Bonds and Stocks
Irrational Exuberance Revisited
December 4, 2008
Tomorrow marks the twelfth anniversary of the speech by former Fed Chairman Greenspan in which he questioned the strong and lengthy rise of U.S. equity prices and coined the expression “irrational exuberance” to describe the psychologically charged market behavior. The Dow Jones Industrial Average was at 6,437 when he spoke, constituting a 15.4% per annum […] More
Central Bank Watch
Danish Central Bank Cut Key Lending Rate by 75 Basis Points
December 4, 2008
The Danmarks Nationalbank matched the ECB’s action. Denmark’s central bank does not have an independent monetary policy reacting to price and growth conditions in its economy. Officials instead target the krone/euro cross rate, which is currently trading near 7.4500 or roughly in the middle of today’s high-low range of movement. Denmark’s arrangement is reminiscent of […] More
Trouble Deepens in Canada
December 4, 2008
Three disappointing Canadian indicators were reported today. The IVEY-PMI, which comprises activity in both manufacturing and non-manufacturing, dived a dozen points to a record low of 40.2 in November and registered an average score of 46.2 in October and November after quarterly means of 59.8 in 3Q08 and 63.2 in 2Q08. This index is not […] More
Currency Markets in the News
Evolution of ECB GDP and CPI Forecasts
December 4, 2008
The table below documents range forecasts made by the ECB staff in December 2007 and March, June, September, and December of this year. Forecasts for calendar 2010 were made for the first time today. The medium-term target for consumer price inflation is below but close to 2.0%. 12/08 09/08 06/08 03/08 12/07 GDP ’08 […] More
Central Bank Watch
ECB Press Conference More Dovish Than Formal Statement
December 4, 2008
The ECB rate cut of 75 basis points was larger than any taken before and exceeded the 50-bp amount suggested in remarks by officials during the past month. But in line with recent horrific data and the huge rate cuts of other central banks this week, 75 basis points is at the low end of […] More
Central Bank Watch
Swedish Riksbank Reduced Repo Rate to 2.0% from 3.75%
December 4, 2008
After cuts of 50 basis points each on October 8th and 23rd, Swedish monetary officials declared “an unexpectedly rapid and clear deterioration in economic activity” that requires an outsized 175-basis point further reduction of its repo rate to 2.0%. A second message from officials is that “the repo rate is expected to remain at this […] More
Bank of England Eases 100 Basis Points
December 4, 2008
The Bank of England met the minimum market expectation but did not match last month’s 150-bp ease or today’s earlier move by the Swedish Riksbank. The British Bank Rate now becomes 2.0%, down 300 basis points in the past two months and off 375 basis points from peak counting cuts of 25 bps each last […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Huge Rate Cuts in New Zealand, Vietnam, and Sweden
December 4, 2008
The Swedish Riksbank repo rate was reduced 175 basis points to 2.0%. Officials signaled steadiness at that level for now. New Zealand’s cash rate was cut by 150 bps to 5.0%. At least another 50 bps and possibly more seen likely in January. Vietnam’s base rate was cut another 100 bps to 10%, and reserve […] More
Central Bank Watch
New Zealand Cash Rate Cut to 5.0% from 6.5%
December 4, 2008
The Reserve Bank of New Zealand like other recent central banks chose a bold option, topping the size of its three prior cuts — 25 basis points in July, 50 bps in September and 100 bps in October — as well as reductions earlier this week of 100 basis points each by the central banks […] More
