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| Fed minutes: June rate hike likely if growth picks up - live updates | Fed minutes: June rate hike likely if growth picks up - live updates |
| (35 minutes later) | |
| 8.07pm BST | |
| 20:07 | |
| Poor Janet Yellen.... As Fed chair, she’s going to have to keep a close eye on the nitty-gritty of Britain’s EU referendum battle, points out the FT’s Mehreen Khan. | |
| Fed's June meeting is a week before Brexit referendum. Yellen to become discerning observer of online v phone polls debate | |
| 8.04pm BST | |
| 20:04 | |
| Wall Street now reckons there’s a 25% chance of a June rate hike - up from below 5% last week: | |
| Futures market pins greater than 1-in-4 chance of June rate rise. https://t.co/1LmoraN7YY pic.twitter.com/VeWw1rl83t | |
| 7.37pm BST | 7.37pm BST |
| 19:37 | 19:37 |
| Fed: Brexit and China are threats | Fed: Brexit and China are threats |
| The Federal Reserve is pretty clear that Britain’s EU referendum is a potential shock to the world economy, as is China’s slowdown. | The Federal Reserve is pretty clear that Britain’s EU referendum is a potential shock to the world economy, as is China’s slowdown. |
| The minutes state that: | The minutes state that: |
| [Many policymakers] indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook. | [Many policymakers] indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook. |
| Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China’s management of its exchange rate.” | Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China’s management of its exchange rate.” |
| The next Fed meeting takes place just a week before Britain goes to the polls in a vote that will determine its place in, or our, of the European Union. So the Fed might well judge it too risky to raise borrowing costs after all (as Joseph Lake, US analyst at the Economist Intelligence Unit, suggested earlier today) | The next Fed meeting takes place just a week before Britain goes to the polls in a vote that will determine its place in, or our, of the European Union. So the Fed might well judge it too risky to raise borrowing costs after all (as Joseph Lake, US analyst at the Economist Intelligence Unit, suggested earlier today) |
| 7.29pm BST | 7.29pm BST |
| 19:29 | 19:29 |
| The yield, or interest rates, on US government bonds has spiked sharply since the minutes were released. | The yield, or interest rates, on US government bonds has spiked sharply since the minutes were released. |
| That’s another sign that investors are now expecting American interest rates to rise earlier than before. | That’s another sign that investors are now expecting American interest rates to rise earlier than before. |
| For those without a Bloomberg, this is what the 10yr UST made of the lead-up and release of the FOMC minutes pic.twitter.com/Ud5JSQvA7Q | For those without a Bloomberg, this is what the 10yr UST made of the lead-up and release of the FOMC minutes pic.twitter.com/Ud5JSQvA7Q |
| Updated | Updated |
| at 7.38pm BST | at 7.38pm BST |
| 7.23pm BST | 7.23pm BST |
| 19:23 | 19:23 |
| Jeremy Cook, chief economist at foreign exchange firm World First, reckons the Federal Reserve are trying to signal to the market.... | Jeremy Cook, chief economist at foreign exchange firm World First, reckons the Federal Reserve are trying to signal to the market.... |
| Fed wiggles big stick to beat overt dovishness out of market. Would still be surprised if it was June | Fed wiggles big stick to beat overt dovishness out of market. Would still be surprised if it was June |
| Ironically, by pushing up the dollar, markets create the kind of tighter monetary conditions that allow the Fed to hold off actually raising rates at all..... | Ironically, by pushing up the dollar, markets create the kind of tighter monetary conditions that allow the Fed to hold off actually raising rates at all..... |
| 7.19pm BST | 7.19pm BST |
| 19:19 | 19:19 |
| US rate hike odds are spiking | US rate hike odds are spiking |
| Investors are rapidly repricing their expectations for US interest rate moves this year. | Investors are rapidly repricing their expectations for US interest rate moves this year. |
| There’s now a greater expectation that borrowing costs could rise during 2016, based on market moves in the last 20 minutes. | There’s now a greater expectation that borrowing costs could rise during 2016, based on market moves in the last 20 minutes. |
| However, they still don’t think that a June hike is terribly likely, despite the Fed saying that many policymakers think it could be justified if the data improves. | However, they still don’t think that a June hike is terribly likely, despite the Fed saying that many policymakers think it could be justified if the data improves. |
| CNBC has the details: | CNBC has the details: |
| More here: Rate hike odds spike across the board after Fed minutes | More here: Rate hike odds spike across the board after Fed minutes |
| 7.16pm BST | 7.16pm BST |
| 19:16 | 19:16 |
| Fed sends dollar up, but stocks slide | Fed sends dollar up, but stocks slide |
| Shares on Wall Street have erased all their gains after the Fed minutes revealed that a June rate hike is certainly possible. | Shares on Wall Street have erased all their gains after the Fed minutes revealed that a June rate hike is certainly possible. |
| U.S. stocks erase gains after Fed minutes while banks hold rally https://t.co/KFbngvsyX3 pic.twitter.com/LTq4KelesI | U.S. stocks erase gains after Fed minutes while banks hold rally https://t.co/KFbngvsyX3 pic.twitter.com/LTq4KelesI |
| And the dollar is soaring... hitting a nine-week high against the Swiss franc and a three-week high against the yen. | And the dollar is soaring... hitting a nine-week high against the Swiss franc and a three-week high against the yen. |
| 7.05pm BST | 7.05pm BST |
| 19:05 | 19:05 |
| US Fed: prepared to hike in June if data merits it | US Fed: prepared to hike in June if data merits it |
| Breaking: Policymakers on the Federal Reserve’s monetary policy-setting committee are leaning towards raising interest rates at their next meeting in June. | Breaking: Policymakers on the Federal Reserve’s monetary policy-setting committee are leaning towards raising interest rates at their next meeting in June. |
| That’s the top line from the minutes of last month’s meeting, which just hit the wires. | That’s the top line from the minutes of last month’s meeting, which just hit the wires. |
| They show that “most” policymakers judge that a June rate hike would be appropriate, if data suggest that the US economy is recovering this quarter after its winter slowdown. | They show that “most” policymakers judge that a June rate hike would be appropriate, if data suggest that the US economy is recovering this quarter after its winter slowdown. |
| And some Fed officials are concerned that the markets aren’t ready for a June hike -- that’s true, given many investors only expect one hike in 2016. | And some Fed officials are concerned that the markets aren’t ready for a June hike -- that’s true, given many investors only expect one hike in 2016. |
| This is the key quote from the minutes: | This is the key quote from the minutes: |
| “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor markets continued to strengthen, and inflation making progress toward the committee’s 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June.” | “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor markets continued to strengthen, and inflation making progress toward the committee’s 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June.” |
| However, the minutes also show that the Fed is concerned that Britain’s EU referendum could spook the financial markets next month. | However, the minutes also show that the Fed is concerned that Britain’s EU referendum could spook the financial markets next month. |
| Updated | Updated |
| at 7.08pm BST | at 7.08pm BST |
| 6.50pm BST | 6.50pm BST |
| 18:50 | 18:50 |
| Nearly time for the final event of the day....the minutes of the Federal Reserve’s April monetary policy meeting. | Nearly time for the final event of the day....the minutes of the Federal Reserve’s April monetary policy meeting. |
| Paul La Monica of CNN hopes we don’t get too carried away... | Paul La Monica of CNN hopes we don’t get too carried away... |
| Fed minutes in less than 15 minutes. My excitement is palpable. Nothing like overanalyzing something that was said three weeks ago. | Fed minutes in less than 15 minutes. My excitement is palpable. Nothing like overanalyzing something that was said three weeks ago. |
| 5.56pm BST | 5.56pm BST |
| 17:56 | 17:56 |
| European markets higher but FTSE 100 flat | European markets higher but FTSE 100 flat |
| Another mixed day for stock markets, with the FTSE 100 hit by falling commodity stocks in the wake of the strong dollar but a rebound in banks providing support elsewhere. And even the FTSE 100 managed to end virtually unchanged on the day. Tony Cross, markets analyst at Trustnet Direct said: | Another mixed day for stock markets, with the FTSE 100 hit by falling commodity stocks in the wake of the strong dollar but a rebound in banks providing support elsewhere. And even the FTSE 100 managed to end virtually unchanged on the day. Tony Cross, markets analyst at Trustnet Direct said: |
| It seems fair to say that today could have been a whole lot worse for equity markets and by all accounts that shock IPSOS/MORI poll on the referendum does seem to have played at least some part in helping ensure the FTSE-100 rounds the day out broadly unchanged. It paints a picture that the remain campaign is quite literally a country mile ahead and whilst the stronger pound has done little to help commodity stocks, many other sectors seem to be finding some solid support off the back of this shift in sentiment. | It seems fair to say that today could have been a whole lot worse for equity markets and by all accounts that shock IPSOS/MORI poll on the referendum does seem to have played at least some part in helping ensure the FTSE-100 rounds the day out broadly unchanged. It paints a picture that the remain campaign is quite literally a country mile ahead and whilst the stronger pound has done little to help commodity stocks, many other sectors seem to be finding some solid support off the back of this shift in sentiment. |
| So the final scores showed: | So the final scores showed: |
| On Wall Street, the Dow Jones Industrial Average is currentlyi up 33 points or 0.19%. | On Wall Street, the Dow Jones Industrial Average is currentlyi up 33 points or 0.19%. |
| Meanwhile oil prices have shaken off their earlier dip following a surprise rise in US crude stocks. Brent is now up 0.65% at $49.60 a barrel. | Meanwhile oil prices have shaken off their earlier dip following a surprise rise in US crude stocks. Brent is now up 0.65% at $49.60 a barrel. |
| 5.23pm BST | 5.23pm BST |
| 17:23 | 17:23 |
| More on the Fed: | More on the Fed: |
| Interesting that before the April meeting there were hawkish comments then a dovish statement will we get the same again today... 1/2 | Interesting that before the April meeting there were hawkish comments then a dovish statement will we get the same again today... 1/2 |
| Vice-Chair Fischer & Dudley are both scheduled to speak tomo... is this strategic Fed timing to calm impending volatility from mins?!... 2/2 | Vice-Chair Fischer & Dudley are both scheduled to speak tomo... is this strategic Fed timing to calm impending volatility from mins?!... 2/2 |
| 5.13pm BST | 5.13pm BST |
| 17:13 | 17:13 |
| There has been much talk about when the US Federal Reserve would raise interest rates again after December’s hike, and the minutes of last month’s Fed meeting which will be released later could give further clues. | There has been much talk about when the US Federal Reserve would raise interest rates again after December’s hike, and the minutes of last month’s Fed meeting which will be released later could give further clues. |
| On Tuesday two - albeit non-voting - members said the June meeting was a live one, and two to three rate increases could be expected this year. Along with stronger than expected US data, this seemed to put a June rise firmly on the table. Not everyone agrees, however, with Joseph Lake, US analyst at the Economist Intelligence Unit, suggesting there will be no move until at least September: | On Tuesday two - albeit non-voting - members said the June meeting was a live one, and two to three rate increases could be expected this year. Along with stronger than expected US data, this seemed to put a June rise firmly on the table. Not everyone agrees, however, with Joseph Lake, US analyst at the Economist Intelligence Unit, suggesting there will be no move until at least September: |
| All eyes today are on the release of the minutes of the April FOMC meeting, which will give markets an indication of the future direction of interest rates, and the likelihood of a Fed rate rise in June. This will influence the future direction of the US dollar, and have a large bearing on whether commodity prices can sustain their recent rally. | All eyes today are on the release of the minutes of the April FOMC meeting, which will give markets an indication of the future direction of interest rates, and the likelihood of a Fed rate rise in June. This will influence the future direction of the US dollar, and have a large bearing on whether commodity prices can sustain their recent rally. |
| Politics will play a key role in when the Fed decides to increase the policy rate. The next FOMC meeting is on June 14-15, just one week before the UK votes on whether it will leave or remain in the European Union. Although the EIU expects the UK to vote to remain in the EU, polls are close and the vote will be tight. This will weigh on financial markets and factor in to the Fed’s decision. It would be risky to lift US interest rates just one week before a UK poll which could have wide ranging consequences for the global economy. | Politics will play a key role in when the Fed decides to increase the policy rate. The next FOMC meeting is on June 14-15, just one week before the UK votes on whether it will leave or remain in the European Union. Although the EIU expects the UK to vote to remain in the EU, polls are close and the vote will be tight. This will weigh on financial markets and factor in to the Fed’s decision. It would be risky to lift US interest rates just one week before a UK poll which could have wide ranging consequences for the global economy. |
| Had the domestic economic data been overwhelmingly positive in the past two months, the Fed would probably have moved in June. However, while economic data has been positive, it has not been overwhelmingly so and, combined with the Brexit vote, this will be enough to persuade the Fed to delay the next rate increase. It is unlikely to move at the following FOMC meeting, in July, as it is not accompanied by a press conference. Although the Fed insists that all meetings are live, given the very gradual nature of this tightening cycle, and the importance of clear communication, the Fed will probably skip July, leaving the following FOMC meeting in September as the most likely date of the next policy rate increase. | Had the domestic economic data been overwhelmingly positive in the past two months, the Fed would probably have moved in June. However, while economic data has been positive, it has not been overwhelmingly so and, combined with the Brexit vote, this will be enough to persuade the Fed to delay the next rate increase. It is unlikely to move at the following FOMC meeting, in July, as it is not accompanied by a press conference. Although the Fed insists that all meetings are live, given the very gradual nature of this tightening cycle, and the importance of clear communication, the Fed will probably skip July, leaving the following FOMC meeting in September as the most likely date of the next policy rate increase. |
| Thereafter, politics will once again enter the Fed’s calculations, but this time it will be domestic matters. The lead up to the November presidential and congressional elections will increase investor uncertainty, and raise volatility in financial markets. Although we think the domestic economic prospects for the second half of 2016 are bright, the uncertainty generated by politics will deter the FOMC from tightening policy at the November meeting, leaving the FOMC gathering in mid-December as the last chance to increase the policy rate for a second time in 2016. | Thereafter, politics will once again enter the Fed’s calculations, but this time it will be domestic matters. The lead up to the November presidential and congressional elections will increase investor uncertainty, and raise volatility in financial markets. Although we think the domestic economic prospects for the second half of 2016 are bright, the uncertainty generated by politics will deter the FOMC from tightening policy at the November meeting, leaving the FOMC gathering in mid-December as the last chance to increase the policy rate for a second time in 2016. |
| 5.05pm BST | 5.05pm BST |
| 17:05 | 17:05 |
| A quick look at what is expected at this week’s G7 finance ministers’ meeting in Japan, from Capital Economics. In sum, not much: | A quick look at what is expected at this week’s G7 finance ministers’ meeting in Japan, from Capital Economics. In sum, not much: |
| This weekend’s G7 finance ministers meeting in Sendai, Japan, is likely to focus on exchange rate and fiscal policy and to end with another warning about the dangers of Brexit. However, no major policy announcements are on the cards. | This weekend’s G7 finance ministers meeting in Sendai, Japan, is likely to focus on exchange rate and fiscal policy and to end with another warning about the dangers of Brexit. However, no major policy announcements are on the cards. |
| In more detail: | In more detail: |
| The hosts, Japan, will be looking for support for the view that currency intervention can be a legitimate policy option in some circumstances. After all, the appreciation of the yen, of 10% so far this year, has been much bigger than that of the euro (and has had a major impact on corporate earnings. And Japanese officials have hinted recently that they may intervene to push the yen down...US officials are not likely to criticise the euro-zone’s or Japan’s exchange rate policy too heavily at this weekend’s meeting because neither the ECB nor the Bank of Japan has been intervening to weaken their currencies. | The hosts, Japan, will be looking for support for the view that currency intervention can be a legitimate policy option in some circumstances. After all, the appreciation of the yen, of 10% so far this year, has been much bigger than that of the euro (and has had a major impact on corporate earnings. And Japanese officials have hinted recently that they may intervene to push the yen down...US officials are not likely to criticise the euro-zone’s or Japan’s exchange rate policy too heavily at this weekend’s meeting because neither the ECB nor the Bank of Japan has been intervening to weaken their currencies. |
| Indeed, the US is more concerned about China, which is of course not a G7 member, though the People’s Bank has been selling foreign currency over the past year in order to prop the renminbi up, rather than trying to gain competitive advantage. | Indeed, the US is more concerned about China, which is of course not a G7 member, though the People’s Bank has been selling foreign currency over the past year in order to prop the renminbi up, rather than trying to gain competitive advantage. |
| All in all, it seems highly likely that the G7 will stick to its established formula on exchange rate policy. The key elements are a commitment to market-determined exchange rates and to using fiscal and monetary policies to achieve domestic objectives. | All in all, it seems highly likely that the G7 will stick to its established formula on exchange rate policy. The key elements are a commitment to market-determined exchange rates and to using fiscal and monetary policies to achieve domestic objectives. |
| Finance ministers will also discuss fiscal policy, with Germany likely to be singled out for criticism once again. But the Japanese government is unlikely to push for a coordinated statement in favour of fiscal stimulus given implacable opposition from Germany itself. Moreover, Japan is not in a good position to argue for a coordinated fiscal stimulus: under current plans, its fiscal policy will be tightened more than that of any other G7 economy apart from the UK during 2016-2020. | Finance ministers will also discuss fiscal policy, with Germany likely to be singled out for criticism once again. But the Japanese government is unlikely to push for a coordinated statement in favour of fiscal stimulus given implacable opposition from Germany itself. Moreover, Japan is not in a good position to argue for a coordinated fiscal stimulus: under current plans, its fiscal policy will be tightened more than that of any other G7 economy apart from the UK during 2016-2020. |
| Finally, the G7 will surely issue yet another warning about the dangers posed by Brexit. With only five weeks to go until the referendum, getting this in any formal communiqué will be the only significant objective of the UK government. But this would surely do little to change anybody’s view on the merits of Brexit. | Finally, the G7 will surely issue yet another warning about the dangers posed by Brexit. With only five weeks to go until the referendum, getting this in any formal communiqué will be the only significant objective of the UK government. But this would surely do little to change anybody’s view on the merits of Brexit. |
| 4.22pm BST | 4.22pm BST |
| 16:22 | 16:22 |
| Oil is still in negative territory following the US inventory figures, but it is not seeing a major slide, with Brent crude down just 0.2% at $49.17 a barrel. Fawad Razaqzada, market analyst at City Index, said: | Oil is still in negative territory following the US inventory figures, but it is not seeing a major slide, with Brent crude down just 0.2% at $49.17 a barrel. Fawad Razaqzada, market analyst at City Index, said: |
| Crude oil dropped in the immediate aftermath of the latest official US oil inventories report from the EIA as traders responded to the headline build of 1.3m barrels. Clearly this wrong-footed many speculators who had expected to see another drawdown following last week’s 3.41m barrel decrease in US oil stocks. | Crude oil dropped in the immediate aftermath of the latest official US oil inventories report from the EIA as traders responded to the headline build of 1.3m barrels. Clearly this wrong-footed many speculators who had expected to see another drawdown following last week’s 3.41m barrel decrease in US oil stocks. |
| This is the second time in as many weeks that the API has got it completely wrong. [The American Petroleum Institute earlier this week reported a 1.1m barrel drop in US crude oil supplies.] | This is the second time in as many weeks that the API has got it completely wrong. [The American Petroleum Institute earlier this week reported a 1.1m barrel drop in US crude oil supplies.] |
| But the other aspects of the oil report were not too bad at all. For a start, oil production fell once again. What’s more, there were larger-than-expected draws in distillates and – more importantly for this time of the year – gasoline stocks as refineries processed more crude now that the driving season is underway. Hence, [US benchmark] oil has not exactly fallen off a cliff (yet). | But the other aspects of the oil report were not too bad at all. For a start, oil production fell once again. What’s more, there were larger-than-expected draws in distillates and – more importantly for this time of the year – gasoline stocks as refineries processed more crude now that the driving season is underway. Hence, [US benchmark] oil has not exactly fallen off a cliff (yet). |
| Updated | Updated |
| at 4.22pm BST | at 4.22pm BST |
| 4.10pm BST | 4.10pm BST |
| 16:10 | 16:10 |
| Back with the latest shareholder spring, and nearly 32% of the votes cast at Paddy Power Betfair’s annual meeting were against the approval of the remuneration report. | Back with the latest shareholder spring, and nearly 32% of the votes cast at Paddy Power Betfair’s annual meeting were against the approval of the remuneration report. |
| Updated | Updated |
| at 4.13pm BST | at 4.13pm BST |
| 3.59pm BST | 3.59pm BST |
| 15:59 | 15:59 |
| US COMMERCIAL CRUDE STOCKS rose counter-seasonally by +1.3 million bbl to 541 million (YoY surplus rose to +59 mn) pic.twitter.com/4P4UAaAOJA | US COMMERCIAL CRUDE STOCKS rose counter-seasonally by +1.3 million bbl to 541 million (YoY surplus rose to +59 mn) pic.twitter.com/4P4UAaAOJA |
| 3.43pm BST | 3.43pm BST |
| 15:43 | 15:43 |
| Unsurprisingly, oil prices have fallen on the US inventory news. Brent crude, having touched $49.54 a barrel earlier, is now down 0.3% at $49.13. Reuters has the report on the US data: | Unsurprisingly, oil prices have fallen on the US inventory news. Brent crude, having touched $49.54 a barrel earlier, is now down 0.3% at $49.13. Reuters has the report on the US data: |
| U.S. crude stocks rose unexpectedly last week even as gasoline and distillate inventories fell more than expected, data from the Energy Information Administration showed on Wednesday. | U.S. crude stocks rose unexpectedly last week even as gasoline and distillate inventories fell more than expected, data from the Energy Information Administration showed on Wednesday. |
| Crude inventories rose by 1.3 million barrels in the week to May 13, compared with analysts’ expectations for an decrease of 2.8 million barrels. | Crude inventories rose by 1.3 million barrels in the week to May 13, compared with analysts’ expectations for an decrease of 2.8 million barrels. |
| Crude stocks at the Cushing, Oklahoma, delivery hub rose by 461,000 barrels, hitting a fresh record high, the data showed. | Crude stocks at the Cushing, Oklahoma, delivery hub rose by 461,000 barrels, hitting a fresh record high, the data showed. |
| Refinery crude runs rose by 192,000 barrels per day, EIA data showed. Refinery utilization rates rose by 1.4 percentage points. | Refinery crude runs rose by 192,000 barrels per day, EIA data showed. Refinery utilization rates rose by 1.4 percentage points. |
| Gasoline stocks fell by 2.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 150,000-barrel drop. | Gasoline stocks fell by 2.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 150,000-barrel drop. |
| Distillate stockpiles, which include diesel and heating oil, fell by 3.2 million barrels, versus expectations for a 642,000-barrel drop, the EIA data showed. | Distillate stockpiles, which include diesel and heating oil, fell by 3.2 million barrels, versus expectations for a 642,000-barrel drop, the EIA data showed. |
| U.S. crude imports rose last week by 22,000 barrels per day. | U.S. crude imports rose last week by 22,000 barrels per day. |