Archive for January 2016

Deeper Analysis

January in Figures

January 30, 2016

January 2016 was an extremely volatile month in world financial markets.  Oil set the tone, with West Texas Intermediate crude plunging almost 31% in the first three weeks to a low of $26.19 before trimming that loss by more than half.  Beyond mid-month, stock prices in the U.S. were headed for a record January dive. […] More

Foreign Exchange Insights and Next Week

Next Week

January 29, 2016

Central Bank Beat:  Monetary policy meetings in Australia, India, Poland, Thailand, the Czech Republic, the U.K., Mexico and Romania.  Release of Bank of Japan minutes and Reserve Bank of Australia quarterly Monetary Policy Statement.  BOJ Governor Kuroda and RBA Governor Stevens speak publicly.  So does K.C. Fed President George. Election News:  Iowa Caucus on Monday, […] More

Central Bank Watch

Central Bank of Russia

January 29, 2016

Russia’s key interest rate was left at 11.0%, its level since a 50-basis point reduction last July.  At the end of 2014, the rate stood at 17% in an effort to contain inflation and ruble depreciation.  In 2015, the rate was cut 200 basis points in January, 100 bps in March 150 bps in April, […] More

Central Bank Watch

Bank of Japan Introduces Negative Interest Rate to its Deflation-Fighting Toolbox

January 29, 2016

The five hour seventeen minute Policy Board meeting over two days surprised and electrified world financial markets with a statement that by a 5-4 vote added a negative interest-rate dimension to its nearly three-year-long experiment with quantitative and qualitative monetary easing.  Reserves held by the BOJ for financial institutions will from mid-February be earmarked for […] More

New Overnight Developments Abroad - Daily Update

Japanese Central Bank Drops a Bombshell of a Surprise

January 29, 2016

The Bank of Japan adopted a negative interest rate after repeated officials comments from central bank officials earlier that they weren’t contemplating such. In response, Japanese share prices advanced 2.8% and the yen has fallen 2.2% against the dollar and 0.9% relative to the euro.  The 10-year Japanese JGB yield declined 12 basis point to […] More

Central Bank Watch

A Tightly Contested South African Interest Rate Decision Ends Up Raising the Repo Rate to 6.75% from 6.25%

January 28, 2016

The six-person monetary policy committee at the South African Reserve Bank produced a 3-2-1 vote.  Two dissenters preferred to hike the interest rate by only 25 basis points, and another objection was cast in favor of leaving the repo rate unchanged.  Officials are mandated to secure price stability but are sensitive to deteriorating growth prospects.  […] More

New Overnight Developments Abroad - Daily Update

Grim News Keeps Piling On

January 28, 2016

The Chinese Shanghai Composite Stock index slumped another 2.9% overnight. Markets reacted adversely to the FOMC statement, which did not explicitly back away from December’s message that the fed funds rate is likely to climb a full percentage point in 2016 but indicated that risks are more skewed to the downside now than before. Economic […] More

Central Bank Watch

New Zealand’s Central Bank Leaves Cash Rate at 2.5% and Delivers Dovish Statement

January 27, 2016

The statement from the Reserve Bank of New Zealand arrived an hour after the FOMC statement and reveals more about the market’s angst over Fed tightening than about New Zealand.  Both central banks left key interest rates unchanged in January, which wasn’t a great surprise since each had changed rate levels at the previous policy […] More

Central Bank Watch

A More Hawkish FOMC Statement than Some Were Expecting

January 27, 2016

The January FOMC statement is neither all hawkish nor noticeably more dovish than the one released six weeks ago when the first federal funds rate hike since June 2006 was made.  Considering the disappointing economic data and wildly tumultuous financial and commodity market movement during the interim, the surprise is that the statement still implies […] More

Central Bank Watch

FOMC Preview

January 27, 2016

Since the last FOMC policy announcement on December 16, the dollar has depreciated 2.7% against the yen while rising just 0.8% versus the euro.  The 10-year Treasury yield is 27 basis points lower now than then.  As part of a global-wide liquidation of equity-held wealth, the Dow Jones has dropped 9%, and the price of […] More

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