Internal Markets Commentary
- The slightly dovish Fed minutes seemed to help the S&P 500 to reversed earlier losses to close in positive territory for the day (+0.32%). US economists believes the minutes indicated that a further rate hike should be expected in June but that the Committee is not in a rush to clearly signal a more hawkish trajectory at this juncture. In the details, the minutes noted that “most participants judged that….it would likely soon be appropriate…to take another step in removing policy accommodation”. On balance, the minutes didn’t seemed to be too concerned about an overheating economy and inflation over shooting. It noted that a temporary period of inflation “modestly above 2% would be consistent with the committee’s symmetric inflation objective…” and that “it was premature to conclude that inflation would remain at levels around 2%….” On the labor market, the minutes noted the Employment cost index for 1Q indicated the strength in the labor market was “…showing through to a gradual pickup in wage increases, although the signal from other wage measures was less clear.” while many participants commented that overall wage pressures were still moderate or were strong only in industries and occupations…”
Internal Markets Commentary
- President Donald Trump canceled his planned summit with North Korean leader Kim Jong Un that had been scheduled for June 12 in Singapore, citing “tremendous anger and open hostility” in recent statements from Pyongyang. Trump communicated his decision in a letter Thursday to Kim released by the White House. North Korea hardened its rhetoric toward the U.S. earlier Thursday, lashing out after remarks by Vice President Mike Pence and the White House national security adviser, John Bolton, that had compared the country with Libya. Choe Son Hui, vice-minister of Foreign Affairs, called Pence a “political dummy” and his comments “unbridled and impudent,” according to an English-language statement from North Korea’s state-run KCNA outlet. Choe warned her nation was prepared for a “nuclear-to-nuclear” showdown if the U.S. didn’t follow through on the summit. “We can also make the U.S. taste an appalling tragedy it has neither experienced nor even imagined up to now,” she said, warning that she would recommend Kim cancel the summit if U.S. officials didn’t curb their language. Secretary of State Mike Pompeo told the Senate Foreign Affairs Committee shortly after the letter was released that he was “still optimistic” the U.S. and North Korea would reach a historic deal. Pompeo said the U.S. had tried in recent days to put teams together to prepare for the meeting and “we had received no response to our inquiries from” the North Korean government. Kim Eui-kyeom, spokesman for South Korean President Moon Jae-in, said in a text message Thursday night in Seoul that his government is still “trying to figure out” Trump’s intention on the summit. The highly anticipated summit had been cast by the White House as an opportunity to stave off a military conflict with North Korea and showcase Trump’s ability to make progress where his predecessors had struggled. The president has openly entertained the idea that he could have been awarded the Nobel Peace Prize had the meeting led to a peace agreement between North Korea and the U.S. and South Korea. The countries are technically still at war. But Trump ultimately ran into the same diplomatic quandary that has flummoxed U.S. presidents for the past 25 years: the inability to persuade a stubborn regime to give up a nuclear program that it regards as key to its survival.