Central Bank Watch
South African Reserve Bank Delivers a Surprise 50-Bp Rate Cut
August 13, 2009
South Africa’s monthly rate decision faked out market analysts for the second time in a row, as the Repo Rate was cut to 7.0% from 7.5%. Analysts overwhelmingly expected no change in the benchmark central bank rate, although some doubt emerged recently following two very weak economic reports. Industrial production fell 17.1% in the year […] More
Central Bank Watch
Hong Kong Base Rate Left At 0.5%
August 13, 2009
The Hong Kong Monetary Authority left monetary policy unchanged as expected. Since October 1983, domestic monetary policy has been subordinated to an exchange rate policy that links the Hong Kong dollar to the U.S. dollar at a parity of 7.8. That effectively ties changes in Hong Kong rates to changes in Fed policy. No change […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: 2Q GDP Rose in Germany and France
August 13, 2009
Investor appetite for risk is higher after FOMC statement and European GDP data releases. Dollar, yen, and sovereign yields are lower. Stocks and commodities are higher. Lots of U.S. data due later today. The dollar edged 0.2% higher against the yen but slows losses of 1.1% against the Australian dollar. 0.8% against the kiwi, 0.7% […] More
Central Bank Watch
FOMC Statement: No Rocking the Boat
August 12, 2009
Today’s FOMC message is that it will be quite a while still before rates are raised. The intensity of quantitative easing (QE) is already diminishing, and the Treasury buying is set to end in October. The clause about making adjustments to these programs “as warranted” could be a two-edged sword, as they leave open the […] More
Canadian and U.S. Trade
August 12, 2009
A sharp drop of the Canadian trade deficit from C$ 1.105 billion in May to C$ 0.055 billion in June is not really an encouraging development, since it reflects higher energy export prices and weak imports. While total exports grew 2.3%, non-energy Canadian exports slipped 0.5% and were 23.9% below their June 2008 level. Imports […] More
Central Bank Watch
Norwegian Central Bank: Rate Hike Likely Sooner Than Presumed Earlier
August 12, 2009
The Norges Bank cut its key policy rate three times in the fourth quarter of 2008 by 275 basis points and engineered four more reductions in 1H09 summing to another 175 bps. The aggressive easing from 5.75% to 1.25% in the space of eight months is reaping better and quicker results than monetary officials had […] More
Central Bank Watch
Vital Market Signs When the FOMC Met Previously
August 12, 2009
EUR/$ $/JPY 10Y, % DJIA Oil, $ 06/30/04 1.2173 109.44 4.63 10396 37.95 06/30/05 1.2090 110.89 3.96 10370 57.00 06/29/06 1.2527 116.07 5.20 11077 73.41 06/28/07 1.3452 123.17 5.10 13456 69.82 08/07/07 1.3749 118.55 4.73 13510 72.27 09/18/07 1.3888 115.75 4.51 13475 81.42 10/31/07 1.4458 115.28 4.42 13873 93.59 12/11/07 1.4682 111.49 4.11 13645 […] More
New Overnight Developments Abroad - Daily Update
New Overnight Developments Abroad: Dollar Unchanged against Euro and Yen
August 12, 2009
Ahead of the FOMC announcement at 18:15 GMT today, the dollar is unchanged from yesterday’s closing levels against the euro and yen. It shows gains of 0.7% against the Australian dollar and of 0.4% against the kiwi and lesser advances of 0.2% against sterling and 0.1% relative to the Canadian dollar. The buck has dipped […] More
Over-Rated Virtues of High Productivity Growth
August 11, 2009
Productivity, output per employee hour, plays a a key economic role. The growth of real GDP stems either from gains in hours worked or faster productivity. Strengthening productivity provides a basis for faster economic growth, better wages, lower inflation, and lower interest rates. The belief in a fairly enduring advance in productivity was the critical […] More
Central Bank Watch
Bank of Korea Retained 2.0% Seven-Day Repo Rate As Expected
August 11, 2009
South Korean monetary officials left monetary policy settings where such have been since a 50-basis point rate cut last February 12th. A statement from Bank of Korea officials framed the decision process as whether to keep the status quo or begin reabsorbing stimulus, suggesting that 2.0% is the cyclical floor. That’s what analysts have been […] More
