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Global stocks, US equity futures, and the dollar rose on Friday ahead of a much anticipated speech by Jerome Powell which the market hopes will provide clarity on whether the Fed will deliver another interest rate cut in three weeks, and whether it will be 25 or 50bps.
The levitation was hit, however, just after 630am when Global Times EIC tweeted that a Chinese retaliation to the latest round of US tariffs is coming.
Twitter - MSCI - All - Country - World
Twitter trolling notwithstanding, the MSCI All Country World Index was up 0.1% and set to break a three-week losing streak.
European stocks rebounded from the previous day’s falls, with the European Stoxx 600 index gaining as much as half a percent in early deals, and were set for the best weekly gain since June, clearly indicating confidence that Powell would not reveal any hawkish surprise. Britain’s FTSE 100 index was up 0.64%.
Volumes - Case - Traders - Capital - Today
Volumes, as has been the case, were lethargic with traders unwilling to commit capital ahead of today's main event, when Powell is due to speak at 10am at Jackson Hole, Wyoming. While markets overwhelmingly expect the Fed to follow up its first rate cut in a decade with more stimulus at its meeting next month, a trio of policymakers sounded less than keen. On Thursday, Kansas City Fed President Esther George, who dissented against the decision to ease in July, Philadelphia Fed President Patrick Harker, who said he “reluctantly” supported the cut, and Boston Fed's Rosengren all said the U.S. economy did not need more stimulus at this point.
This hawkishness was somewhat offset by Dallas Fed President Robert Kaplan who said businesses had become much more cautious due to surprises on trade policy and he was “going to at least be open-minded about making some adjustment” if he saw continued weakness. That has made Powell’s speech pivotal for...
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