Market movers today

  • In the US, markets will keep a close eye on a range of FOMC speeches, including from Chairman Powell. Focus will centre in particular on any indications of whether the size of the first cut will be 50bp or 'just' 25bp.

  • On an otherwise quiet day in terms of data releases, market sentiment will continue to be driven by any headlines related to the Trump-Xi meeting at the G20 summit in Japan at the end of the week.


Selected market news

US Trade Representative Lighthizer and Treasury Secretary Mnuchin spoke on Monday with China's Vice Premier Minister Liu He on the phone as the two countries are preparing for the G20 meeting, where US President Trump and China's President Xi Jinping are set to meet - likely on 29 June - in hopes that trade talks will be resumed.

The US has put sanctions on Iran's supreme leader Khamenei and eight other senior officials as tensions between the US and Iran continue to grow. In return, Iran reported that the diplomatic path with Washington is closed forever. Meanwhile, oil prices are trading lower, with Brent crude falling below USD65/bbl. In our view, the latest escalation of the conflict and the new round of sanctions are less important to the oil market since Iran's oil production is already very low.

The Fed's Kaplan warned in a written comment yesterday that monetary stimulus would contribute to building up excess imbalances that would be difficult to manage. His view stands in contrast to that of other Fed officials, e.g. the Fed's Kashkari who on Friday said he advocated for a 50bp cut at last week's FOMC meeting, and to market pricing looking for a 25-50bp cut at the upcoming July FOMC meeting.

The monthly manufacturing activity index from the Dallas Fed dropped to minus 12.1 from minus 5.3, while consensus was expecting an increase. Along with weak German Ifo business confidence figures, this confirmed the relatively weak reading of the world economy as seen in Friday's PMIs.

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