Post Tagged with: "interest rates"
Brazil Surprise Rate Cut To Weigh On BRL
While most EM central banks have moved into dovish wait-and-see stances, very few have cut rates during this cycle. Besides Brazil, only Turkey has this distinction and we’ve seen markets punish the lira in recent weeks. While the underlying fundamentals are much stronger in Brazil than in Turkey, we simply point out that market credibility is something that should not be taken for granted
Some predictions for the rest of the decade
Markets have been crazy this month, but rather than try to wade through all the news, much of which doesn’t seem to have much informational content, I thought I would duck out altogether and instead make a list of things I expect will happen over the next several years
Now For Something Completely Different: WPA
This column argues that while Bernanke will want to show that the Fed still has options at its disposal, with various trade-offs associated, perhaps he may want to also underscore the limitations of monetary policy. If current conditions are somewhat like the Great Depression, then we may need to face up to the fact that it ultimately was not monetary policy that ended the crisis but fiscal policy
On Sweden and Capital Preservation
Capital preservation has once again has become mantra. The safety offered by Japan and Switzerland are meeting resistance from policy makers. As the market looks for alternatives, the Swedish krona has much to offer, including a relatively robust economy, low public debt and a current account surplus
US real 10 year yields at record 225bpt discount to JGBs
PIMCO, the world’ largest bond fund call this suppression of yields financial repression because it means savers and bond investors get negative real returns. However, John Hempton pointed out that in Japan, where this monetary policy is well-advanced, deflation has set in and real yields are positive despite the zero-rate interest policy (ZIRP)
Why Permanent Zero is toxic and leads to depression
While rate easing and its cousin permanent zero might have some salutary effect in the short term, these policies are toxic to the financial sector and consumption demand. Likely, they will not spur the economy but lead to a deepening malaise
For whatever reason
Investors shunning US debt ‘for whatever reason’ presupposes the outcome. I need to see the steps that get us from 2.25% 10-year rates to 4 or 5% without the Fed actively raising rates because the only way rates are going higher is because the Fed is forced by inflation to raise them
Kocherlakota: Statement on Dissenting Permanent Zero Policy
Written and video statements explaining Minnesota Fed President Kocherlakota’s dissent on 9 August
SNB takes action against strong CHF
US growth concerns and downgrade risk remain in play after budget deal. Euro zone periphery remains under pressure as ECB meets Thursday. SNB takes action against strong CHF; spike in EUR/CHF offers good entry point to go long
China: no hard landing, but no solution
I have been arguing for a while that as long as the Chinese government retains its capacity to raise debt we are not going to see a sharp slowdown in economic growth – at least until 2013. Any indication that the economy is slowing too quickly will be met with a relaxation of credit controls, and the concomitant rise in investment will spur growth
Chart of the Day: China’s Yield Curve flattening
The Chinese 2-5 year swap spread has flattening to 1 basis point. The last time it was so flat was
Brynjolfsson on Treasuries Rising due to Debt Stalemate
A stalemate could mean selective default. However, my sense is that the bonds themselves will be paid first. Other government expenditures will not get paid and that means a hardship for those who expect the money, whether companies doing business with the US government or people receiving services and benefits