For his debut as Fed chair, Kevin Warsh stamped his authority by refusing to play the part investors had cast him in. Many had expected him to appear as a dove beguiled by artificial intelligence, convinced that productivity gains would eventually tame prices. Instead, the market discovered a hawk concerned by "persistent and elevated" inflation, which has been above the 2% target for more than five years. Rates were left unchanged for the fourth meeting in a row, at 3.5% to 3.75%, unanimously, but the projections took a significant turn: 9 of the 18 Federal Reserve bankers surveyed now see a rate rise before the end of the year. Traders are pricing it in for October, without ruling out September.

Beyond the verdict itself, Warsh has set about dusting down the institution. The statement was cut from 341 to 130 words, stripped of forward guidance deemed outdated. The new chair is even carrying that logic so far as to the point of offering no personal forecast of his own, a practice he considers futile. Five working groups are to examine communication, the size of the balance sheet, currently $6.7 trillion, the use of data, productivity and employment, and the inflation-fighting framework. The stated objective is to return the Fed to a cleaner, leaner role. A palace revolution pushed through at breakneck speed, which will test financial markets' ability to adapt and may break the monotony of central bank meetings in the months ahead for hacks of my sort.

What should we take from all this? First, that the market had been betting Warsh would not be his master's voice at the Fed. It had positioned accordingly. Hence the dollar's rebound in May and US debt yields remaining perched at lofty levels, despite good news on the oil front. The rise in US bond yields and the dollar after the central bank's announcements yesterday nevertheless shows that investors view the new Fed chair's position as a shade more orthodox than expected. That matters for what comes next, even if I would happily bet my lunch that Warsh may have slightly overplayed his hawkishness, to secure better control of the narrative. In monetary policy, words are sometimes enough to steer the economy without the need for action. Wall Street still took a bit of a knock: the three major indices fell in unison by around 1%. Recently, the pattern had tended to be a Nasdaq yo-yo moving against the rest of the market. The Fed's decision seems to have brought everyone into line: the next rate cut is more likely to be a rate rise.

At the same time, the G7 in Evian ended with the signing of a memorandum of understanding between the United States and Iran to halt the conflict around the Persian Gulf. In reality, Donald Trump signed the document from Versailles, where he was Emmanuel Macron's guest. Evian, Versailles: history's venues have a habit of recurring. The announcement helped keep the pressure off oil prices and warded off the spectre of a last-minute failure, with markets still bruised by previous diplomatic false starts. In the United States, Trump's opponents have launched a campaign of sarcasm over the contents of the agreement, which is said to be worse than the one negotiated in the Obama era, even though that accord was heavily criticised by the current occupant of the White House. Ultimately, investors will mainly remember that oil is falling again. Donald Trump hopes that is what voters will remember too.

In Asia-Pacific, technology-heavy markets remain on an upward trajectory. Taiwan is up 1.3%, while Japan and South Korea are gaining around 1.5%. Australia is moderately lower, while Hong Kong is down 1.9%. The MSCI AC Asia Pacific index is nevertheless up 0.6%, thanks to the Korean and Japanese heavyweights. Europe is expected to open lower, but US futures are rising.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.33
  • Gold: US$4,298.68
  • Crude Oil (BRENT): US$77.42
  • United States 10 years: 4.46%
  • BITCOIN: US$63,320.1

In corporate news:

  • Diageo is launching a wide-ranging review of costs and headcount under the leadership of its new CEO, Dave Lewis.
  • A US federal judge has referred the case concerning Bayer’s Roundup settlement to the Missouri courts.
  • GSK and Spero Therapeutics have received FDA approval for Utebzi for the treatment of complicated urinary tract infections.
  • HSBC’s Australian subsidiary faces a fine of US$24.6 million for failings in its anti-fraud measures.
  • Rheinmetall and Vantor have signed a memorandum of understanding for intelligence contracts in Germany.
  • The FDA has approved the first generic version of Roche’s flu treatment.
  • Moody’s has maintained Swisscom’s rating and outlook.
  • Leonardo has set up a joint venture with the UAE-based Edge.
  • Nyxoah has received $15 million from the European Investment Bank.
  • Apple is considering raising its prices in response to rising memory chip costs, Tim Cook told the WSJ.
  • Noam Shazeer, co-lead of the Gemini project at Google, is joining OpenAI.
  • Biogen is focusing on immunology with the $1 billion acquisition of RayThera.
  • Activist investor TOMS Capital is pressing Devon Energy to speed up its asset disposals or to sell the company.
  • Roelof Botha has been elected as an independent director to the board of SpaceX.
  • SLB aims to double the turnover and operating profit of its digital businesses by 2030.
  • Bristol-Myers Squibb is maintaining its quarterly dividend at US$0.63 per share, payable on 3 August.
  • A large-scale hacking campaign has compromised organisations via Fortinet equipment, according to researchers.
  • General Dynamics has secured a US$116.6 million contract extension from the US Navy for the MK 54 Lightweight torpedo.
  • KKR is investing $1.4 billion in aircraft leasing to airlines.
  • Nucor forecasts higher-than-expected Q2 earnings, driven by rising prices and volumes.
  • Today’s key earnings reports: Accenture, The Kroger, Tesco, Whitbread.

See more news from UK listed companies here

Analyst Recommendations:

  • Metlen Energy & Metals Plc: BNP Paribas downgrades to neutral from outperform and reduces the target price from EUR 58 to EUR 44.
  • Man Group Plc: BNP Paribas upgrades to outperform from neutral with a price target raised from GBX 280 to GBX 350.
  • Antofagasta Plc: BNP Paribas maintains its underperform recommendation and raises the target price from GBX 2340 to GBX 2670.
  • Anglo American Plc: BNP Paribas maintains its outperform recommendation and raises the target price from GBX 4300 to GBX 4900.
  • Glencore Plc: BNP Paribas maintains its outperform recommendation and raises the target price from USD 16.60 to USD 18.40.
  • Oxford Instruments Plc: Peel Hunt upgrades to buy from add with a price target raised from GBP 23 to GBP 35.
  • Halma Plc: Citi maintains its buy recommendation and raises the target price from GBP 46 to GBP 49.
  • Entain Plc: AlphaValue/Baader Europe downgrades to add from buy and raises the target price from GBX 714 to GBX 734.
  • Rathbones Group Plc: RBC Capital maintains its outperform recommendation and reduces the target price from GBX 2400 to GBX 1950.
  • Shell Plc: AlphaValue/Baader Europe maintains its add recommendation and reduces the target price from GBX 3851 to GBX 3846.
  • Fevertree Drinks Plc: Singer Capital Markets initiates a buy recommendation with a target price of GBX 1180.