Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:
Main Trading Event Of The Day: Several today including USD FOMC Statement @ 18.00 GMT & GBP Annual Budget Release @ 12.30 GMT
WHAT WE’RE WATCHING TODAY
Fed Outlook: Geopolitical Concerns, Rates Could Rise At Turn Of The Year
Janet Yellen will chair the FOMC today with wide agreement on Wall Street over the outlook for policy this year and a forecast for stronger U.S. growth this year and next. There are some divisions over what happens to Federal Reserve policy in 2015 with a cloud of geopolitical concern hanging over the outlook but most analysts see the Fed tapering at the meeting today and at each of the remaining meetings this year. On average, analysts see the Fed tapering by around $10 billion at each meeting. The Fed currently is purchasing $65 billion in assets every month to try and drive down interest rates and stimulate the economy. It has signaled it would reduce or taper its purchases by $10 billion at each meeting this year, which would effectively end its purchase program by December. However, investors pricing in a federal funds rate hike in mid-2015 could get caught off guard, according to former Federal Reserve Governor, Robert Heller. Heller believes that markets will force the Fed to tighten a little bit earlier than that, probably around the turn of the year as we approach 2015, which is around the time that the tapering operation should be finished. The Federal Reserve has kept its benchmark interest rate near zero since 2008, when a global financial crisis that plunged financial markets into turmoil. As the Fed now unwinds its massive stimulus program and the U.S. economy recovers, markets anticipate an interest rate increase to follow not too long after the end of tapering. According to Heller, as investors become more become more bullish about the domestic recovery, yields on U.S. government bonds will be pushed higher, encouraging the Fed to follow suit. Other factors being taken into consideration are the recent weak U.S. economic data due to extreme weather conditions and new economic risks on the horizon, particularly China and Ukraine. Nevertheless, the general feeling is that Wall Street is reasonably comfortable with its outlook for Fed policy.
FOMC Statement/Press Conference @ 18.00 GMT
UK Budget 2014: Osborne Supporting A Resilient Economy
George Osborne will set out his plans to support a “resilient” economy in today’s Budget, which will be focused on boosting economic security and aspiration. The budget comes against a backdrop of a strengthening economic recovery, with unemployment and inflation falling and growth this year projected to be the among the strongest of any Western economy. Business groups have forecast that the UK’s total economic output will exceed its pre-recession peak in the second quarter of 2014 after the economy grew by 1.9% in 2013. Osborne is expected to address the UK’s historic economic weaknesses, particularly the need to increase manufacturing output and improve the UK’s balance of payments by boosting exports. He is also expected the chancellor to unveil schemes, incentives and tax breaks for some businesses. Alongside details of proposed tax and spending changes, Osborne will announce the Office for Budget Responsibility’s latest forecasts for economic growth and government borrowing for the years ahead. Deficit reduction remains his number one priority, with the ultimate goal of delivering an annual budget surplus before 2020.
Stocks: Google To Launch New Smartwatch Platform
Google announced earlier this week that smartwatches based on its Android mobile software will be available later this year, enlisting a variety of partners including Samsung Electronics, LG Electronics and Intel, signaling the company’s intent to play a leading role in what could be the next big computing market. Android Wear will allow people to speak into their watches to check sports scores, control music, send replies to text messages and even open their home garages. By aligning itself with a broad spectrum of partners to develop the smartwatches, Google is hoping to replicate the success that helped make its free Android software the most popular smartphone operating system, analysts said. Many believe wearable computers represent the next big shift in technology. More than 130 million smart wearable devices are predicted to ship by 2018.
That sums up today’s highlights! It’s a busy day on the markets so make sure you keep up to date with all the events via our Facebook, Twitter, Google+ and LinkedIn pages.
We hope you have a profitable day on the markets!
