• America's central bank is poised to raise interest rates for the second time this year as policymakers take another step towards normalisation amid an improving economy.
The US Federal Reserve is expected to raise its federal funds target to between 1pc and 1.25pc, from 0.75pc to 1pc in just the fourth increase since the financial crisis.
Economists also expect policymakers to flesh out plans to reduce its $4.5 trillion (£3.5 trillion) balance sheet later this year alongside fresh forecasts for growth, jobs and inflation.
• The US Fed could decrease its balance sheet to $2-2.5 trln from the current $4.5 trln in five years, whilst the ongoing normalisation in monetary conditions draws support from the currently robust economic growth, rendering fiscal accommodation unnecessary, a central bank official said.
The bloated Fed balance sheet limits the scope of monetary policy response and overall Fed efficiency in case of a new crisis or recession. Therefore, the regulator has been studying the possibilities of balance sheet reduction since QE ended in 2014. The main problem is how to sell the assets currently under the Fed’s control without provoking a destructive market reaction.
For example, selling some $2 trln worth of US Treasuries over a short timeline would produce a plunge is US governmental bond value and unwind a significant increase in Treasury yields, pushing natural interest rates higher and jeopardising the US debt’s status as safe haven. The same applies to mortgage-backed securities.
• Attorney General Jeff Sessions will face questions about the firing of FBI Director James Comey and undeclared meetings with Russian officials at a U.S. Senate hearing on Tuesday, though it was unclear whether he would testify in public or in private.
• Japan's core machinery orders fell more than expected in April, casting doubt on the strength of companies' capital spending and adding to concerns about the country's fragile economic recovery.
The 3.1 percent fall in the core orders from a month earlier was much bigger than the 1.3 percent decline expected by economists in a Reuters poll, potentially dragging on economic growth in the current quarter.
• Qatar can easily defend its economy and currency against sanctions by other Arab states, Qatari finance minister Ali Sherif al-Emadi told CNBC television in an interview broadcast on Monday.
He added that the countries which had imposed sanctions would also lose money because of the damage to business in the region.
• Oil prices rose on Monday as futures traders bet the market may have bottomed after recent falls, even as physical markets remain bloated, especially from a relentless rise in U.S. drilling.
Brent crude futures LCOc1 were at $48.29 per barrel at 0651 GMT, up 14 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $45.95 per barrel, up 12 cents, or 0.3 percent.
Reference: Reuters
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