India and Brazil: Inverted Yield Curves

I am concerned that the emerging markets have overheated and are now reversing direction quickly. Policy rates are still low when adjusted for inflation. But, given the economic weakness now manifest across North America and Europe, the risk is clearly to the downside for now

ECB Expected To Signal July Hike, Brazil Hikes to 12.25%

Dollar mixed vs. majors ahead of ECB decision; signal for 25 bp hike in July widely expected. Negotiations on second Greece aid program continue; talks could drag on for weeks. NZD outperforms on hawkish RBNZ statement, AUD underperforms on weak jobs data. Brazil hiked rates 25 bp to 12.25%, as widely expected

Sentiment Deteriorates Amid Concerns over Growth

From cautious optimism to caution

I am more cautious than optimistic on risk assets and the global economy. From where I sit global growth prospects are not improving; they are weakening

Financial Repression

The financial repression that is being discussed is not in developing countries but in the advanced industrialized countries. The ostensible goal is to support the government bond markets. Moral suasion, the cajoling of investors are soft forms of financial repression, where the government can impose such cooperation by fiat

Gross: Savers to Be Disadvantaged for Years

The Federal Reserve will be on easy street for a long time to come. Real interest rates will remain low, meaning debtors will be favoured over savers. Investors in fixed–income will take it on the chin

Norges Bank Raises Rates

While many of our readers may not be particularly interested in Norway, two of our Casey Report investment picks are in the country – hence the quick update on the Norges Bank’s (the Norwegian Central Bank) rate decision

El-Erian on Investing in Periods of Financial Repression

Financial repression leads to investors’ leveraging up, moving abroad, moving out on the risk curve or moving into riskier asset classes. Apparently, Pimco is employing all of these strategies. Will it work, though? I say greater risk doesn’t always mean greater reward. That means leverage and risk-seeking strategies will result in underperformance and could lead to losses

Why is Google issuing bonds?

Google is loaded o the gills with cash, yet today they are pricing up a bond issue. he Financial Times is reporting that Google will raise as much as $3 billion of 3, 5 and 10-year money. Here’s my question: why do this? Acquisition: Maybe they are pulling a Microsoft and preparing a debt-financed acquisition.

China: rebalancing through wage increases

Is China currently rebalancing? The currency has been appreciating, the PBoC has hiked interest rates four times, and wages have been surging. Because of all of this I am often asked if China has finally begun the long-waited rebalancing process and whether we have yet seen an improvement in the underlying economy caused by a rising consumption share. Those who were hoping the answer was yes will have been disappointed by the release Thursday of the World Bank’s China Quarterly Update – April

QE2: Captblogain, your ship is sinking

QE is, in fact, a ‘crop failure’ for the dollar. The Fed’s shifting of securities out of the economy and replacing them with clearing balances removes interest income. And the lower rates from Fed policy also reduces interest paid to the economy by the US Treasury, which is a net payer of interest. But the global markets mistakenly believed QE was producing a bumper crop for the dollar. They all believed, and some to the of panic, that the Fed was ‘printing money’ and flooding the world with dollars. Last week I suggested that higher crude prices were the last thing holding down the dollar, and that as crude started to fall I suggested it was all starting to reverse. It’s now looking like it’s underway in earnest.

Should Central Banks Focus On Core Inflation? Part 2

The latest figures from the US show that the consumer price index rose 0.5% in March, whilst the core personal consumption expenditure price index rose only 0.1%. This column explains the roles of these competing measures and argues that US monetary policymakers should pay close attention to headline inflation. It warns that neglecting headline inflation risks feverish boom-and-bust cycles with prolonged periods of high unemployment