USA AT THE CROSS ROADS
The Markets and the FED don’t really know what to do next week. Indeed growth is strong oil the US and unemployment at a record low, but last week’s surprisingly low labor unit cost data took everybody by surprise.
USA AT THE CROSS ROADS
The Markets and the FED don’t really know what to do next week. Indeed growth is strong oil the US and unemployment at a record low, but last week’s surprisingly low labor unit cost data took everybody by surprise. read more
It’s time to talk about the FED’s balance sheet.
Eight years after the Federal Reserve launched the first of three controversial bond-buying campaigns to help save the U.S. economy, its holdings are stuck at $4.5 trillion, and the question of when to let them shrink is beginning to simmer. read more
PICTURES ARE A THOUSAND TIME MORE TELLING THAN WORDS !!
As can be seen from the US 30 year Treasury and the German 30 Year Bund yields graphs below, Bond yields have fallen to extremes and maintained artificially low in the past few years by the interventions of Central banks buying bonds to fight deflation. read more
The 10-year Treasury yield may climb to 2.75 percent to 3 percent over the “medium term’’ as the Federal Reserve will probably raise rates twice more this year, according to Pacific Investment Management Co.
The likelihood of a reduction in the Fed’s balance sheet over the next couple of years will also bolster yields, said Mark Kiesel, Pimco’s chief investment officer for global credit. read more
US UNEMPLOYMENT FALLS TO 4.5 %, THE LOWEST IN A DECADE, MAY FORCE THE FED TO RETHINK MONETARY POLICY.
The U.S. jobs report on Friday provided Federal Reserve officials with a surprise. Unemployment in March had already declined to the level they’d expected it to hit by the end of 2017. read more
THE WORLD ECONOMY IS STARTING TO GROW GLOBALLY.
Global growth is firming, contributing to an improvement in confidence.
A recovery in industrial activity has coincided with a pickup in global trade, after two years of marked weakness.
In emerging market and developing economies, obstacles to growth among commodity exporters are gradually diminishing, while activity in commodity importers remains generally robust. read more
Today’s ECB meeting and Mario Draghi’s Press Conference were eagerly watched by the financial markets with analysts looking for signs that the ECB would plan for a tapering of their exceptional QE anytime soon.
The ECB held its benchmark refinancing rate at 0% on September 7th and the net asset purchases at the current monthly pace of €60 billion. However, President Draghi said discussions on tapering QE will likely start next meeting, despite the euro being a source of uncertainty for inflation. read more
The US Treasury market has shrugged off the news in the latest FOMC minutes that the Committee may begin to alter its reinvestment policy later this year. Nonetheless, we still expect a reduction in the size of the Fed’s balance sheet to contribute to a rise in yields in the coming years. read more
Donald Trump has a cautious side after all. In naming Jerome Powell as next chairman of the Federal Reserve, the president has chosen a loyal ally of the outgoing chair, Janet Yellen.
At first sight, the appointment signals business as usual in monetary policy, rather than the unconventionality that some of the other candidates stood for. read more
The good news for bullish debt investors is that riskier assets will probably keep rallying in
the near term.
The bad news is that the longer the rally continues, the more these investors stand to lose of their principal investments down the line.
That’s because companies and consumers have substantially boosted their leverage in the past few years as central bankers worldwide flood the market with cash to suppress borrowing
costs. read more
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