US Fed says June hike possible; UK employment hits record high - as it happened
US central bank says many policymakers would vote to hike borrowing costs next month, if economic data justifies it
- Latest: Federal Reserve says June hike could be likely
- June rate hike expectations are jumping
- Dollar surged too.
Earlier:
9.08pm BST
And finally..... here's my colleage Jana Kasperkevic on today's Fed minutes:
The US Federal Reserve could rase interest rates as early as June, according to minutes from its April meeting, with Fed members arguing the risks of a slowdown in the global economy have receded.
Yet even as the members have become more bullish about US economic resilience, they remained cautious about raising rates. They voted 11-1 to keep interest rates unchanged for a third time this year at the April meeting.
Related: Interest rates could rise as soon as June, Federal Reserve suggests
9.06pm BST
The New York stock market has closed for the night, pretty much where they started it:
a baby born right now would have no idea that the 2 PM minutes sent the stock market red.
8.46pm BST
Tariq Zahir, crude oil trader and managing partner at Tyche Capital Advisors, reckons the US dollar could continue to strengthen.
He says:
"We think people really had a June rate hike off the table.
"But with the Fed disputing that, we could have a much stronger dollar from here, which is typically bearish for oil and other commodities."
8.33pm BST
Jack Ablin, chief investment officer at BMO Private Bank in Chicago, has got the Fed's message, telling Reuters that:
"They are ready to pull the trigger on a rate increase in June."
8.07pm BST
Poor Janet Yellen.... As Fed chair, she's going to have to keep a close eye on the nitty-gritty of Britain's EU referendum battle, points out the FT's Mehreen Khan.
Fed's June meeting is a week before Brexit referendum. Yellen to become discerning observer of online v phone polls debate
8.04pm BST
Wall Street now reckons there's a 25% chance of a June rate hike - up from below 5% last week:
Futures market pins greater than 1-in-4 chance of June rate rise. https://t.co/1LmoraN7YY pic.twitter.com/VeWw1rl83t
7.37pm BST
The Federal Reserve is pretty clear that Britain's EU referendum is a potential shock to the world economy, as is China's slowdown.
The minutes state that:
[Many policymakers] indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook.
Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China's management of its exchange rate."
7.29pm BST
The yield, or interest rates, on US government bonds has spiked sharply since the minutes were released.
That's another sign that investors are now expecting American interest rates to rise earlier than before.
For those without a Bloomberg, this is what the 10yr UST made of the lead-up and release of the FOMC minutes pic.twitter.com/Ud5JSQvA7Q
7.23pm BST
Jeremy Cook, chief economist at foreign exchange firm World First, reckons the Federal Reserve are trying to signal to the market....
Fed wiggles big stick to beat overt dovishness out of market. Would still be surprised if it was June
7.19pm BST
Investors are rapidly repricing their expectations for US interest rate moves this year.
There's now a greater expectation that borrowing costs could rise during 2016, based on market moves in the last 20 minutes.
7.16pm BST
Shares on Wall Street have erased all their gains after the Fed minutes revealed that a June rate hike is certainly possible.
U.S. stocks erase gains after Fed minutes while banks hold rally https://t.co/KFbngvsyX3 pic.twitter.com/LTq4KelesI
7.05pm BST
Breaking: Policymakers on the Federal Reserve's monetary policy-setting committee are leaning towards raising interest rates at their next meeting in June.
That's the top line from the minutes of last month's meeting, which just hit the wires.
"Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor markets continued to strengthen, and inflation making progress toward the committee's 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June."
6.50pm BST
Nearly time for the final event of the day....the minutes of the Federal Reserve's April monetary policy meeting.
Paul La Monica of CNN hopes we don't get too carried away...
Fed minutes in less than 15 minutes. My excitement is palpable. Nothing like overanalyzing something that was said three weeks ago.
5.56pm BST
Another mixed day for stock markets, with the FTSE 100 hit by falling commodity stocks in the wake of the strong dollar but a rebound in banks providing support elsewhere. And even the FTSE 100 managed to end virtually unchanged on the day. Tony Cross, markets analyst at Trustnet Direct said:
It seems fair to say that today could have been a whole lot worse for equity markets and by all accounts that shock IPSOS/MORI poll on the referendum does seem to have played at least some part in helping ensure the FTSE-100 rounds the day out broadly unchanged. It paints a picture that the remain campaign is quite literally a country mile ahead and whilst the stronger pound has done little to help commodity stocks, many other sectors seem to be finding some solid support off the back of this shift in sentiment.
5.23pm BST
More on the Fed:
Interesting that before the April meeting there were hawkish comments then a dovish statement will we get the same again today... 1/2
Vice-Chair Fischer & Dudley are both scheduled to speak tomo... is this strategic Fed timing to calm impending volatility from mins?!... 2/2
5.13pm BST
There has been much talk about when the US Federal Reserve would raise interest rates again after December's hike, and the minutes of last month's Fed meeting which will be released later could give further clues.
On Tuesday two - albeit non-voting - members said the June meeting was a live one, and two to three rate increases could be expected this year. Along with stronger than expected US data, this seemed to put a June rise firmly on the table. Not everyone agrees, however, with Joseph Lake, US analyst at the Economist Intelligence Unit, suggesting there will be no move until at least September:
All eyes today are on the release of the minutes of the April FOMC meeting, which will give markets an indication of the future direction of interest rates, and the likelihood of a Fed rate rise in June. This will influence the future direction of the US dollar, and have a large bearing on whether commodity prices can sustain their recent rally.
Politics will play a key role in when the Fed decides to increase the policy rate. The next FOMC meeting is on June 14-15, just one week before the UK votes on whether it will leave or remain in the European Union. Although the EIU expects the UK to vote to remain in the EU, polls are close and the vote will be tight. This will weigh on financial markets and factor in to the Fed's decision. It would be risky to lift US interest rates just one week before a UK poll which could have wide ranging consequences for the global economy.
Had the domestic economic data been overwhelmingly positive in the past two months, the Fed would probably have moved in June. However, while economic data has been positive, it has not been overwhelmingly so and, combined with the Brexit vote, this will be enough to persuade the Fed to delay the next rate increase. It is unlikely to move at the following FOMC meeting, in July, as it is not accompanied by a press conference. Although the Fed insists that all meetings are live, given the very gradual nature of this tightening cycle, and the importance of clear communication, the Fed will probably skip July, leaving the following FOMC meeting in September as the most likely date of the next policy rate increase.
Thereafter, politics will once again enter the Fed's calculations, but this time it will be domestic matters. The lead up to the November presidential and congressional elections will increase investor uncertainty, and raise volatility in financial markets. Although we think the domestic economic prospects for the second half of 2016 are bright, the uncertainty generated by politics will deter the FOMC from tightening policy at the November meeting, leaving the FOMC gathering in mid-December as the last chance to increase the policy rate for a second time in 2016.
5.05pm BST
A quick look at what is expected at this week's G7 finance ministers' meeting in Japan, from Capital Economics. In sum, not much:
This weekend's G7 finance ministers meeting in Sendai, Japan, is likely to focus on exchange rate and fiscal policy and to end with another warning about the dangers of Brexit. However, no major policy announcements are on the cards.
The hosts, Japan, will be looking for support for the view that currency intervention can be a legitimate policy option in some circumstances. After all, the appreciation of the yen, of 10% so far this year, has been much bigger than that of the euro (and has had a major impact on corporate earnings. And Japanese officials have hinted recently that they may intervene to push the yen down...US officials are not likely to criticise the euro-zone's or Japan's exchange rate policy too heavily at this weekend's meeting because neither the ECB nor the Bank of Japan has been intervening to weaken their currencies.
Indeed, the US is more concerned about China, which is of course not a G7 member, though the People's Bank has been selling foreign currency over the past year in order to prop the renminbi up, rather than trying to gain competitive advantage.
4.22pm BST
Oil is still in negative territory following the US inventory figures, but it is not seeing a major slide, with Brent crude down just 0.2% at $49.17 a barrel. Fawad Razaqzada, market analyst at City Index, said:
Crude oil dropped in the immediate aftermath of the latest official US oil inventories report from the EIA as traders responded to the headline build of 1.3m barrels. Clearly this wrong-footed many speculators who had expected to see another drawdown following last week's 3.41m barrel decrease in US oil stocks.
This is the second time in as many weeks that the API has got it completely wrong. [The American Petroleum Institute earlier this week reported a 1.1m barrel drop in US crude oil supplies.]
4.10pm BST
Back with the latest shareholder spring, and nearly 32% of the votes cast at Paddy Power Betfair's annual meeting were against the approval of the remuneration report.
3.59pm BST
US COMMERCIAL CRUDE STOCKS rose counter-seasonally by +1.3 million bbl to 541 million (YoY surplus rose to +59 mn) pic.twitter.com/4P4UAaAOJA
3.43pm BST
Unsurprisingly, oil prices have fallen on the US inventory news. Brent crude, having touched $49.54 a barrel earlier, is now down 0.3% at $49.13. Reuters has the report on the US data:
U.S. crude stocks rose unexpectedly last week even as gasoline and distillate inventories fell more than expected, data from the Energy Information Administration showed on Wednesday.
Crude inventories rose by 1.3 million barrels in the week to May 13, compared with analysts' expectations for an decrease of 2.8 million barrels.
3.32pm BST
US crude stocks have unexpectedly risen compared to expectations of a weekly decline.
According to the Energy Information Administration, crude stocks rose by 1.3m barrels to 541.29m compared to forecasts of a 2.8m draw.
#Crude: EIA says US oil inventories increased by 1.31 million barrels last week. A decrease was expected. API wrong again. #WTI drops ^FR
Oil goes negative on EIA build vs last week's surprise drawdown; EIA data at odds with this API drawdown
3.27pm BST
US oil inventory data is due shortly and the crude price is steadying ahead of the news, given the recent supply problems including the Canadian wildfires. Brent is currently up 0.3% at $49.45 a barrel having earlier fallen as low as $48.88.
2.58pm BST
The US stock market has opened in the red, as Wall Street continues to ponder the possibility of a hike in interest rates.
Hawkish comments from some Federal Reserve policymakers yesterday, plus strong inflation data, have reignited talk about higher borrowing costs.
US stocks open lower ahead of Fed minutes: https://t.co/IDMu6fL6JE pic.twitter.com/zf3d3GdTpr
2.44pm BST
Bloomberg's Lucy Meakin has shown how the pound has jumped against all major currencies today, as Brexit fears suddenly ease.....
The pound really is having quite a party after those #Brexit polls https://t.co/6pqQq4l0lO via @LukanyoMnyanda #FX pic.twitter.com/zCVyxBMP6z
2.37pm BST
Money is continuing to pour into sterling, after the latest EU referendum poll gave the Remain side a shock 18 point lead.
Investors are reacting to the news that 55% of those polled want to stay in the EU, while 37% want so leave, according to IPSOS MORI.
GBP +0.93% on USD, +1.28% EUR, +1.8% AUD, +1.34% JPY.
Booooooooooom.
"Remain has been boosted by a Conservative swing, but they are also more likely to change their mind, so in this volatile election, with voters divided over the short and long-term impacts of their decision, nothing can be taken for granted."
1.53pm BST
The test manipulation scandal that is gripping the automobile industry has claimed another casualty.
The president of Mitsubishi Motors, Tetsuro Aikawa, has resigned today, four weeks after the company admitted it had falsified fuel efficiency reports for decades.
12.46pm BST
By delaying sanctions against Spain today, the EC could be preparing the ground to rebuke the next Spanish government (if they don't comply with Brussels' demands)...
My interpretation of @pierremoscovici's words: EU Commission is ready to fine Spain after the elections (if a leftwing government is formed)
Wait til after Spanish elections, then put Troika Death Star into orbit,https://t.co/NZVgh35in3
12.35pm BST
Speaking of Europe...Spain and Portugal have just been given more time to get their finances into order.
The European Commission had been expected to get tough with both countries for running deficits over the 3% target mandated by Brussels. It could even have imposed its first ever fines against a member state.
"This is not the right moment economically or politically to take action against Spain & Portugal" on deficit level: @pierremoscovici
The delay will be a source of relief for Madrid, where voters will be heading to the polls in a second general election in just seven months.
Spain's incumbent prime minister Mariano Rajoy was defiant ahead of today's showdown with Brussels, promising to implement a fresh round of tax cuts should he be re-elected in the summer....
The European Commission has avoided imposing its first ever fine on member states for budget failings https://t.co/8xzv4PDDWu
11.58am BST
Breaking away from the jobs report, the pound has jumped after a new opinion poll showed a big lead for the campaign to Remain in the EU.
IPSOS MORI reports that 55% of the public are planning to vote to stay in Europe in June's referendum, with just 37% backing Brexit.
on latest poll - pic.twitter.com/XvfEJKBiUB
Ipsos MORI #EUreferendum poll:
Remain 55%
Leave 37%https://t.co/Je8Oj4XAHp
11.50am BST
Josh Hardie, CBI Deputy Director-General, reckons that George Osborne's new 'national living wage' is starting to hit the labour market:
"While it's encouraging that employment has risen there are some signs of a softening in the labour market, particularly with job vacancies falling back.
"However, continued uncertainty could be weighing on hiring intentions. In addition we are seeing evidence that employers are considering the impact of the National Living Wage, introduced last month."
11.14am BST
The Department for Work and Pensions have riffled through their old collection of vinyl to give today's report some musical context:
Can you spot the records? #getbritainworking pic.twitter.com/bSZByZioVP
11.01am BST
John Hawksworth, chief economist at PwC, has sent over a handy summary of today's jobs report.
"Today's data confirms that the great UK job creating machine slowed somewhat in the first quarter of this year, with unemployment flattening off at pre-crisis levels and average earnings growth remaining relatively muted at around 2%.
"The employment rate is still rising, however, reaching record levels of 74.2% in the first quarter, fuelled in part by more women in the 60-64 age group working as the state pension age rises.
11.00am BST
The pound has dipped a little this morning, despite Britain's employment rate hitting a record high.
Andy Scott, economist at HiFX, says traders are concerned that March's claimant count was revised high this morning, to show the biggest jump since autumn 2011.
Today's figures continue to show that the UK economy has lost momentum with the claimant count rising by almost 15,000 in March - the biggest increase for over four years.
There was some positive news on average earnings including bonuses which rose unexpectedly, but even if you strip out some potential impact from Brexit concerns, underlying growth has weakened.
10.54am BST
Ian Stewart, chief economist at Deloitte, is concerned that wage growth has dipped. It could be a worrying signal....
"The jobs market has been a standout success for the UK economy in recent years, delivering record levels of employment and one of the lowest jobless rates in Europe.
"But the momentum of job creation has eased in recent months and we still haven't seen lift-off for wages.
10.51am BST
Ian Brinkley, chief economic advisor at Lancaster University's Work Foundation, flags up that young people are continuing to get a rough deal:
For the first time in many quarters, there was no rise in permanent jobs. All of the increase was for the self-employed and temporary employee workers.
With weak hiring it is the young, as usual, who lose out. Overall unemployment remained unchanged at 5.1% but unemployment among 18 to 24 year olds went up from 12% to 12.2%.
Worsening world trade conditions pushing some export based sectors such as manufacturing into recession and increased costs from the introduction of the National Living Wage are more immediate explanations for employers being more cautious about new hires."
10.46am BST
If you adjust for inflation, then average earnings have fallen from their recent peak:
At 1.8 per cent, earnings growth has fallen further from the pre-crisis trend of 2.2 per cent pic.twitter.com/puWq1DHPdz
10.35am BST
Here's the main charts points from today's labour force report:
10.15am BST
Some fascinating historical context from Royal Bank of Scotland:
UK employment as a % of total population since 1855. Only higher during 1941-1943. pic.twitter.com/gWiIjGbMg6
10.02am BST
Digging into today's report, its clear that the employment rate has hit a record high partly because more women are working longer.
That's because of changes to the retirement age, pushing it up to 65 for men and women by November 2018, and then 66 by October 2020 (more details here)
9.57am BST
Work and Pensions Secretary Stephen Crabb has welcomed this latest rise in the employment total, and the small drop in unemployment:
"These are another record-breaking set of figures, with more people in work than ever before and the unemployment rate is the lowest in a decade at 5.1%.
More people in work means that more families across the UK are benefiting from the security of a regular wage and the fulfilment that employment brings.
9.51am BST
Real wages continues to grow in the last quarter, the Office for National Statistics reports. But it's a mixed picture.
Average weekly earnings for employees in Great Britain increased by 2.0% in January-March, up from 1.9% in October-December.
9.45am BST
Today's report also shows that the number of people out of work dipped by 2,000 in the last quarter, to around 1.69m. That's 139,000 fewer than for a year earlier.
9.38am BST
Breaking: The proportion of people in work across the UK has hit a new record high.
The latest labour market report, just released, shows that the employment rate has hit 74.2%, the highest since comparable records began in 1971.
#Unemployment rate 5.1% for Jan-Mar 2016, down from 5.6% a year earlier https://t.co/Qs15Wgmjtc pic.twitter.com/ddQ64gTgvl
9.29am BST
5mins UK employment and wage data
9.22am BST
A new report has warned that Britain's government is "years behind schedule" in its bid to halve the employment gap between disabled and non-disabled people.
According to the TUC union, the target may not be hit until 2030 - a whole decade later than planned.
Tory promises to halve the unemployment gap of disabled workers will be missed by a shameful 10 years, research shows.
The election manfesto pledge is "years behind schedule" at current rates of progress, according to a TUC study.
Tories miss their target for cutting unemployment among disabled workers https://t.co/JyUFqLWlJU pic.twitter.com/KkSQTnUdBD
8.56am BST
The US dollar has hit a three-week high against the euro, on that renewed talk of an American interest rate hike.
This has pushed the euro down to $1.1265, from $1.1311 last night.
Mario Draghi and the #ECB #QE crew will enjoy their espresso coffee this morning as they see the Euro dip to 1.127 versus the US Dollar
8.37am BST
Fashion chain Burberry is under pressure again this morning after it issued yet another downbeat report to the City.
Burberry's performance [last year] reflected a difficult period for the luxury sector as a whole as demand slowed in many markets for both cyclical and structural reasons.
Related: Burberry to overhaul retail operations after 10% fall in profits
8.26am BST
World stock markets are sliding this morning as investors begin to worry that America's central bank might raise interest rates again soon.
The FTSE 100 has shed 40 points, down 0.7%, to 6125, which erases all yesterday's gains.
8.12am BST
Overnight, Japan made a rather spectacular escape from recession.
New growth figures showed that the Japanese economy expanded at an annual rate of 1.7% in the last three months (meaning it grew by over 0.4% during the quarter).
Related: Japan dodges recession with 0.4% growth in first quarter
#Japan dodges recession thanks to consumers, public spending. Now sales tax decision eyed. https://t.co/ZILUJ6PEXS pic.twitter.com/whdFVotDeY
7.58am BST
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