Deeper Analysis
January in Figures
January 31, 2014
Risk aversion reared its head again in January. Stocks fell. Bond prices rose, sending long-term yields downward. Commodity-sensitive and major European currencies declined, while the yen went up against the the euro as well as the dollar. Gold, in contrast to its 28.2% plunge in 2012, rose 3.2% in the first month of 2014. 10-Yr […] More
Foreign Exchange Insights and Next Week
Next Week
January 31, 2014
Janet Yellen takes over as Fed Chairman tomorrow. For central bank watchers, monetary policy meetings are scheduled in Australia, Euroland, Britain, Poland, the Philippines, Romania and the Czech Republic during the coming week. China remains closed for the Lunar New Year holiday on Monday and Tuesday. New Zealand’s market is closed Thursday for the holiday […] More
Central Bank Watch
Bank of Mexico Retains 3.5% Overnight Lending Rate
January 31, 2014
Mexico’s central bank did not become the latest victim in an epidemic of emerging markets where central bank rates have been hiked to stem capital outflows, currency depreciation, mounting inflation worries. To be sure, the peso has depreciated, and inflation has risen to 4.6% led by food and higher fiscal charges. But a statement from […] More
New Overnight Developments Abroad - Daily Update
Poor European Data Throw Investors into a Risk-Off State of Mind
January 31, 2014
Share prices lost yesterday’s traction and have so far fallen 1.3% in Germany, 1.1% in France, 1.0% in Britain, Switzerland and Spain, and 0.9% in Italy. Most Asian bourses were shut for the Lunar New Year. The celebrations of the Year of the Horse last five days in China. Japan’s Nikkei lost another 0.6%, falling […] More
Foreign Exchange Insights and Next Week
Can the Global Economy Handle Fed Tapering?
January 30, 2014
Being in unchartered waters, that’s a matter that remains to be answered in the months ahead. Given the high level of uncertainty, it’s not surprising for the investment community to feel uneasy. Sovereign debt markets shuddered at the first whiff of tapering plans late last spring, and emerging markets have been battered lately now that […] More
New Overnight Developments Abroad - Daily Update
After the Taper and Before the GDP Release
January 30, 2014
The Federal Reserve reduced its QE3 stimulus for a second time on Wednesday, and now investors await today’s release of 4Q U.S. GDP data as well as weekly jobless insurance claims and monthly pending home sales. Many overseas economic statistics were also released. China’s five-day-long Lunar New Year celebration begins tonight. Several other Asian markets […] More
Central Bank Watch
Reserve Bank of New Zealand Closer to a Rate Hike
January 29, 2014
In 2013, New Zealand monetary authorities repeatedly reiterated the expectation that the official cash rate would stay unchanged at 2.5%, and they kept that implicit promise. Late in the year, the message was modified to inform people that increases would become necessary in 2014. The released statement from Governor Wheeler following this year’s first policy […] More
Central Bank Watch
FOMC Plows Forward with Measured Tapering
January 29, 2014
The decision to cut monthly purchases of mortgage-backed securities and longer-term Treasury Securities by $5 billion apiece matched analyst and investor expectations exactly and brings the cumulative combined lessening of quantitative stimulus to $20 billion per month from $85 billion to a new level of $65 billion. The $85 billion amount was introduced in September […] More
Central Bank Watch
FOMC Preview
January 29, 2014
Chairman Bernanke’s eight-year tumultuous stewardship is down to its final detail and appears likely to go out like a lamb, not a lion, without so much as the fanfare of press conference. There is a new array of voting regional presidents on the Federal Open Market Committee, including the hawkish Dallas Fed President Fisher and […] More
Central Bank Watch
South African Reserve Bank Repo Rate Hiked Unexpectedly and by 50 Basis Points
January 29, 2014
South Africa fits the profile of many battered emerging markets (EM): sub-potential and slowing growth, rising inflation exacerbated by capital outflows and the resulting currency depreciation, and sizable current account and fiscal deficits. Many EM central banks have been forced to raise interest rates under difficult circumstances. Monetary officials tightened by 50 basis points in […] More
