Here is what you need to know.
Today is a Fed day. Attention turns to Janet Yellen as investors look for clues as to when the Fed will raise interest rates. “The expected date of the first hike in the Fed Funds rate is closer than it has been at any point so far in the recovery,” noted Goldman Sachs economist Kris Dawsey. He continued, “As a result, the signal from the June FOMC meeting will be especially important.” Currently, Fed Funds futures are pricing in a December rate hike. The US 10-year yield is up 2 basis points at 2.33%.
The UK is seeing wage growth. Average weekly earnings rose 2.7%, their fastest since August 2011. Meanwhile, the UK’s unemployment rate held at 5.5%, and remained at its lowest level since 2008. The British pound is stronger by 0.6% at 1.5740.
Ifo upped its forecast for German growth. Germany’s Ifo Institute has raised its 2015 growth forecast to 1.9% from its 1.5% estimate that was made in December. “Private consumption remains the pillar of the upswing, since private households’ income expectations are good due to the improved situation on the labour market,” noted Ifo economist Timo Wollmershaeuser. As for 2016, Ifo sees German growth of 1.8%. Germany’s 10-year yield is up 0.3 basis points at 0.80%.
Japan’s trade deficit exploded. The trade deficit jumped to 216 billion yen in May, up from 53.4 billion yen in April. Exports edged up 2.4%, missing the 3.0% advance that was expected. Meanwhile, imports tumbled 8.7% on anticipation of an 8% drop. Exports to China and the US climbed 1.1% and 7.4%, respectively, but slowed from April. Japan’s yen is weaker by 0.5% at 123.93.
FedEx earnings are due out. The package delivery service is expected to report earnings of $US2.69 per share on revenue of 12.3 billion. FedEx’s results are due out at 7:30 a.m. ET.
FitBit’s IPO prices tonight. The wearable device company has raised the size of its initial public offering to $US656 million. Increased demand could drive the IPO pricing above the $US14-to-$US16 range that has been anticipated. The stock will trade under the ticker ‘FIT’.
Amazon wants the FAA to ease drone rules. The online retailer is lobbying Congress to help in its quest for looser drone regulations. According to ITWorld, Amazon wants Congress to “embrace automated drone flights and come up with a set of simple, nationwide regulations that will allow its proposed Prime Air service to get off the ground.” The FAA’s current rules will not allow the Prime Air service off the ground.
Sinopec is trying to buy a stake in US shale. China’s second largest oil refiner is looking for a 10%-to-15% stake in a US shale project to export liquefied natural gas. Reuters notes, despite the recent drop in oil prices, bargain hunters have been disappointed with the high valuations assigned to shale assets. “The asking price is not low,” noted Jack Yu, managing director of Sinopec D.C..
Stock markets around the world are mixed. China’s Shanghai Composite (+1.7%) led the gains in Asia and France’s CAC (-0.7%) paces the decline in Europe. S&P 500 futures are up 3.25 points at 2092.25.
US economic data is light. Crude oil inventories will be released at 10:30 a.m. ET.