New Overnight Developments Abroad - Daily Update
A Number of Surprises
October 9, 2014
Fed officials rarely comment on the dollar, so the following passage from minutes of September 16-17 meeting of the FOMC caught the market’s attention, sending the dollar and bond yields lower and turning around Tuesday’s swoon in equities. Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area […] More
Foreign Exchange Insights and Next Week
Economic Growth May Not Remain as Stratified as Assumed
October 8, 2014
The case for continuing dollar appreciation seems very strong based on diverse growth trends, interest rate differentials, and credit policy situations between the United States on the one hand and the euro area and Japan on the other. New IMF forecasts released this week project 2015 average GDP growth of 3.0% in the United States […] More
Central Bank Watch
National Bank of Poland
October 8, 2014
A 15-month pause in interest rate cutting ended today. Poland’s Monetary Policy Council voted to cut its key reference rate by a greater-than-expected 50 basis points to 2.0%. The Lombard rate was trimmed to 3% from 4%, narrowing the corridor between its level and the deposit rate, which remains at 1.0%. The central bank’s rediscount […] More
New Overnight Developments Abroad - Daily Update
Concern about World Growth and Fed Tightening Still Weighing on Stocks
October 8, 2014
Equities in the Pacific Rim closed down 1.2% in Japan, 1.5% in Indonesia, 1.0% in Taiwan, 0.7% in Hong Kong and 0.8% in Australia. The reopened Chinese market after a week’s closure rose 1.1%, but that’s the exception. Stocks in Europe are down by 0.9% in Switzerland, 0.8% in Germany, 0.7% in France, 0.6% in […] More
Central Bank Watch
Reserve Bank of Australia Keeps 2.5% Official Cash Rate Level
October 7, 2014
The statement released after this month’s RBA Board meeting repeats many points from prior statements. Growth is expected to be a little below trend for the next several quarters. Modest wage pressure “should keep inflation consistent with the 2-3% target even with lower levels of the exchange rate.” Monetary policy remains accommodative. Credit growth is […] More
Central Bank Watch
Bank Indonesia
October 7, 2014
Between June 2013 and October 2013, the BI interest rate was lifted five times by a total of 175 basis points to its current level of 7.5%. A statement released after this month’s regularly scheduled Board of Governors meeting concedes that GDP will expand only at the lower end of the range previously predicted, notes […] More
Central Bank Watch
Bank of Japan Review
October 7, 2014
A five hour 39 minute meeting of the BOJ Board ended with the release of a statement that acknowledged that business conditions appear not to have revived as much last quarter as hoped, expressed continuing confidence in an outlook of moderate recovery, positive inflation for now, and eventual attainment of sustained 2.0% core inflation. Downgrades […] More
New Overnight Developments Abroad - Daily Update
Lower Share Prices Again
October 7, 2014
Stocks fell 1.1% in India, 0.7% in Japan, and 0.6% in Taiwan. The DOW is off 0.7%, and European equities have fallen by 1.9% in Spain, 1.5% in France and Italy, 0.9% in Germany and 0.8% in Britain. Investors were bummed out by confusing Japanese policy signals and a much-greater-than-anticipated 4.0% drop in German industrial […] More
Deeper Analysis
Brief Note on Fiscal Debt and Long-Term Interest Rates
October 6, 2014
Hindsight is insightful as well as twenty-twenty. While thinning out my files over the weekend, I came across an article from the April 28, 2010 issue of the Financial Times entitled Clock is ticking on Japan’s low debt yields. The two self-explanatory lead sentences provide the gist of the entire text: It is one of […] More
New Overnight Developments Abroad - Daily Update
Euro Firmer Despite Some Poor German Data
October 6, 2014
The dollar is generally softer, with losses of 0.7% against the Australian currency, 0.4% versus the yen and loonie, 0.3% relative to the euro, 0.2% against the kiwi and Swiss franc and 0.1% vis-a-vis sterling. European share prices have risen 1.0% in Spain, 0.8% in Germany, 0.5% in Switzerland, 0.4% in Italy, 0.3% in Britain […] More
