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You can find the current article at its original source at http://www.theguardian.com/business/live/2015/oct/29/us-economy-gdp-slowdown-rate-hike-business-live
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| Version 1 | Version 2 |
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| US economy expected to slow as rate hike expectations build - business live | US economy expected to slow as rate hike expectations build - business live |
| (35 minutes later) | |
| 8.50am GMT08:50 | |
| Those disappointing results from Barclays and Royal Dutch Shell have helped to wipe almost 1% off the FTSE 100 this morning. | |
| The blue chip index is down 53 points at 6383, with mining stocks among the big fallers. | |
| Miners in the bad books again. $FTSE pic.twitter.com/U51OpSBvwc | |
| Conner Campbell of SpreadEx explains: | |
| Helping drag the commodity sector as a whole further into the red was Shell; announcing its third quarter results less than 48 hours after revealing its latest ($2 billion) write-down in relation to its failed Carmon Creek project, the oil giant slipped to a $6.1 billion loss after the cost of ending multiple long term projects added up to a whopping $8.2 billion. | |
| This pushed Shell nearly 2% lower after the bell, worsening the situation in an already loss-loving sector. | |
| Other European stock markets are faring better this morning: | |
| 8.34am GMT08:34 | |
| Shares in Barclays have fallen by 3.5% in early trading, after the bank missed profit forecasts and posted a 10% drop in adjusted earnings. | |
| Barclays also revealed that ring-fencing its retail banking arm will cost £1bn, on top of £2.3bn bill on legal costs and compensation. | |
| And intriguingly, the company also warned that it faces new compensation claims to foreign exchange customers. But Barclays refused to give much information in a conference call with the media.... | |
| My colleague Jill Treanor tells us what we know: | |
| As its new boss, Jes Staley, pledged to clean up the bank’s reputation, Barclays said it was facing £290m redress costs as a result of an internal review relating to rates for foreign exchange transactions between 2005 and 2012. | |
| The figures were released a day after Barclays named Staley, a US investment banker, as its new chief executive. He is on a £10m pay packet and will start on 1 December. | |
| The £290m is part of £1.3bn set aside for compensating customers in the fist nine months of this year, while there is £1bn for on going investigations and litigation. | |
| More here: | |
| Related: Barclays legal bill hits £2.3bn in nine months | |
| Updated at 8.36am GMT | |
| 8.25am GMT08:25 | |
| The UK government has taken another step towards untangling itself from the banking sector, by selling more shares in Lloyds Banking Group. | |
| This cuts the taxpayers stake in Lloyds to below 10%, seven years after bailing out the company during the financial crisis. | |
| Updated at 8.25am GMT | |
| 8.12am GMT08:12 | 8.12am GMT08:12 |
| Morgan Stanley reckons the Federal Reserve will be feeling pleased with itself: | Morgan Stanley reckons the Federal Reserve will be feeling pleased with itself: |
| MS: Fed was aiming for markets to adjust to better price-in a December hike. At close-to 50/50 now, the Fed got what it was looking for. | MS: Fed was aiming for markets to adjust to better price-in a December hike. At close-to 50/50 now, the Fed got what it was looking for. |
| 8.10am GMT08:10 | 8.10am GMT08:10 |
| UK house prices rise again | UK house prices rise again |
| Britain’s economy may be slowing down, but house prices are still rising. | Britain’s economy may be slowing down, but house prices are still rising. |
| Nationwide has reported that prices rose by 0.6% this month, pushing the annual house price inflation up to 3.9%. | Nationwide has reported that prices rose by 0.6% this month, pushing the annual house price inflation up to 3.9%. |
| Robert Gardner, Nationwide’s chief economist, says house prices will probably keep rising. But can building firms keep up? | Robert Gardner, Nationwide’s chief economist, says house prices will probably keep rising. But can building firms keep up? |
| Gardner says: | Gardner says: |
| “Over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term. | “Over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term. |
| While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand. | While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand. |
| 8.04am GMT08:04 | 8.04am GMT08:04 |
| This explains why the markets are taking the Federal Reserve’s comment about considering a rate rise at its “next meeting” so seriously: | This explains why the markets are taking the Federal Reserve’s comment about considering a rate rise at its “next meeting” so seriously: |
| JPM's Feroli: the statement's direct reference to the 'next' mtg was the first such mention of possible action at a subsequent mtg since '99 | JPM's Feroli: the statement's direct reference to the 'next' mtg was the first such mention of possible action at a subsequent mtg since '99 |
| 7.59am GMT07:59 | 7.59am GMT07:59 |
| Today’s US GDP report will probably show that growth has fallen back below the 2% trend rate. | Today’s US GDP report will probably show that growth has fallen back below the 2% trend rate. |
| The Wall Street Journal explains: | The Wall Street Journal explains: |
| The economy has grown at little better than a 2% pace since the recovery began in mid-2009. That’s largely because a quarter or two of above-trend growth has been upended by a weak performance. | The economy has grown at little better than a 2% pace since the recovery began in mid-2009. That’s largely because a quarter or two of above-trend growth has been upended by a weak performance. |
| If the third-quarter data turns out as economists project, growth for the year will have decelerated from last year’s 2.4% increase. | If the third-quarter data turns out as economists project, growth for the year will have decelerated from last year’s 2.4% increase. |
| As this chart shows, the US economy has been held back by two bad winters: | As this chart shows, the US economy has been held back by two bad winters: |
| 7.53am GMT07:53 | 7.53am GMT07:53 |
| Before last night’s Fed meeting, investors were only pricing in a 35% chance that US borrowing costs would rise in December. It’s now a 48% chance: | Before last night’s Fed meeting, investors were only pricing in a 35% chance that US borrowing costs would rise in December. It’s now a 48% chance: |
| Morning Note: 1. Premier Li floats 6.5% target. 2. DB plans to scrap dividend. 3. And there was a Fed meeting... pic.twitter.com/6IZW1ryiXy | Morning Note: 1. Premier Li floats 6.5% target. 2. DB plans to scrap dividend. 3. And there was a Fed meeting... pic.twitter.com/6IZW1ryiXy |
| 7.49am GMT07:49 | 7.49am GMT07:49 |
| US GDP: Growth expected to slow sharply | US GDP: Growth expected to slow sharply |
| In a few hours we find out how badly the US economy has suffered from the problems in emerging markets, and China’s slowdown. | In a few hours we find out how badly the US economy has suffered from the problems in emerging markets, and China’s slowdown. |
| Economists expect that the first estimate of US GDP for the last quarter, due at 12.30pm GMT, will show a sharp drop in growth in the world’s biggest economy. | Economists expect that the first estimate of US GDP for the last quarter, due at 12.30pm GMT, will show a sharp drop in growth in the world’s biggest economy. |
| Wall Street estimates that US GDP rose at an annualised rate of around 1.5%, or roughly 0.4% in pure quarterly terms. If so, that’s a big slowdown compared to the second quarter of 2015, when the US posted annualised growth of 3.9% (or 1% quarter-on-quarter). | Wall Street estimates that US GDP rose at an annualised rate of around 1.5%, or roughly 0.4% in pure quarterly terms. If so, that’s a big slowdown compared to the second quarter of 2015, when the US posted annualised growth of 3.9% (or 1% quarter-on-quarter). |
| A weak GDP print will add to growing concerns over the global economy. Earlier this week, UK growth slowed from 0.7% to 0.5%, suggesting advanced economies are coming off the boil. | A weak GDP print will add to growing concerns over the global economy. Earlier this week, UK growth slowed from 0.7% to 0.5%, suggesting advanced economies are coming off the boil. |
| BUT.... the report may also show that the US domestic economy is strengthening. If consumer spending is strong, then the Federal Reserve may feel emboldened to push on and raise interest rates in December.... | BUT.... the report may also show that the US domestic economy is strengthening. If consumer spending is strong, then the Federal Reserve may feel emboldened to push on and raise interest rates in December.... |
| Updated at 7.50am GMT | Updated at 7.50am GMT |
| 7.26am GMT07:26 | 7.26am GMT07:26 |
| The Agenda: US rate hike expectations build | The Agenda: US rate hike expectations build |
| Good morning , and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning , and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Today we’ll be mopping up the reaction to last night’s Federal Reserve meeting, where US policymakers floated the serious possibility of raising interest rates in December. | Today we’ll be mopping up the reaction to last night’s Federal Reserve meeting, where US policymakers floated the serious possibility of raising interest rates in December. |
| America’s central bank dropped its previous warnings about risk that global financial problems pose to the US economy. | America’s central bank dropped its previous warnings about risk that global financial problems pose to the US economy. |
| And it added a crucial new sentence to its monetary policy statement: | And it added a crucial new sentence to its monetary policy statement: |
| “In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation.” | “In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation.” |
| This suggests that a first rate rise in almost a decade could finally be close. And emerging market currencies have slid overnight, as money pours back into the US dollar. | This suggests that a first rate rise in almost a decade could finally be close. And emerging market currencies have slid overnight, as money pours back into the US dollar. |
| IG’s Angus Nicholson explains: | IG’s Angus Nicholson explains: |
| A new sentence in the Fed monetary policy statement has put a December rate hike by the Fed back on the table. | A new sentence in the Fed monetary policy statement has put a December rate hike by the Fed back on the table. |
| G10 currencies slid against a resurgent US dollar, while the worst was left for emerging market currencies. The Korean won, Indonesian rupiah and Malaysian ringgit saw the heaviest selling in Asia. | G10 currencies slid against a resurgent US dollar, while the worst was left for emerging market currencies. The Korean won, Indonesian rupiah and Malaysian ringgit saw the heaviest selling in Asia. |
| The euro has also weakened, which could send Mario Draghi scurrying off to hang up the Christmas decorations early: | The euro has also weakened, which could send Mario Draghi scurrying off to hang up the Christmas decorations early: |
| #Dollar at 2-1/2-month high after Fed keeps Dec rate hike on agenda. Euro trades <$1.10. https://t.co/3tvmIjbBv3 pic.twitter.com/MEpU4ADLhJ | #Dollar at 2-1/2-month high after Fed keeps Dec rate hike on agenda. Euro trades <$1.10. https://t.co/3tvmIjbBv3 pic.twitter.com/MEpU4ADLhJ |
| European stock markets are expected to take the news in their stride, perhaps taking comfort that the Fed isn’t as worried as last month. | European stock markets are expected to take the news in their stride, perhaps taking comfort that the Fed isn’t as worried as last month. |
| That sets the scene for the main news of the day - the US growth figures, due at 12.30pm GMT, which are expected to show a sharp slowdown (more on that in a moment). | That sets the scene for the main news of the day - the US growth figures, due at 12.30pm GMT, which are expected to show a sharp slowdown (more on that in a moment). |
| Lots of financial results to wade through this morning, including Deutsche Bank (which has reported a €6bn loss and is suspending its dividend in an attempt to cut costs and drive profits), Barclays (which has just posted a 13% drop in adjusted profits), and Royal Dutch Shell. | Lots of financial results to wade through this morning, including Deutsche Bank (which has reported a €6bn loss and is suspending its dividend in an attempt to cut costs and drive profits), Barclays (which has just posted a 13% drop in adjusted profits), and Royal Dutch Shell. |
| Deutsche Bank posts €6bn Q3 loss. | Deutsche Bank posts €6bn Q3 loss. |
| LATEST: Barclays 3rd-quarter adjusted pretax profit is £1.4 billion ($2.1 billion), down 13% https://t.co/CodSGQmEeQ pic.twitter.com/xNmRCIrgwm | LATEST: Barclays 3rd-quarter adjusted pretax profit is £1.4 billion ($2.1 billion), down 13% https://t.co/CodSGQmEeQ pic.twitter.com/xNmRCIrgwm |
| Oil Giant Shell Slumps To £4bn Quarterly Loss https://t.co/c7oH8bYvny pic.twitter.com/MmSaJXMYd0 | Oil Giant Shell Slumps To £4bn Quarterly Loss https://t.co/c7oH8bYvny pic.twitter.com/MmSaJXMYd0 |
| We also get the latest measure of UK house prices, from the Nationwide building society. | We also get the latest measure of UK house prices, from the Nationwide building society. |
| And the City will be set a new target on gender diversity today. Lord Davies is expected to say that at least 33% of all board members at Britain’s biggest firms should be female, by 2020: | And the City will be set a new target on gender diversity today. Lord Davies is expected to say that at least 33% of all board members at Britain’s biggest firms should be female, by 2020: |
| CITY AM: the 33% club #tomorrowspaperstoday pic.twitter.com/NZ6Svjjda8 | CITY AM: the 33% club #tomorrowspaperstoday pic.twitter.com/NZ6Svjjda8 |
| We’ll be tracking all the main events through the day | We’ll be tracking all the main events through the day |
| Updated at 7.32am GMT | Updated at 7.32am GMT |