The power of monetary policy in 4 charts January 31, 2014 The monetary policy responses of Japan and the Eurozone to weak inflation couldn't be more different. Deflation risks At a dovish extreme, you have the Bank of Japan respondingly aggressively to deflation. 2013 saw newly installed central banker Haruhiko Kuroda steer the economy from deflation to inflation in excess of one per cent. While the [...]
Asian shares take a hit as Fed stays the course on tapering January 31, 2014 Asian shares fell on Friday, in wake of fears about the impact of the Federal Reserve's tapering of its stimulus programme on emerging markets. Trading volumes were down due to the Chinese New Year. Japan's Nikkei share average declined 0.6 per cent after a resurgent yen hit exporter shares. Investors were initially optimistic after Japan's [...]
Why we’re not about to witness the death of the global bubble economy January 30, 2014 AN ABNORMAL amount of liquidity is still afloat in today’s global markets, amounting to an unprecedented estimate of 27 per cent of global GDP. And whatever the troubles facing some emerging markets in recent months – apparently in the face of the Fed taper – this important ratio of global liquidity to GDP is not [...]
What you need to know before the open – 30/01 January 30, 2014 European markets are expected lower this morning after the Fed’s open market committee made the unanimous decision last night to trim another $10bn off its asset purchase programme. In addition, PMI figures from China showed that manufacturing activity in the country contracted in January. Asian markets slipped on the news, with the Nikkei losing 3.2 [...]
Fed cuts bond purchases by further $10bn January 29, 2014 THE FEDERAL Reserve last night announced it would trim the US quantitative easing (QE) easing programme by another $10bn (£6.03bn) next month, the second month of winding down the central bank’s policy. In his last meeting as Fed chair, Ben Bernanke had unanimous agreement for the decision, which cuts asset purchases from $75bn currently to [...]
London Report: Volatility hurts FTSE as it drops to six-week low January 29, 2014 THE UK’S top share index fell to six-week lows yesterday, on investor concern about the effect a further reduction of US monetary stimulus would have on emerging markets. Investors have been on edge in the past days as unease about Chinese growth and the withdrawal of US monetary stimulus spread from emerging-market currencies to the [...]
New York Report: Wall St falls further after Fed decision January 29, 2014 STOCKS dropped more than one per cent yesterday, hitting session lows after the Federal Reserve stuck with its plan to scale back stimulus even in the midst of emerging market turmoil. With the day’s decline, the S&P 500 is down four per cent for the month – its worst monthly loss since May 2012. Some [...]
Forget the EM crisis. Fed tapering will leave France without a paddle January 29, 2014 Emerging markets continue to feel the pain of the Federal Reserve’s taper, but trouble could be rapidly approaching for another struggling economy – France. Research by Rabobank, looking at narrowing spreads in the Eurozone periphery, concluded that economic fundamentals are set to be an increasingly important driver of capital markets as the taper progresses. And [...]
What you need to know before the open – 29/01 January 29, 2014 European bourses are expected higher this morning, ahead of the Fed’s Open Market Committee meeting and in the wake of Turkey’s rates hike. Over in Asia, the Nikkei leapt the most in five months on the news that Turkey has increased interest rates from 7.75 per cent to 12 per cent. Post a measurable [...]
Turkey stuns global markets with rate hikes January 28, 2014 THE TURKISH central bank has hiked rates dramatically in a bid to stabilise the value of its currency. In a shock announcement at midnight Ankara time, the bank raised its overnight lending rate to 12 per cent, up from 7.75 per cent, and upped its overnight borrowing rate from 3.5 to eight per cent. It [...]