-Yellen’s conversation: Traders hoping to get away early for their Memorial Day weekend will have to hang around a little longer than they might like today as Fed Chair Janet Yellen is due to give a speech at an event in Massachusetts at 1:15 p.m. ET. The event, billed as a conversation with Harvard professor Greg Mankiw, will be closely watched for any signs that would inform the market’s view on the likelihood of a June rate hike. Jeffrey Gundlach has said that he expects the remarks to be dovish, with the U.S. dollar’s best month in 16 likely to be derailed if he is right. Current market-based expectations for a hike in June are at 28 percent, rising to 51 percent by the July meeting.
-Group-of-seven leaders meeting: World leaders meeting at the G-7 summit in Japan have tangled over the recipe of measures needed to boost global growth. While the group’s statement said the nations would use «all policy tools — monetary, fiscal and structural» there was disagreement between Germany, who favor reform, and both Japan and Canada who favor more stimulus. Risks to global growth cited at the summit included the upcoming Brexit referendum, the slowdown in China, as well as that country’s South China Sea ambitions — but Japanese Prime Minister Shinzo Abe, the host of the event, failed in his bid to have the G-7 warn of the risk of full-blown global economic crisis.
-Oil slipping: Crude is falling again this morning, with West Texas Intermediate for July delivery trading at $49:04 a barrel at 5:51 a.m. ET in New York. Unusually, Brent for July settlement was trading at the exact same price at that time in London. The failure of the commodity to hold the $50 level, reached for the first time this year yesterday, means that a sustainable rise to the mid-$50s which would make explorers start to feel secure may be some way off yet.
-Markets flat: The MSCI Asia Pacific Index gained 0.7 percent overnight while in Europe the Stoxx 600 Index was 0.2 percent higher at 6:00 a.m. ET. S&P 500 futures were 0.1 percent higher. It seems markets are waiting on Yellen for direction.
-Election anxiety creeps in: U.S. presidential politics are starting to influence investors, with measures of expected volatility in options tied to the S&P 500 Index showing a spike around the time of the Republican National Convention in July and the election itself in November. On the campaign trail in North Dakota, Republican presidential candidate Donald Trump said that he would rescind the Obama administration’s environmental actions within 100 days of being elected.
-British pound gets G7 boost: The British pound posted a short-lived surge against every other major global currency on Friday after world leaders meeting in Japan warned about the damage a British exit from the European Union could do to the global economy. The pound has taken a beating over the past few months due to growing concerns that voters would opt for Brexit at an upcoming referendum in June. Now traders seem more confident that voters will choose to remain in the European Union, which would guarantee strong trade ties with 27 other countries in the EU.
– Eyes on oil: Global oil prices have dipped back below $50 per barrel after rising above the psychologically important level on Thursday. Crude oil futures are sinking by about 1% on Friday to trade around $49 per barrel. Analysts believe that the oil market is returning to balance after many months of oversupply and low prices. Supply disruptions in countries like Canada, Nigeria and Venezuela have cut millions of barrels of oil from the market over the past few weeks.
-Still anemic: U.S. growth picks up to only 0.8%; America’s economy grew a little more at the beginning of the year than first thought, but it’s still not much to celebrate. U.S. economic growth between January and March was 0.8% compared to the same time frame a year ago. That’s better than the initial estimate of 0.5%, which came in April, but still pretty sluggish. Consumers spent a little more than first thought. They popped for long-term items like roofs and kitchen counter tops. State and local government spending also jumped more than initially believed. Despite the low figure, the pick up in growth may help build the case for the Federal Reserve to raise interest rates in June for the first time this year.
-Facebook and Microsoft are building a giant cable under the sea: Facebook and Microsoft are working together on an unusual project. The two tech behemoths want to bury a 6,600 km cable deep under the Atlantic Ocean, stretching all the way from Virginia to Spain. The companies deal with a tremendous amount of data every day, whether it’s showing photos to Facebook’s 1.6 billion users, or loading documents stored in Microsoft’s cloud services. Instead of solely relying on telecom companies for bandwidth, they’re taking matters into their own hands. Called MAREA, Spanish for «tide,» the cable will offer speeds of up to 160 terabytes per second, making it the highest capacity cable running this route, according to the companies. Construction will begin in August 2016 and take a little over a year to complete. The Virginia Beach departure point will benefit both Facebook and Microsoft, which have data centers in Virginia. And Spain is a convenient gateway to reach countries throughout Asia and Africa, where the next billion people are currently going online.