disapproval ratings surpass 20 percentage points, the widest since his inauguration.