“Wall Street opens higher; investors eye Fed minutes.”
U.S. stocks opened higher on Wednesday morning ahead of the latest Federal Reserve’s minutes, which will offer investors clues on future interest rate hikes this year. The central bank will release the details of the July policy meeting at 1400 ET (1800 GMT).
A slide in inflation readings in recent months, which remain below the Fed’s 2 percent target rate, have made the markets skeptical about a rate hike by December. However, recent hawkish comments by New York Fed chief William Dudley advocating for another rate hike this year and strong retail sales data on Tuesday have upped the odds. Chances of a December hike rose to 49.2 percent, up from 42 percent at the start of the week, according to CME Group’s FedWatch tool.
At 9:39 a.m. ET, the Dow Jones Industrial Average. DJI was up 46.94 points, or 0.21 percent, at 22,045.93 and the S&P 500. SPX was up 4.79 points, or 0.19 percent, at 2,469.40.
“U.K. Wage Growth Beats Forecasts but Still Lags Inflation.”
The squeeze on U.K. consumers continued in the second quarter, when the fastest inflation in four years ate into workers’ income.
Basic wages rose an annual 2.1 percent in the three months, lagging behind a surge in price growth driven by the pound’s decline in the wake of the Brexit vote. That left real incomes down 0.5 percent year-on-year, the Office for National Statistics said on Wednesday.
Still, it’s a headache for the Bank of England policy makers that wage growth has failed to sustainably pick up even with unemployment at the lowest in more than 40 years. Officials cut their forecasts for pay growth at this month’s Inflation Report, with Governor Mark Carney suggesting that “an element of Brexit uncertainty” was preventing firms from awarding bigger wage increases.
Even with the weaker growth outlook, the lowest unemployment rate since 1975 should be driving up wages. There were 125,000 jobs created in the three months and the unemployment rate fell to 4.4 percent, the report said. That’s below the BOE’s equilibrium rate of 4.5 percent. In a further sign of labor-market tightness, the number of unemployed people per vacancy was at a record low of 1.9.
Total pay including bonuses rose 2.1 percent, the ONS said, also better than forecast. Adjusted for inflation, it fell 0.5 percent, slightly less than recorded the previous month. The report also showed that productivity, as measured by output per hour, fell 0.1 percent in the three months through June, recording a second straight quarter of declines.
“As NAFTA talks begin, Trump’s ‘America First’ agenda looms large.”
As the United States, Canada and Mexico kick off negotiations on Wednesday to modernize the North American Free Trade Agreement, the biggest uncertainty is whether a deal can pass President Donald Trump’s «America First» test.
Trump, who made trade a centerpiece of his presidential campaign as he promised to reinvigorate the manufacturing sector, pulled the United States out of the Trans Pacific Partnership trade pact shortly after taking office in January. But he has since backed off other trade threats, including declaring China a currency manipulator and tearing up NAFTA, which he regularly calls a disaster. U.S.-Canada-Mexico trade has quadrupled since NAFTA took effect in 1994, surpassing $1 trillion in 2015.
This week’s talks will be led by U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo. Each side is expected to make remarks at the start of the talks being held at a historic Washington hotel. The first round of meetings, which is expected to last until Sunday, will largely be administrative and focus on merging proposed texts from all three sides, according to a senior U.S. trade official, speaking to reporters on the eve of the talks.
The United States has made lowering the $64 billion U.S. trade deficit with Mexico its top priority in the NAFTA talks, although trade experts argue that such a goal will not be achieved through trade deals but rather by boosting savings. One of the most contentious issues in the talks is likely to be over the «Chapter 19» mechanism requiring the use of binational panels to settle anti-dumping and anti-subsidy disputes, which the Trump administration wants to eliminate because the rulings often go against the United States. Canadian Foreign Minister suggested on Monday that Canada would walk away from the talks if the United States insisted on scrapping the mechanism
“More Countries Join the Euro-Area Recovery Bandwagon.”
The euro-area economy gathered pace in the second quarter as more nations joined the recovery. The 0.6 percent expansion matched an Aug. 1 estimate and was supported by continued growth in Germany, the region’s largest economy, and the strongest Spanish performance in almost two years. But after years of unprecedented stimulus, the upswing is finally starting to spread across the 19-nation region.
Exports and investment have led France to its strongest continuous expansion since 2011 and the Netherlands posted the fastest growth since the end of 2007. Italy, which has lagged the pickup of its peers, is starting to shake off its reputation as the sick man of Europe with an increase in gross domestic product that may top 1 percent this year for the first time since 2010.
Even though the euro area’s economic revival comes with steadily declining unemployment and business confidence at a decade high, price pressures have so far remained largely elusive. The European Central Bank is confident that inflation will eventually pick up as wages rise and economic slack abates, and President Mario Draghi has had to upgrade his view of the economy in recent months.