Fed defies Trump, May fires minister over Huawei, Central banks’ gold rush year: Thursday Trading News briefing

After a two-day policy meeting, the Fed held interest rates steady on Wednesday as data showed continued job gains and economic growth.

Powell ignores Trump’s call

“We think our policy stance is appropriate at the moment; we don’t see a strong case for moving it in either direction,” Fed Chairman Powell said.

The Fed FOMC said in a policy statement that “the labour market remains strong … economic activity rose at a solid rate” in recent weeks. The comments came a day after President Donald Trump once again urged for a cut in interest rates by a full percentage point and revive a stimulus program that would see the pumping of trillions of Dollars into the economy.

The statement and Powell’s insistence in defiance of Trump that the Fed saw no powerful reason to take a rate cut in response to weak inflation into consideration, pushed US Treasury yields and Dollar higher.

US data

The ADP National Employment Report showed the increase of 275K jobs in private sector in April, the most since last July. Figures come ahead of the US Labor Department’s comprehensive non-farm payrolls report due on Friday, which includes data for both public and private-sector employment.

US-China meetings to resume

US Treasury Secretary Steven Mnuchin said he and US Trade Representative Robert Lighthizer had “productive meetings” with Chinese Vice Premier Liu He in Beijing in the latest Sino-US talks to resolve their trade war. He added he is looking forward to talks in D.C. next week.

Politico cited two people close to the talks that the sides agreed on how to enforce the deal, but details need to be ”worked out.” A deal would involve immediate removal of 10 percent tariffs on a $200 billion in Chinese goods affected, with a gradual removal of tariffs on remaining goods, Politico said.

The US government will have to stop borrowing money between July and December if Washington doesn’t agree to increase the so-called debt ceiling. The Treasury Department said the debt ceiling is going to be reached by the half of the year and issuance of Treasury bills is expected to gradually decline over the second quarter.

Williamson sacked over Huawei leak

UK Prime Minister Theresa May fired her defence secretary Gavin Williamson for allegedly leaking to the media considerations to allow the Chinese telecoms giant Huawei to get involved in building Britain’s 5G network.

The US has been putting pressure on its Western allies not to work with Huawei on the grounds it might be providing intelligence to the Communist Party of China.

English voters are expected to use local government elections on Thursday to punish PM May’s Conservative Party over its failure to deliver Brexit. The Conservatives are forecast to lose hundreds of seats. Labour and Liberal Democrats are expected to make gains.

The Bank of England reported the IHS Markit/CIPS manufacturing PMI dropped to 53.1 in April from March’s 13-month high of 55.1. Exports fell at one of their fastest rates in the past five years.

Gold rush

The World Gold Council (WGC) said on Thursday that purchases by central banks pushed global gold demand up 7 percent in the first quarter of the year. In order to diversify their reserves, central banks bought a total of 145.5 tonnes of gold over the January-March period, making it 68 percent more than a year earlier. Purchases of 651.5 tonnes in 2018 was the most in any year since 1967.

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