Central Bank Watch
Central Bank of Brazil
September 4, 2014
The Brazilian Selic interest rate has been kept at 7.25%, its level since April and 375 basis points above the level prior to April 2013. Moreover, the released statement, unlike July’s, did not suggest that this peak would necessariy be retained more then for “the moment.” Officials must balance the realities of elevated inflation at […] More
Deeper Analysis
Further Widening of Non-Manufacturing PMI Spread
September 4, 2014
The 6.5-point gap in the U.S.-minus-Euroland services PMI differential constitutes the strongest U.S. advantage in a year. Added to an 8.3-point manufacturing spread, their sum hasn’t been so large since late 2012. A 0.9-point rise in the sales sub-index to 65.0 led the 0.9-point improvement in the U.S. index. Euroland’s services PMI fell 0.7 points […] More
Foreign Exchange Insights and Next Week
September Introduces New Stuff to Watch in Currency Trading
September 4, 2014
The ECB announced some meaningful stimulus today. The Bank of Japan, which made its big play, is now the central bank in need of stimulus that seemingly fallen behind the curve. The tone of U.S. data has progressed this year from disappointing to mixed to, most recently, increasingly positive. And the dollar this week has […] More
Central Bank Watch
Swedish Riksbank
September 4, 2014
Sweden’s repo rate, which had been cut by 50 basis points on July 3 to 0.25%, was left unchanged at this week’s subsequent meeting of the Riksbank Executive Board. Between December 2011 and December 2012, four cuts took the repo rate down to 1.0% from 2.0%, and a fifth reduction was administered in December 2013. […] More
Central Bank Watch
Bank of England: No News to Report
September 4, 2014
Once early in the Carney stewardship as Bank of England Governor, precedent was broken, and a market-moving commentary was included in the note informing us that policy had not been changed. But the Monetary Policy Committee quickly slipped back into the habit of releasing when no policy is changed just the briefest of notes telling […] More
Central Bank Watch
Bank of Japan: No Change in Stance or Overall Assessment
September 4, 2014
The statement released after the September monetary policy meeting hardly changes wording of the August statement. In two sentences of paragraph three, clauses are inverted, and the main substantive modification is a downgrade of the view on housing investment. The more incredible thing about the release that left a virtual zero interest rate stance imposed […] More
Central Bank Watch
More Stimulus from the European Central Bank
September 4, 2014
The ECB Governing Council delivered more stimulus than anticipated today. Its three interest rates were each cut by 10 basis points. The new 0.05% refinancing rate will be flanked symmetrically by a negative 0.2% deposit rate and a marginal lending facility rate of 0.3%. All of these are record lows. Markets were reminded that previously […] More
New Overnight Developments Abroad - Daily Update
Central Bank Hit Parade
September 4, 2014
In a surprise move, the ECB cut all three of its interest rates by 10 basis points to a marginal lending rate of 0.30%, a refinancing rate of 0.05%, and a deposit rate of -0.2%. All three rates had been cut in July. Now markets await other possible steps like the purchase of ABS securities. […] More
