Bonds and Stocks
A Market Vote of No Confidence
September 17, 2008
The AIG bailout was meant to avoid financial Armageddon. Market jitters instead escalated. For the second time in three sessions, the Dow Jones Industrial Average fell by more than 4.0%. There had previously been no days with a drop that steep subsequent to 2002, when there were two instances. 2001 had three such moves, two [...] More
Bank of England Minutes Edged Closer to Cutting Rates
September 17, 2008
After meeting September 3-4th, Bank of England policymakers left the Bank Rate at 5.0%, the same decision that was made in the four previous monthly meetings, but minutes released from that meeting document some movement closer a resumption of the easing done last December, February, and April. The minutes are full of on-the-one-hand, on-the-other-hand thinking, [...] More
How The U.S. Current Account Deficit Was Funded in The Second Quarter
September 17, 2008
The dollar was under sustained selling pressure during the first quarter, and it showed in the balance of payments data. Likewise, the dollar’s increasingly improved tone after the rescue of Bear Stearns in mid-March was mirrored in the greatly improved quality of net capital inflows in 2Q08. The current account deficit itself has not changed [...] More
Central Bank Watch
Bank of Japan Holds Rates Steady After 11th Straight Unanimous Vote
September 17, 2008
The Monetary Policy Board voted 7-0 in favor of retaining the 0.5% target on the uncollateralized call rate. The Board still has two vacancies. Today’s decision was made on a day when the central bank also injected another $28.58 billion equivalent of yen to preserve the smooth functioning of local the money market, thus underscoring [...] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: AIG Rescued By $85 Billion Bridging Loan From Fed
September 17, 2008
Money markets in Asia remained tight despite the bailout of AIG by the Fed. The Bank of Japan ($28.6 billion), Reserve Bank of Australia ($3.4 bln) and Reserve Bank of India ($1.0 bln) injected liquidity. A professor from China called the global financial system “ruptured beyond repair.” The dollar is mixed. It rose 0.3% against sterling [...] More
Currency Markets in the News
Bank of Japan Preview: No Rate Change Seen
September 17, 2008
BOJ officials in August conceded that Japan probably is in a recession but not one that warrants additional loosening of an already quite-accommodative stance, where the overnight target rate has been at 0.5% since February 2007. In doing so, they downgraded their assessment for a second straight month and downgraded the outlook for exports, which [...] More
