Wall Street unanimous on U.S. rate hike next week - Reuters poll | Reuters
By Richard Leong | NEW YORK NEW YORK Wall Street's top banks were unanimous on the view the Federal Reserve will increase interest rates at its policy meeting next week following a stronger-than-forecast February U.S.
By Richard Leong
| NEW YORK
NEW YORK Wall Street's top banks were unanimous on the view the Federal Reserve will increase interest rates at its policy meeting next week following a stronger-than-forecast February U.S. payrolls report, a Reuters poll showed on Friday.Employers added 235,000 jobs last month, more than the 190,000 forecast among economists polled by Reuters.A drop in unemployment, more people seeking jobs and a rebound in wage growth were other upbeat aspects of the report that economists at these top banks reckoned give the Fed a green light to raise rates by a quarter point, to 0.75-1.00 percent."It ticks all the boxes for the Fed to move next week," said Michael Hanson, chief U.S. macro strategist at TD Securities in New York.The Fed previously raised rates by a quarter point, to 0.50-0.75 percent, in December.TD is one of the 23 primary dealers, or banks that do business directly with the Fed.To be sure, the path of rate increases in 2017 could change, according to primary dealers.
It may speed up if the economy accelerates because of possible tax cuts, looser regulations and infrastructure spending from President Donald Trump and a Republican-controlled Congress. On the other hand, it may be slowed by overseas developments including surprise election results in Europe, which could roil financial markets, they said. Barring unexpected outcomes, the widely anticipated rate increase in less than a week would be followed by two more hikes later in 2017, 20 dealers said in the poll.Two dealers forecast only one more hike after a March move, while one dealer saw three more increases.
A Reuters poll conducted on Feb. 3 showed 14 primary dealers surveyed say they expected no rate hike in March with 12 of them anticipating such a move by the end of the second quarter.The dramatic shift in expectations for a March hike came even before Friday's strong jobs figures.Last week, a group of Fed officials including Chair Janet Yellen hammered the point that they were prepared to lift rates at the Fed's upcoming meeting as the economy is near full employment and inflation to closing in on their 2 percent goal.Traders' view on a March increase, as measured by interest rate futures FFH7, jumped to 80 percent from 30 percent in reaction to a barrage of hawkish rhetoric from policymakers.
Their view on the possibility of a rate hike strengthened to 93 percent after Friday's jobs report, according to CME Group's FedWatch tool.After March, however, primary dealers were split on the timing for when the Fed would raise rates during the rest of 2017. Twelve of the 23 dealers saw a rate increase to 1.00-1.25 percent by the June 13-14 meeting, while 10 expected such a move by the Fed's September meeting, the latest Reuters poll showed.Six of them forecast the Fed's final rate hike for 2017 at its September meeting, bringing its target range to 1.25-1.50 percent.Fourteen primary dealers said they saw the Fed raising rates to 1.25-1.50 percent at its Dec 12-13 meeting. (Reporting by Richard Leong; Editing by Daniel Bases, Chizu Nomiyama and Leslie Adler)
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By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.