This week: Central banks, politics and a chicken sandwich in space.
It was a week dominated by central bank meetings and more political play. The U.S. Federal Reserve (Fed) raised its key interest rate by a further 0.25% – the second increase this year – while Donald Trump came under further scrutiny as investigations surrounding Russian interference in the 2016 presidential elections continued. In market news, a split over monetary policy meant that the FTSE 250 suffered its worst day since last year’s Brexit vote.
U.S. inflation eased in May, while monthly retail sales posted their biggest drop in more than a year. But this didn’t stop policymakers lifting rates by another quarter point to 1.25%, with Fed Chair Janet Yellen stating the nation’s prospects remained bright.
Meanwhile, the Bank of England kept rates at their historic low despite a split over policy and outlook among the committee. It was an unexpectedly close call as members voted 5-3 in favor of keeping rates on hold. Markets were clearly not positioned for such a narrow majority with the FTSE 250 falling 2.1% on Thursday. The 10-year Gilt yield — a key indicator of inflation expectations — climbed from 0.95% to 1.03%.
Changes under way
Emmanuel Macron’s fledgling centrist party, La République En Marche, looks set to fly to an overwhelming majority in parliament after the first round of elections. Electoral victory will make France’s new president a potent force. His team will be made up of largely inexperienced political novices, but they are ambitious and will be in control with a minimum of 400 of the 577 seats available. The revolution is underway in France.
In contrast, Theresa May’s hopes of a strong and stable government are all but gone. It was another tough week for the Conservative leader as she attempted to scramble together a government. Talks with the Democratic Unionist Party looked to be moving ahead, but, at the time of writing, they have failed to deliver anything concrete.
It seems that no matter what U.S. President Donald Trump does or says, the Russia investigation won’t go away. Despite Trump taking to Twitter to protest his innocence, a heightened sense of unease gripped the White House this week as the President is under investigation for potential obstruction of justice. Testing times could lie ahead.
Not so swoosh
Nike, the Oregon-based sportswear maker, announced it will be cutting 2% of its global workforce. The move is a shift in its business model that aims to sell more products directly to consumers as it looks to reverse slowing sales growth.
It wasn’t a particularly grandiose week for Majestic Wine either. The retailer fell to a £1.5 million (US$1.9 million) loss following flat sales and a failed attempt at direct marketing in the U.S. But despite the news, bosses are confident that a turnaround plan is already beginning to bear fruit.
On June 21, KFC plans to launch its Zinger chicken sandwich into space via a high-altitude solar-powered balloon known as a “stratollite,” a word combining “stratosphere” and “satellite.”
Admittedly, the burger will only make it 28.5 miles above land, falling short of the 62-mile threshold to be considered the edge of space. Still, it’s one small step for a chicken sandwich, and one giant leap for fast food.
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Image credit: Frederic Legrand - COMEO / Shutterstock.com (Macron and May images)
Image credit: Crush Rush / Shutterstock.com (Trump image)