Larry's Blog
No Way Out
August 11, 2010
In the risk-averse first twenty-four hours after the Federal Open Market Committee statement, The yen and dollar advanced 2.5% and 1.9% against the euro, Ten-year Treasury yields dropped twelve basis points, and the two-year maturity slid back to 0.51%, The Nasdaq, S&P 500, and Dow Jones Industrials fell by 2.5%, 2.2% and 1.8%, and Oil […] More
Central Bank Watch
Norwegian Policy Interest Rate Left at 2.0%, 75 Basis Points Above Cyclical Low
August 11, 2010
Moderate growth and sightly sub-target inflation give Norway’s monetary authorities leeway to normalize interest rates at a gradual pace. That’s the essential message of a statement released today after the policy rate was left at 2.0% for the second consecutive meeting. The trough of 1.25% was maintained from June 2009 until October 2009. The rate […] More
Deeper Analysis
U.S. and Canadian Trade: More Bad News
August 11, 2010
Good recessions are supposed to cleanse economies of structural impurities, so that faster, more sustainable long-term expansion is possible. A primary imbalance of the old regime involved huge balance of payments imbalances. Surpluses in China, Japan, and Germany were unsustainably larger as were the deficits of the United States, Spain and Greece. These patterns are […] More
Central Bank Watch
No Change in Hong Kong’s 0.5% Base Rate
August 11, 2010
As sure as day follows night, the Hong Kong Monetary Authority matched the Fed’s Tuesday decision not to change its key interest rate. The Base Rate has been at 0.5% since late 2008, yielding a 25-50 basis point premium on the Fed funds target range of 0-0.25% over that span. Hong Kong has not had […] More
New Overnight Developments Abroad - Daily Update
FOMC and Overnight Data Put Markets in a Very Foul Mood
August 11, 2010
A fresh spike in risk aversion has depressed stocks, oil and sovereign bond yields and sent the dollar and yen higher. Equities plunged 2.7% in Japan, 1.9% in Australia, 1.2% in Singapore, 1.3% in South Korea, 1.0% in Taiwan, 0.8% in India and Hong Kong, and 0.7% in Indonesia. Europe is performing very badly, with […] More
