Market Reaction to Chinese Monetary Easing

April 20, 2015

The People’s Bank of China slashed its reserve requirement to 18.5% from 19.5%.  The full-percentage point reduction was twice as great as a previous 50-bp cut announced on February 4 and came in reaction to weaker GDP and other data announced last week.  February’s cut had been the first since three 50-bp reductions engineered in […] More

Financial Markets Relieved by Two Developments

February 3, 2015

The new Greek government retreated from talk of a debt write-off and is instead offering a plan to swap its existing debt with new securities.  The plan would give Greece more time to pay off its obligations.  Greek share prices shot up over 8% in response.  The 10-year Greek sovereign debt yields slid two basis […] More

Risk Trade Turned Off

September 30, 2011

New concerns have arisen about Greece and the EFSF enlargement scheme.  Some believe Greece has only enough cash for the first half of October, and German officials continue to threaten no additional financial support without the imposition of more fiscal austerity in Greece.  Germany’s Bundestag, the lower parliamentary body, approved greater EFSF powers by a […] More

Focus on Policy Support

September 16, 2011

Stocks in the Pacific Rim advanced by 3.7% in South Korea, 2.6% in Taiwan, 2.3% in Japan, 1.9% in Australia, 1.6% in Indonesia, 1.4% in Hong Kong, 0.8% in Singapore but just 0.3% in India and 0.2% in China where containing inflation remains the top priority.  In Europe, the German Dax so far is up […] More

Germany’s Responsibility for the Euro Crisis

September 12, 2011

German officials and citizens have assumed the high moral ground since the start of the euro debt crisis in the autumn of 2009.  One can easily imagine their ire at learning that governments like Greece not only far exceeded agreed ceilings on fiscal deficits and debt in a chronic way since joining the European Economic […] More

More Help for Wounded Greece Creates More Trouble for Other EMU Members

June 26, 2011

An axiom among economists and investors is that the if the symptoms but not the causes of structural problems are addressed, the ultimate cost of repairing the problem will rise proportionately with the length of time that policymakers do not fix the real problem.  Weekend press of the EU/IMF/ECB’s approach to Greece, providing aid in […] More

A Better Market Tone

June 24, 2011

Equities rose 2.9% in India, 2.4% in China, 1.9% in Hong Kong, 1.7% in South Korea, 1.2% in The Philippines, 0.9% in Japan and Thailand, 0.7% in Indonesia and Singapore, and 0.2% in Australia.  The Paris Cac, British Ftse, and German Dax are 1.7%, 1.4%, and 1.3% higher. The ten-year Japanese JGB yield touched a […] More

Global Growth Worries Continue to Lift Euro and Swissy and Depress Equities

June 2, 2011

Markets continue to reel from Wednesday’s discouraging data.  U.S. jobless insurance claims released today added to that funk. Stocks fell 1.7% in Japan, 1.6% in Hong Kong and China, 2.3% in Australia, and 1.3% in South Korea.  The Paris Cac, German Dax, and British Ftse have declined so far by an additional 1.1%, 1.0%, and […] More

Fearful Markets

May 12, 2011

Commodities and stocks have been hammered.  The dollar and yen are stronger.  Investors fear a commodity market squeeze from higher margin requirements.  Another worry is that European leaders may not agree to a larger aid package for Greece.  Weak overnight data are meanwhile weighing on economic growth prospects.  Then there is the fast-approaching end of […] More

Credit Rating Downgrades

June 15, 2010

Moody’s announced a four-step downgrade of Greek debt from Ba1 to junk status, A3.  The 10-year Greek-minus-German yield premium widened 35 basis points to more than 600 basis points.  Irish and Spanish premiums also increased. Fitch reduced British Petroleum’s credit rating from AA to BBB.  President Obama will address the nation on the oil spill […] More