Archive for July 2019

New Overnight Developments Abroad - Daily Update

Stocks Mixed, Bond Yields Lower, Oil’s Up, and the Dollar’s Little Changed

July 22, 2019

Equity markets closed down 1.3% in China and Hong Kong, 0.8% in India, 0.4% in Indonesia, and 0.2% in Japan but have risen in Europe by 0.5% in Germany, 0.4% in Italy and 0.3% in the U.K. and France. U.S. share prices also opened slightly higher. Ten-year U.S., German and British¬† sovereign debt yields slipped […] More

Foreign Exchange Insights and Next Week

Next Week’s Menu

July 19, 2019

Central Banks: Monetary policy reviews are scheduled at the European Central Bank and in Turkey, Russia and Hungary. ECB President Draghi and Reserve Bank of Australia Governor Lowe will be speaking publicly. Special Event: Robert Mueller’s congressional testimony on July 24. Scheduled U.S. Economic Statistical Releases: Preliminary estimate of second quarter GDP. Monthly new and […] More

New Overnight Developments Abroad - Daily Update

NY Fed President Moves Markets Unwittingly

July 19, 2019

John Williams, President of the NY Fed and a permanent member of the FOMC, gave an academic speech asserting that it’s best for central banks to respond quickly in the face of slower economic growth. Investors took his comment as the clearest sign yet that the federal funds rate will be cut at the FOMC […] More

Central Bank Watch

South African Repo Rate cut 25 Basis Points to 6.5%

July 18, 2019

The South African Reserve Bank by unanimous vote has implemented its first interest rate cut in 16 months, a 25-basis point cut of the repo rate to 6.5%. A released statement observes moderating inflation expectations, signaled policy easing by advanced economy central banks, weaker-than-anticipated global economic activity, and “escalating trade and geo-political tensions.” Officials expected […] More

Central Bank Watch

Second Rate Reduction in Ukraine

July 18, 2019

The National Bank of Ukraine implemented the second move of an easing cycle, cutting its discount rate to 17.0% from 17.5%. A half percentage point cut had been also done in April. A released statement asserts that inflation of 9% is on track to keep falling toward the 5% target and should reach that goal […] More

Central Bank Watch

Bank Indonesia Eases

July 18, 2019

Bank Indonesia’s key 7-day reverse repo rate was reduced to 5.75% from 6.0%. It’s the first cut since September 2017. The previous changes were a pair of hikes in September and November of 2018. Today’s easing was justified by in-target inflation, lessening pressure on Indonesia’s balance of payments, and the expectation of easier Fed policy […] More

Central Bank Watch

Bank of Korea

July 18, 2019

The Bank of Korea’s 7-day repo rate was sliced to 1.50% from 1.75% in a move that surprised some analysts and which was ascribed to mounting trade tensions, easing monetary policies in other economies, and geopolitical risks. In taking this step, monetary authorities revised projected GDP growth this year slightly downward from 2.5% to something […] More

New Overnight Developments Abroad - Daily Update

A Quartet of Central Bank Rate Cuts and Netflix Stock Takes a Large Hit

July 18, 2019

Central bank rates were cut today in South Korea, Indonesia, South Africa, and Ukraine. The likelihood that the Fed will ease at the end of this month played a role in each of these actions. All of the reductions were 25-basis point moves. The share price of Netflix has tumbled 10.75% in response to an […] More

Deeper Analysis

Fed Beige Book Out of Regional U.S. Economic Conditions

July 17, 2019

The Beige Book, covering the period from mid-May to early July¬† identifies modest growth, a positive economic outlook, stable-to-diminishing price pressure, but also “widespread concerns about the possible negative impact of trade-related uncertainty.” This publication, which is prepared prior to each of the eight scheduled policy reviews by the FOMC, offers no contradicting opinions to […] More

New Overnight Developments Abroad - Daily Update

Powell and Price Data in the News

July 17, 2019

President Trump needs a weaker dollar to reinforce his trade policy and enhance his reelection prospects. The means to a weaker dollar lies in getting the Federal Reserve to cut interest rates, if not by knuckling under verbal pressure then by packing the Fed Board with monetary policy doves. Powell overnight made comments suggesting that […] More

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