Federal Reserve raises rates, crude oil tanks, and the Bank of England is on deck. Here are some of the things people in markets are talking about.
The Federal Reserve hiked rates on Wednesday and maintained plans to go ahead with another increase by year-end. The central bank gave a fairly detailed update on its approach to balance sheet normalization, which revealed a relatively aggressive path for a reduction in its bond holdings. Fed Chair Janet Yellen shrugged off soft inflation as “transitory,” and said an end to reinvestments could come “relatively soon.”
West Texas Intermediate futures got slammed following the release of data showing U.S gasoline inventories increased while crude stockpiles shrank by less than anticipated. Crude fell more than 3.5 percent to below $45 per barrel, hitting its lowest level since November. More bad news for oil bulls: Fresh supplies from non-OPEC producers like the U.S., Brazil, and Canada are forecast to exceed demand growth in 2018, a signal the glut could endure. Pouring salt in the wound, it looks like the International Energy Agency is trolling Saudi Arabia’s energy minister.
New Zealand’s first-quarter growth figures are slated to be released at 7:45 a.m. Tokyo time, with economists calling for a 0.7 percent quarter-on-quarter increase following growth of 0.4 percent in the final three months of 2016. Australia is expected to add 10,000 jobs in May on the heels of more than 37,000 net additions in April, with the unemployment rate holding steady at 5.7 percent. Central bankapalooza also continues Thursday with the Bank of England decision at 8 p.m. Tokyo time, with Governor Mark Carney presiding over a U.K. economy that’s seeing negative real wage growth and a mountain of political uncertainties.
A top-ranking U.S. lawmaker, Steve Scalise, was wounded after a gunman opened fire on congressional Republicans as they practiced baseball in a city neighboring the nation’s capital. President Donald Trump said the perpetrator died following a shootout with police. Concerns about lawmakers’ security had been rising ahead of this attack. On the other side of the Atlantic, a fire that broke out in the 24-story Grenfell Tower in London has killed 12 people so far, with officials warning that the death toll was very likely to rise from there.
U.S. stocks dipped from record highs on Wednesday amid the Fed’s resolve to continue tightening policy. Technology stocks acutely weighed on benchmark indexes. The U.S. dollar erased its losses following the central bank communiques, while Treasuries took their cues from the weaker than anticipated inflation print and rallied. Nikkei 225 and S&P/ASX 200 futures are trading to the downside as of 5:30 a.m. in Tokyo.