New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Talk of a BoJ Rate Cut
October 29, 2008
According to the Nikkei press quoting informed sources, the BOJ will consider a 25-bp rate cut this Friday. Today, the Fed and Norges Bank are expected to implement rate cuts of 50 basis points. On November 6th, the Bank of England and ECB are likely to reduce their rates. U.S. S&P futures indicate a lower […] More
Currency Markets in the News
Several Rate Cut Scenarios and Lessons From Japan
October 28, 2008
Kathy Lien of GFT describes four rate cut scenarios for tomorrow: 1) a reprise of the October 8th coordinated round of Fed, ECB, and BOE rate reductions, 2) a 50-basis point ease by the Fed, 3) a 25-basis point Fed ease and 4) a 75-bp cut of the Fed funds rate. The market expects the […] More
Currency Markets in the News
In Defense of the ECB
October 28, 2008
ECB President Jean-Claude Trichet in Spain yesterday signaled a very strong likelihood, but not a certainty, for a follow-up rate reduction when the ECB meets next week. Amid the debate over the size of the coming cut, many analysts have savagely criticized ECB policymakers for running an excessively tight monetary policy and needlessly allowing the […] More
Larry's Blog
Awaiting Rate Cuts Wednesday in Norway and the United States
October 28, 2008
When the Norges Bank cut rates on October 15th for the first time since March 2004, a reduction of 50 basis points to 5.25%, hints were dropped that more monetary relief could be required, and officials made a point to underscore that a planned monetary policy meeting on October 29th would go ahead as scheduled […] More
Central Bank Watch
Icelandic Rate Hike Mandated By IMF
October 28, 2008
What a difference thirteen days make! Back on October 15th, the Central Bank slashed its benchmark rate to 12% from 15.5%, citing difficult market conditions and heavy job losses and predicting a very sharp economic contraction. In the meantime as three Icelandic banks failed and foreign exchange trading ground to a halt, the government negotiated […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Yen Lower and Stocks Mostly Higher
October 28, 2008
Today has been a day of counter-trend market movements. The U.S. dollar rose 2.2% against the yen and 0.6% against the Swiss franc but fell sharply against commodity currencies like the Australian dollar (-2.4%), New Zealand kiwi (-1.5%) and Canadian dollar (-0.6%). The USD also eased 0.3% against sterling but is unchanged against the euro. […] More
Bonds and Stocks
Another Depressing Day for Stocks
October 27, 2008
Another 2.4% decline of the Dow Jones Industrial Average today left the per annum advance from December 13, 1961 at 5.27%. U.S. consumer price inflation over that long-run period of nearly 47 years averaged 4.34% per annum, so the Dow’s real rate of incline was only 0.89% per annum. Investing for the long run is […] More
Currency Markets in the News
German IFO Suggests Sharp, Not Mild, Economic Slump
October 27, 2008
Few economies have experienced the transformation from days of plenty to days of great difficulty more dramatically than Germany, and that shift is documented in the monthly IFO index for the climate in Germany trade and industry. The index peaked last year in May and fell additionally when the banking crisis surfaced in August 2007. […] More
Currency Markets in the News
The Yen, Nikkei, and G7
October 27, 2008
The yen has advanced to levels where Japanese companies may seriously consider relocating production abroad. The record dollar/yen low of 79.85 on April 19, 1995, gives a misleading sense of how close Japan’s currency is currently to unchartered waters. In 1995, which saw Japan’s economy slide into recession, the yen was stronger than 90 per […] More
Currency Markets in the News
G-7 Statements on Forex: Evolution of Currency Policy Since 9/11/01
October 27, 2008
10/27/08 Conference Call “We reaffirm our shared interest in a strong and stable international financial system. We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability. We continue to monitor markets closely, and cooperate as appropriate.” Afterward, the French Finance […] More
