Federal Reserve Predicts No Rate Increase Until End Of 2023

On Wednesday the Federal Reserve said it won’t be raising interest rates from their near-zero level for years. After a two-day policy meeting, the Fed released new projections in which 13 of 17 officials said they expect to keep rates near zero until 2023. A statement from the Fed said that it will maintain rates near zero until it sees evidence of a tight labour market and inflation on track to exceed 2% for a significant length of time. “They set an enormously high bar to raise rates here. That’s the bottom line,” former Fed economist Roberto Perli told The Wall Street Journal. US stocks fell back marginally later in the session following the news.

The Fed’s latest projections coincided with new data released on its trade situation with China. The country remains embroiled in a messy trade war with China instigated by President Trump which has been made worse by the spread of coronavirus, and investment flows between China and the US have now fallen to their lowest level in almost a decade in the first half of the year.

A report from consultancy Rhodium Group and the National Committee on United States-China Relations, a non-governmental organisation, said capital flows between the two countries amounted to $10.9bn in the first six months of 2020, lower than any period since 2011.

In other headlines, the Trump administration is reportedly pushing for American investors to be the majority owner of the US arm of TikTok, after news of a deal with Oracle (ORCL) that would leave control in the hands of Chinese firm ByteDance.

Cloud and software firm Snowflake’s IPO was another significant event on Wednesday, as it became the biggest software public offering of all time. The firm’s share price quickly doubled from its initial $120 list price, closing the day above $250.

General Electric jumps 10% after positive signs on cash flow

Two of the three major US stock indices were in the red on Wednesday, with the Nasdaq Composite falling furthest at a 1.3% loss. Illumina (ILMN) was among the names dragging the Nasdaq down, closing 8.4% lower after reports that it is in acquisition talks with Grail Inc, which makes a cancer detection test. Grail is approaching its IPO, and Illumina may be about to stump up $8bn for the firm. In the S&P 500, which closed 0.5% lower, General Electric (GE) was the biggest winner of the day. The conglomerate gained 10.6% after CEO Larry Culp spoke at a Morgan Stanley (MS) investor event, where he revealed that cash flow should turn positive in the second half of the year after the firm burned through $3bn in the first six months of 2020. The Dow Jones Industrial Average was the only major index in the green, adding 0.1%, boosted by 2% plus gains from Chevron (CVX), Walgreens Boots (WBA) and Boeing (BA).

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