· Federal Reserve officials at their most recent meeting left room for the possibility of interest rate increases before the end of the year, should economic conditions improve, according to minutes from the session released Wednesday.
The central bank’s Federal Open Market Committee voted unanimously to not raise its benchmark rate at the March 19-20 gathering, and simultaneously indicated that it didn’t see a likelihood for any hikes through 2019.
However, that came after a discussion in which members said they would be watching the data on an economy most of them expected to improve through the year.
The suggestion of a modest move implies one quarter-point adjustment in the current target range of 2.25 percent to 2.5 percent. Futures markets are currently pricing in no chance of an increase and in fact a 55% chance that the Fed might choose to cut rates. The expectation for a rate cut following the minutes is “probably just wishful thinking,” said Robert Frick, corporate economist at Navy Federal Credit Union.
· The Federal Reserve is likely to leave interest rates unchanged this year given risks to the U.S. economy from a global slowdown and uncertainty over trade policies and financial conditions, according to the minutes from its March 19-20 policy meeting.
The U.S. central bank pivoted abruptly at that meeting to a much-less aggressive posture, and the minutes released on Wednesday showed policymakers agreed to be “patient” about making any moves on rates.
· The dollar held modestly lower against a basket of currencies on Wednesday as records on the Federal Reserve’s March 19-20 meeting showed policy-makers debated about the central bank’s bond holdings and agreed on leaving interest rates alone.
At 2:45 p.m., an index that tracks the greenback against the euro, yen, sterling and three other currencies was 0.07% lower at 96.94.
The euro fell on Wednesday as European Central Bank President Mario Draghi underscored the risks facing the euro zone economy, reinforcing bets on possible further stimulus to prevent the region from slipping into recession.
The euro was 0.08% higher at $1.127 and was down 0.27% at 124.855 yen.
· U.S. government debt yields fell on Wednesday after the European Central Bank held interest rates steady and ECB President Mario Draghi warned that recent data confirmed concerns of slower economic growth.
At around 2:51 p.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.476%, while the yield on the 30-year Treasury bond was also lower at 2.901%. The German 10-year bund yield hit a low of -0.039%, its lowest level since Apr. 2, when it yielded as low as -0.055%.
The commentary from the ECB came shortly after the International Monetary Fund downgraded its economic growth forecast for the euro zone economy. Uncertainty surrounding geopolitics, trade agreements and emerging markets had weighed on investor sentiment, Draghi added, with risks “tilted to the downside.”
· Repeated tariff threats from U.S. President Donald Trump are hurting European economic confidence, according to European Central Bank (ECB) President Mario Draghi.
The euro zone’s central bank held interest rates steady Wednesday, with Draghi warning that data analyzed by his team had confirmed “slower growth momentum” in the euro zone.
The European Union and United States are at loggerheads after Washington proposed a list of EU products it wanted to slap tariffs on to as retaliation for European aircraft subsidies. Trump tweeted on Tuesday that the EU had taken advantage of the U.S. on trade “for many years.”
· Donald Tusk, president of the European Council, told the U.K. on Thursday not to waste the additional time that has been agreed on for the country to leave the European Union.
“Please don’t waste this time,” Tusk said.
EU leaders and the U.K. government have agreed to a “flexible extension” of the Brexit deadline until Oct. 31.
· President Donald Trump’s trade war with China has U.S. companies shifting purchases of tariff-targeted products like furniture, refrigerators and car tires to countries such as Vietnam, South Korea, Taiwan and Mexico, according to a new analysis released on Wednesday.
Overall U.S. imports of containerized freight from China fell 6.4 percent during the first quarter as buyers worked off product stockpiled ahead of tariff increases and rerouted orders to lower-cost countries, S&P Global Market Intelligence’s trade data firm Panjiva said in the report.
· The United States and China have largely agreed on a mechanism to police any trade agreement they reach, including establishing new “enforcement offices,” U.S. Treasury Secretary Steven Mnuchin said on Wednesday.
Mnuchin, speaking on CNBC television, said that progress continues to be made in the talks, including a “productive” call with China’s Vice Premier Liu He on Tuesday night. The discussions would be resumed early on Thursday, Washington time, he added.
· Oil prices rose on Wednesday after U.S. data showing a hefty drawdown in gasoline stockpiles overshadowed crude inventories rising to their highest levels in more than a year.
Brent crude futures, the international benchmark for oil prices, were up $1.04, or 1.5%, at $71.65 per barrel around 2:30 p.m., after hitting a five-month high. U.S. West Texas Intermediate crude oil futures rose 64 cents, or 1%, to $64.62 per barrel, holding just below their strongest level since November.
U.S. crude stockpiles last week rose to their highest since November 2017 last week as imports increased, while gasoline inventories posted the steepest drawdown since September 2017, the Energy Information Administration said.
Crude inventories swelled by 7 million barrels last week, compared with analysts’ expectations for an increase of 2.3 million barrels. Gasoline stocks, however, fell 7.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 2 million-barrel drop.
Reference: CNBC, Reuters
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