Tag Archives: Interest rates

Summary: Perceptions of two trends shape the investment climate: reflation and nationalism. Fed rate hike set for next month, barring significant surprise. Japan’s trade surplus is growing even as imports and exports continue to contract. United States Around the middle of the year, St. Louis Federal Reserve President James Bullard revealed his new economic approach. He argued that during economic phases, or...

It’s been really busy as of late to cover all of the topics I have wanted to address. One topic, in particular, is the bond market and the ongoing concerns of a “bond bubble” due to historically low interest rates in the U.S. and, by direct consequence, historically high bond prices. Bob Bryan, via Business Insider, recently penned the following note: “Bond yields are low. Historically low. Yields on government bonds...

Summary: The hangover from the debt crisis and secular stagnation are the two main explanatory models for the low growth and low interest rates. Anew Fed paper brings the focus back to demographics. If true, warns of a protracted period of slow growth, low interest rates. There are two main interpretative frameworks that seek to explain the slow growth and low interest rates. The first is associated with...

Summary: The Canadian dollar’s link to oil has loosened. Its sensitivity to interest rates has increased. Lumber issue is coming to a head shortly. Of the majors, only sterling was weaker than the Canadian dollar in Q3.  Sterling’s drop was a function of its decision to leave the EU and ease monetary policy. The Canadian dollar fell 1.6% compared with sterling’s 2.6% fall. The other dollar-bloc currencies...

The Federal Reserve is expected to keep monetary policy unchanged over the next few months as the central bank continues to assess the underlying strength of the U.S. economy, especially after the Brexit vote raised concerns that a potential slowdown in the U.K. economy could have a significant spillover effect globally.   Credit Suisse’s Global Markets team believes that the vote has, in fact, exacerbated some tendencies within the Fed that were in place long before Britain’s June 23...

As widely expected, core personal consumer expenditure (PCE) inflation dropped back slightly in March in the US, while wage increases remained subdued in Q1. We now expect that the Federal Open Market Committee (FOMC) will hike rates only once in 2016, probably in September. Read the full report here In Friday's report on income and consumption, data were also published on the PCE deflator, the price measure targeted by the Fed in gauging inflation. The core PCE price index (excluding...

Recent equity market peaks coincided with the ECB and BoJ decisions to impose negative rates. From December 1st to last Friday, the MSCI World index declined by 14%. During the same period, the MSCI world banks index declined by 24%. Recent chronology of events Since 2009 and up until recently, central bank action has helped to stabilise equity markets. Looking at recent events, it now seems that the opposite is becoming true. The last two monetary decisions (ECB on 3 December 2015 and BoJ...

Macroview The Fed no longer considers that the risks to the outlook are ‘balanced’. However, yesterday's statement was not particularly dovish. After its meeting earlier this week, the Federal Open Market Committee (FOMC) published a statement where, as widely expected, it acknowledged that “economic growth slowed late last year”. It also added a comment that “the Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor...

ECB policy rates will remain “at present or lower levels for an extended period of time”. Another deposit rate cut, to -0.40% or even lower, looks likely to be part of the ECB’s toolkit, especially if the Fed turns more cautious in the meantime. The ECB left all policy settings unchanged at today’s meeting, as widely expected. At the same time, the overall tone of the press conference reflected yet another significant dovish shift in the ECB’s communication – one that the Governing...

Enough talk already. The moment is finally here: The Federal Reserve raised interest rates today by 0.25 percent for the first time since June 2006. Credit Suisse doesn’t believe the small, well-anticipated hike will hurt the U.S. economy in and of itself. (What happens in rate-sensitive markets, especially high-yield bonds, is another story, and one that The Financialist will cover in the coming days.) More important to financial markets are the signals Federal Reserve Chair Janet Yellen...