fed

Focus on the Fed

It was only a week ago when markets were viewing the US Federal Reserve decision later today as the main policy event of the week, but last week’s comments from the ECB President changed that. Still, markets will still keep a close eye on the Fed’s statement following on from its two-day meeting. The prospect of further quantitative easing remains strong, given the ongoing fragility of the economy and the Fed’s continued focus on the weakness of the labour market. Markets see a relatively low probability of this being sanctioned today.
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01/08/2012 @ 07:10 GMT

Prepare for the worst

Another critical week confronts global financial markets, with a plethora of earnings reports due from America’s corporate heavyweights and Fed Chairman Bernanke delivering his semi-annual testimony on the economy and monetary policy before the Senate Banking Committee later today. Although the Fed decided to extend Operation Twist last month, and declared that it was ready to “take further action as appropriate”, Bernanke is likely to be confronted with some hostile questioning from members of the Committee on why the Fed has not done more.
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16/07/2012 @ 07:09 GMT

Long-suffering

Volumes may be low but the mood of the markets is lower still. Thursday saw yet another burst of risk-repulsion with equities and commodities heading south, the dollar heading north and yields on government bonds drifting lower. Ongoing concerns regarding global growth and the situation in Europe continue to unsettle both investors and traders alike. Moody’s stuck the knife into Italy just a little deeper overnight when they announced a two-notch downgrade to its sovereign debt rating to Baa2.
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13/07/2012 @ 07:20 GMT

Fed stuck between a rock and hard place

How tough to be a central banker these days. Official interest rates are essentially zero, central bank balance sheets have exploded in size and exceedingly generous liquidity schemes have been wheeled out to ensure that the financial system continues to function with a modicum of normality. And yet, despite all of their endeavours, many major economies are either in recession or enduring sub-standard growth.

12/07/12 @ 11:05 GMT by Michael Derks, Director de Estrategia

Not the smoking gun Fed doves sought

On the face of it, after some of the recent misses and revisions, this was a relatively tame number in terms of ‘shock value’. US non-farm payrolls increased 80K in June, not that different from the previous two months. Meanwhile the unemployment rate (calculated from the survey of households) held steady at 8.2%. However this does not mean there is much to cheer about as the labour market has clearly moved into a slower pace of expansion than was the case around the turn of the year. Back then, we saw payrolls’ growth exceed 200K for three consecutive months.
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06/07/2012 @ 13:53 GMT

A brief honeymoon

After Friday’s spectacular leap in the prices of risk assets, the inclination of traders overnight was to take some profits. The euro, which was near 1.27 at the start of the Asian trading session, has slipped back to 1.2620, with the Aussie down at 1.0225 from 1.0270 earlier. News that the HSBC China PMI dropped to a 7mth low of 48.2 in June partially contributed to the more contemplative mood. Today’s final PMI figures for June out of Europe will also make for depressing reading.
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02/07/2012 @ 07:33 GMT

Risk assets wanted more from Ben

Obviously more twisting just wasn’t enough. Risk assets cratered yesterday afternoon as some disappointing US economic data triggered renewed disappointment that Fed Chairman Bernanke did not request that the printing presses start up again. Appetite for risk was also hindered by nervousness ahead of Moody’s announcement that it was downgrading 15 global banks and securities firms. Commodity prices and commodity shares were thumped – the S&P GSCI spot index of raw materials lost almost 3% yesterday, a decline of 22% since the high in late February.
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22/06/2012 @ 09:46 GMT

The skies darken once more

Risk aversion has set in once more on the final trading day of the week, triggered in part by reports that Spain may apply for outside assistance for their battered banks as soon as this weekend. According to a couple of news agencies, there is talk of a eurogroup conference call on Saturday to discuss this and a number of other matters. The IMF has estimated that some EUR 50bn is required to recapitalise Spain’s banks, above the EUR 40bn that Budget Minister Montoro was floating earlier in the week.
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08/06/2012 @ 12:40 GMT

Beijing delivers

Conscious that their economy has lost considerable momentum in the first half of this year, Chinese policy officials are stepping up the pace in terms of easing financial conditions. Yesterday’s 25bp cut in the benchmark deposit and lending rate is the first for four years, and reflects Beijing’s increased confidence that inflationary pressures are easing.
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08/06/2012 @ 06:31 GMT

Bernanke confirms that the Fed is ready to act

Consistent with the message of some other major central banks over recent days, Chairman Bernanke confirmed that the Fed is ready to act if necessary, without specifying exactly what steps he would take. In wide-ranging testimony to the Joint Economic Committee, Bernanke declared that the crisis in Europe posed a significant risk to the US economy, and also stated that fiscal policy would drag on the recovery. Helicopter Ben is clearly laying the foundation for further QE, which could be announced as soon as the next meeting on June 19-20.
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07/06/2012 @ 14:16 GMT