A look at the day ahead in European and global markets from
Wayne Cole.
Wall Street must be hoping Federal Reserve Chair Jerome
Powell would speak in public every day. Given a chance to react
hawkishly to the bumper January payrolls report, Powell demurred
and chose to stay boringly balanced on the rate outlook.
Asked if he regretted using "disinflation" 11 times in his
media conference last week, he said no, he would do the same
again.
He reiterated the "disinflationary process" was under way,
but it would likely take a "significant" period of time and if
the data kept coming in stronger than expected, the Fed would
have to do more on rates.
Hardly earth shattering stuff, but for markets these days if
Powell is not all-out in-your-face hawkish, then he's dovish.
There's no middle ground. Wall Street duly rallied while
Treasury yields and the dollar have eased a little, with futures
priced for just two more hikes to 5.0-5.25%.
Meanwhile, the yen has had a good 24 hours which some put
down to yesterday's report of strong wages figures, a sea-change
for a market that has spent years ignoring Japanese data because
nothing ever happened in them.
Nominal total cash earnings grew 4.8% y/y last quarter, the
fastest since January 1997, thanks to an outsized 7.6% jump in
December bonuses.
Faster pay growth in the spring labour talks is seen as an
essential condition for the Bank of Japan (BOJ) to scale back
its massive monetary stimulus.
Calls by Prime Minister Fumio Kishida for companies to raise
wages seem to actually have had some effect with some big names
pledging large rises recently.
On Tuesday, video game maker Nintendo Co Ltd said
it plans to lift workers' base pay by 10% even as it cut its
profit outlook. It was rewarded today by the market knocking its
shares down 8%.
Key developments that could influence markets on Wednesday:
- Fed's Williams, Cook, Bostic, Barr, Kashkari and Waller
all speak, with Waller and Williams likely to carry the most
weight with markets
- Earnings from Uber and Walt Disney, which will be the
first result with Iger back in charge
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U.S. terminal rate Yields vs stocks The Great Rate Race ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Wayne Cole; Editing by Sam Holmes)
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
