By Lorcan Roche Kelly
In his speech to the Economic Club of New York yesterday President Donald Trump renewed his assault on the Federal Reserve saying the bank was hurting the U.S. by not cutting rates into negative territory. Fed Chairman Jerome Powell will get a chance to give his views in Washington when he appears before Congress’s Joint Economic Committee at 11:00 a.m. Eastern Time. While analysts expect him to maintain the cautiously optimistic approach outlined after the October policy meeting, investors now see increasing chances that rates may remain unchanged throughout 2020.
If Powell is going to capture Wall Street’s interest today, another event on Capitol Hill is likely to command the wider public’s attention: Hearings to determine whether President Trump abused his office and should be impeached at 10:00 a.m. Top U.S. envoy to Ukraine William Taylor and Deputy Assistant Secretary of State George Kent are due to testify in a session that also holds risks for Democratic presidential contenders as Republicans seek ammunition to attack former Vice President Joe Biden. And six senators in the running for the nomination may be forced off the campaign trail at a crucial moment as they would be jurors in a trial.
Saudi Aramco’s prospectus last weekend re-ignited the discussion over peak global demand for crude, with the company citing a forecast that sees a top within the next 20 years. The International Energy Agency painted an even grimmer picture in its latest long-term World Energy Outlook, saying it now sees demand for oil hitting a plateau in about a decade. The forecast suggests current growth levels will continue for the next five years, then start to slow significantly as the use of oil-based passenger cars drops. Investors more concerned about short-term demand effects are pushing the price of a barrel of crude lower this morning as doubts over trade cloud the outlook.
The lack of an announcement on trade progress in President Trump’s speech yesterday continues to weigh on markets. Overnight the MSCI Asia Pacific Index dropped 0.8%, with Hong Kong’s Hang Seng closing 1.8% lower as protests continued to grip the city. In Europe, the Stoxx 600 Index was 0.6% lower at 5:40 a.m. with automakers among the worst performers following no word on the delay of threatened U.S. tariffs on the region’s car industry. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 1.876% and gold was recovering some ground.
U.S. inflation data for October is expected to show no change from the previous month, with the headline number staying at 1.7% and core at 2.4% when it is published at 8:30 a.m. The monthly budget statement will be released at 2:00 p.m. In keeping with the strong political theme in today’s news, Trump will welcome Turkish president Recep Tayyip Erdogan to the White House, the first meeting between the leaders since the beginning of Turkey’s military offensive in northern Syria. As well as Powell, we will also hear from Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker later. Earnings are from Canada Goose Holdings Inc. and Cisco Systems Inc.