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Tuesday, June 18, 2013
fed
Global policy-makers get the message
Rattled by May’s market madness, global policy-makers have finally started to show that they get the message, although their words will need to be followed by strong action before too long. Although the ECB was not decisive enough for our liking given the gravity of the situation in Europe (see below), at least Mario Draghi promised to act if the growth outlook worsened.Read more »
07/06/2012 @ 06:33 GMT
Ben must start up the helicopters
Tomorrow’s testimony on the economic outlook before the Joint Economic Committee of Congress is a critical opportunity for Fed Chairman Bernanke to indicate his potential support for additional quantitative easing. He may not be completely convinced just yet that it is necessary, but nevertheless he must at least put it on the table as an option. Notwithstanding the partial improvement in risk appetite observed in the first half of this week, the fact remains that global economic and financial risks loom large, especially out of Europe.Read more »
06/06/2012 @ 11:45 GMT
Spain relents
After weeks of denying the inevitable, Spain’s leaders have at last finally accepted that they need European assistance to recapitalise their broken banks. How these banks get access to the capital they so desperately require is the subject of much disagreement between Spain and European policy officials. Fearful of the austerity conditions that would be imposed on them if they apply for a bailout to the EFSF, the Spanish government instead is imploring Germany to allow their banks to get funding directly, a position that has some support in both Brussels and Paris.Read more »
06/06/2012 @ 06:52 GMT
Fed will be weighing up more QE
Ahead of next week’s G20 meeting and with financial markets in turmoil over Europe’s rapidly worsening sovereign debt and banking crisis, the Federal Reserve will be weighing up very carefully how they should respond. From a macro perspective, both global and local events have moved on significantly since the FOMC last met near the end of April. The international backdrop has worsened markedly, especially in Europe but also in the likes of China and India. Also, the US economy seems to be stuttering, as last Friday’s payrolls data reinforced.Read more »
05/06/2012 @ 09:53 GMT
Clueless in Brussels
Yet another day where the bears were in charge, despite the fact that some European markets were shuttered for Ascension Day. European equities continued to slide, with losses generally ranging from 1% to 2%. Russia fared worse than most, falling by more than 4%. In the forex world, the dollar was again in the ascendancy; the euro fell under 1.27, cable dropped to near 1.58, and the Aussie traded through 0.99. Commodities were also under pressure, with Brent under USD 110 and aluminium prices down 1.5%.Read more »
18/05/2012 @ 07:14 GMT
Fed on heightened alert re further easing
Notwithstanding the more reassuring recovery signs evident thus far in 2012, asset markets are far too complacent regarding the need for additional monetary accommodation from the Fed in the second half of this year. Firstly, there is the deepening crisis in the eurozone which is permeating through Asia and dampening demand for US products. The most recent FOMC Minutes for the April 24-25 meeting cited Europe as one of the major risks for the US economic outlook.Read more »
17/05/2012 @ 08:31 GMT
A dark and dismal Europe
A swathe of dismal economic news cast a long shadow across Europe yesterday, beating the single currency lower by nearly 1%. The manufacturing PMIs in the periphery for April were uniformly dreadful, Spain down to 43.6 and Italy to 43.8 (from 47.9 in March). For the latter, the new order balance saw the biggest monthly decline for three years, from 45.7 to 39.2, suggesting that there’s not much on the horizon to turn around the fortunes of the manufacturing sector anytime soon.Read more »
03/05/2012 @ 07:36 GMT
Cautious optimism from the Fed
The Fed decision last night was not expected to rock the boat, but the subtleties cannot be ignored given the reliance of many asset markets upon the Fed’s continued easy money stance. There was a subtle upgrading of the Fed’s growth outlook, the statement acknowledging an improvement in the longer-term picture. Although the Fed’s commitment to keep “exceptionally low levels” for rates until late 2014 remains, the charts released with the statement show a notable proportion of the non-voting members are looking to raise rates earlier.Read more »
26/04/2012 @ 07:20 GMT
Asian cheer tempers European fear
Bolstered by some reasonably encouraging growth data, the mood in Asia overnight has been constructive, with broad gains in the major bourses of around 1%. Both Australia and South Korea recorded better than expected employment outcomes last month; in the latter, the unemployment rate fell to 3.4% in March from 3.7% previously. In both Malaysia and the Philippines, exports soared by 15% in the most recent month.Read more »
12/04/2012 @ 07:19 GMT
A higher hurdle for more Fed easing
Synonymous with just how far the debate concerning Fed policy has moved on is the extent to which various policy-makers have expressed significant reservations about the need for additional monetary stimulus. Just in the past few days, no less than four regional Fed Presidents have expressed this view, all of whom have a vote on the FOMC this year. On Tuesday, the March 13 FOMC Minutes showed that policy officials were more confident of recovery prospects, although they remain committed to retaining the funds’ rate at a very low level until late 2014.Read more »
05/04/2012 @ 09:48 GMT
