Jan 30, 2019, by Lorcan Roche Kelly
New era at Fed
The Federal Open Market Committee is widely expected to hold rates unchanged in a 2.25 percent to 2.5 percent target range when it announces its latest decision at 2:00 p.m. today. Chair Jerome Powell’s new communication era kicks off 30 minutes later with a press conference that will now follow every monetary-policy announcement. Economists expect both the statement and press conference to emphasize “patience” in raising interest rates, especially as the shutdown has left policymakers without much of the latest economic data ahead of today’s decision.
The latest round in the trade war between the U.S. and China begins in Washington today with talks between Xi Jinping’s top economic emissary, Liu He, and President Donald Trump’s trade tsar, Robert Lighthizer. Both sides have until March 1 to come to a lasting truce to avoid further escalation of tariffs, so while there are hopes of progress in the two-day meeting, a breakthrough may not happen immediately. The tariffs already in place are causing problems for U.S. companies, with Harley Davidson Inc. blaming them for a profit wipe-out when it reported yesterday.
Shares in Apple Inc. rose more than 5 percent in early trading after the company announced results that reassured investors there is life for the business beyond the iPhone. Technology stocks are higher across the board this morning before a slew of corporate earnings in the sector. Alibaba Group Holding Ltd., Microsoft Corp., Facebook Inc., and possibly-tech-company Tesla Inc. are all due to report today, with each having faced its own challenges in the past quarter.
Overnight, the MSCI Asia Pacific Index rose 0.1 percent while Japan’s Topix index closed 0.4 percent lower with losses led by the pharma sector. In Europe, the Stoxx 600 Index was 0.1 percent higher at 5:50 a.m Eastern Time as investors awaited the Fed decision and news from the trade talks in Washington. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.722 percent and gold was higher.
One thing to keep an eye on today is what happens next with Brexit after the U.K. parliament yesterday voted for Prime Minister Theresa May to go back to Europe to try to gain more concessions on the deal that her EU counterparts have emphatically refused to renegotiate. At 8:15 a.m., ADP publishes their employment-change number, which may serve as a preview for Friday’s payrolls figure. Pending home sales data for December is due at 10:00 a.m. It’s also a big day for blue-chip corporate earnings with Boeing Co., Visa Inc., AT&T Inc., and McDonald’s Corp. all set to announce results.