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By Geoffrey Smith
Investing.com -- The Federal Reserve will publish the minutes of its latest policy meeting, while durable goods orders for April are also due. The euro falls as ECB policymakers row back talk of aggressive interest rate hikes. Nelson Peltz may be about to launch a takeover of Wendy's, while Nvidia will report after the close. Russia edges closer to a manufactured debt default, and U.S. government data will show how well-stocked the nation's gas stations are ahead of the start of the summer driving season. Here's what you need to know in financial markets on Wednesday, 25th May.
1. Fed minutes due as Burry revives memories of 2008
The Federal Reserve will publish the minutes of its last meeting at 2 PM ET (1800 GMT). The release risks, being somewhat backward-looking, inasmuch as the meeting took place at a time when markets were still focused on inflation risks rather than recession risks.
The latter have been dominant this week, as profit warnings and weak home sales data have pushed bond yields down and punished consumer and growth-focused stocks. Memories of the last recession were evoked on Tuesday by a somewhat Delphic tweet by Michael Burry, famous for his role in shorting subprime credit in 2007-08.
“As I said about 2008, it is like watching a plane crash. It hurts, it is not fun, and I'm not smiling,” Burry said, without specifying what “it” was.
Before the Fed, there will also be durable goods data for April, which may show a further slowdown on consumer durable spending, in particular, if Best Buy’s profit warning on Tuesday is anything to go by.
2. Euro falls as ECB hawks step into line; RBNZ hikes by 50bps
The euro fell as European Central Bank hawks and swing voters fell into line behind ECB president Christine Lagarde’s call for only gradual interest rate increases.
Dutch central bank governor Klaas Knot and his Finnish counterpart Olli Rehn, a key centrist on the governing council, indicated that they would both be satisfied with only a 25 basis point hike at the bank’s meeting in July. Rehn, in particular, flagged the big downward revisions to this year’s growth forecasts that are likely when the ECB meets next month.
European data overnight were mixed, with French unemployment rising a little, but Spain’s producer price inflation still roaring ahead at an annual rate of 45%.
Elsewhere overnight, the Reserve Bank of New Zealand hiked its key rate by 50 basis points to 2%.
3. Stocks set for flat opening; Wendy’s in focus
U.S. stock markets are set for a mixed opening, with technology and growth stocks unable to claw back much of Tuesday’s underperformance.