New Overnight Developments Abroad - Daily Update

A Market Respite… But for How Long?

February 12, 2016

Share prices in Europe have recovered part of yesterday’s declines, rising so far this Friday by 2.6% in Italy, 1.7% in Greece and Great Britain, 1.5% in Germany, 1.3% in Switzerland, 1.2% in France and 1.0% in Spain. Markets in the Pacific Basin faired worse.  Stocks dropped 1.5% in Hong Kong, 1.3% in Indonesia, 1.2% […] Read Article

Foreign Exchange Insights and Next Week

Next Week

February 13, 2016

Monday Holidays:  U.S. Presidents Day and Family Day in the Canadian provinces of Alberta, Ontario and Saskatchewan. Central Bank Events:  Interest rate policy meetings in Indonesia, South Korea, and Colombia.  Released policy meeting minutes for the Fed, European Central Bank and Reserve Bank of Australia.  At least four top officials of the Federal Reserve — […] Read Article

Central Bank Watch

Central Bank of Chile

February 12, 2016

Chilean monetary policy has been tightening lately as in neighboring Peru to its north, but officials have been acting less aggressively.  In contrast to Peru’s four 25-basis point moves since September including a hike announced yesterday, officials at the Central Bank of Chile have tightened just twice, also by 25 basis points each in October […] Read Article

Deeper Analysis

First Favorable Shift in U.S.-Minus-Eurozone Factory PMI Since May

February 1, 2016

The U.S. manufacturing purchasing managers index edged up 0.2 points to 48.2 in January.  Not since August has the reading been above 50.0, the breakeven line between improving and deteriorating conditions.  Jobs registered a 2.1-point slide to 45.9, indicating a significantly faster rate of jobs loss.  The prices index was only 33.5 for a second […] Read Article

Larry's Blog

Assessing Bernie Sanders

February 12, 2016

International financial markets are nervous about the prospects of either a Trump or Cruz presidency on the right, but one can find much about the Sanders phenomenon that is also worrisome.  His much bigger-than-expected victory in New Hampshire demonstrates that at minimum his candidacy presents a serious challenge to Clinton. Here’s what to like about […] More

Central Bank Watch

Central Reserve Bank of Peru

February 12, 2016

Peru’s monetary policy rate was raised 25 basis points for a third straight month and by such an amount for the fourth time since September.  It now stands at 4.25%.  Inflation accelerated to 4.6% in January (versus a target of 1-3%) from 4.4% in December and 4.2% in November.  But that’s not why monetary officials […] More

Central Bank Watch

Sweden’s Negative Central Bank Interest Rate Becomes Even More So

February 11, 2016

The Riksbank experience with monetary policy normalization after the Great Recession preceded the Fed’s current attempt by over five years and serves as a lesson of what can go wrong.  From a low of 0.25% at the beginning of 2010, the Swedish repo rate was lifted by a full percentage point that year and by […] More

Central Bank Watch

Bangko Sentral ng Pilipinas

February 11, 2016

Filipino monetary policy settings were not changed at the latest Board meeting.  Interest rates, currently at 4.0% on overnight borrowings from the central bank and 6% on overnight loans, were not changed in either 2015 or 2013, but there were four cuts in 2012 and two hikes of 25 basis points each in July and […] More

New Overnight Developments Abroad - Daily Update

Markets Experiencing Most Panic of 2016

February 11, 2016

Ten-year sovereign debt yields fell overnight by 16 basis points in the U.K. and 4 bps in Germany.  The futures indication for the 10-year U.S. Treasury is an 11-basis point yield decline to 1.56%. Gold recorded its greatest daily leap in a year.  It’s up 3.3% on balance at $1,236.27 per troy ounce. West Texas […] More

Central Bank Watch

Central Bank of Iceland

February 10, 2016

Iceland’s Monetary Policy Committee previously raised its seven-day collateralized lending rate from 5.25%  to 5.75% in June 2015, to 6.25% in August 2015, and to the current level of 6.5% this past November.  Monetary policy has been tightening in Iceland even as other central banks in Europe like the ECB adopted looser stances.  This contrast […] More

New Overnight Developments Abroad - Daily Update

Hope Ahead of Yellen Testimony

February 10, 2016

U.S. stock futures are higher.  Fed Chair Janet Yellen begins her semi-annual Humphrey Hawkins testimony at 15:00 GMT before the House Financial Services Committee. Many Asian markets remained closed for the Chinese New Year.  The Japanese Nikkei dropped another 2.3%, and equities fell by 1.6% in Singapore, 1.2% in Australia, 1.1% in India, 0.9% in […] More

Foreign Exchange Insights and Next Week

A Nation and World Turns its Ear to Janet Yellen

February 9, 2016

Janet Yellen will be testifying Wednesday on the U.S. economy and monetary policy before the House Financial Services Committee and reprising her message Thursday to the Senate Banking Committee.  Formerly known as the semi-annual Humphrey-Hawkins Hearings, Congress can be an unfriendly audience for Fed Chair-persons, especially in election years like this one.  Yellen’s task will […] More

New Overnight Developments Abroad - Daily Update

Stampede from Stocks Into Bonds Accelerates

February 9, 2016

Japan’s Nikkei-225 plunged more than 900 points overnight (5.4%), and the 10-year JGB yield fell below zero to -0.03%. Many other markets in Asia were closed for the Chinese New Year (year of the monkey). Stocks in Australia and India skidded 2.9% and 1.1%.  Compared to a month ago, the Shanghai Composite index has slumped […] More

Larry's Blog

Three Thoughts

February 8, 2016

On U.S. Politics: Beware the role of the party spoiler.  The 2000 presidential election result hinged on the Florida vote and Supreme Court interpretation of that state’s ballot.  Fewer than 1,000 votes separated Bush from Gore, while Ralph Nader siphoned off 97,488 votes in the Floridian state count, mostly from Gore.  Spoiler candidacies fought on […] More

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