Post Tagged with: "quantitative easing"

ECB Action: Just a Question of Time?

The Managing Director of the IMF and the chief economist are making no bones about it. More action by the ECB is inevitable. It is “just a question of timing,” says Lagarde and “sooner was better than later”, chimed Blanchard, the chief economist. The market is less sanguine.

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On Europe’s move toward QE to prevent deflation

There is a battle within the European Central Bank. Some want to take stronger action. Others do not think it is necessary. It is not just a matter of counting up who is on what side of the issue. It is not simply about majority rules. The ECB seeks consensus. As is well appreciated, there are important political and legal obstacles to buying European sovereign bonds.

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European, Japanese, and Ukrainian-Russian deflation

European, Japanese, and Ukrainian-Russian deflation

This isn’t a theme post. It is more like the posts I now do on Friday with a bunch of different ideas on important topics. But the underlying theme that interconnects the ideas is a deflationary-style slowdown. First, in Europe, the CPI is now at a 5-year low of 0.5% for Euroland. Everyone is talking about the prospects of deflation […]

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More Thoughts about Potential for QE from the ECB

More Thoughts about Potential for QE from the ECB

By Marc Chandler There seems to be a stepped effort by ECB officials to talk the euro down. The process began with Draghi last week indicated that the euro has become a more salient factor as it poses a deflationary risk and threatens the fragile economic recovery.  Earlier today, Bundesbank President Weidmann specifically did not rule out quantitative easing but […]

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The move from QE to forward guidance has always been about normalizing policy

The move from QE to forward guidance has always been about normalizing policy

So finally we get to see what the Yellen Fed is all about. And it is not as dovish as people thought it would be.While the noises Yellen made concerning the jobs market came across as dovish, behind the scenes a more hawkish tone has developed at the Fed. The fact is the move from QE to forward guidance has always been about normalizing policy – and that is tightening. The Fed has been telling us this for a year now. But only now are people understanding it means hikes are coming sooner than later.

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The Fed and the Return of Ad Hockery

The Fed and the Return of Ad Hockery

By Marc Chandler There has been sharp rise in US interest rates and the dollar in the immediate response to the Federal Reserve’s statement. The key it seemed was the expectation that Fed funds would be at 1% at the end of next year. This is more than the market had expected. The December Fed funds futures were implying a […]

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Will the slowdown in US services sector reverse with warmer weather?

Will the slowdown in US services sector reverse with warmer weather?

In trying to assess the trajectory of the US economy, one is struck by the recent divergence between the manufacturing and the services sectors. Most analysts blame the weakness in the service sector and the resulting softness in the labor markets on the weather. If that is indeed the case, as temperatures cimb, we should see a material rebound in service oriented businesses and therefore some big improvements in the jobs picture later this spring. That would mean more Fed taper and higher yields.

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What is the ECB to Do?

What is the ECB to Do?

By Marc Chandler A discussion of what the ECB is likely to do at Thursday’s policy meeting requires an appreciation of its challenges. There are four challenges that the ECB faces in nursing the “weak, fragile and uneven” recovery, as Draghi says. The two pillars of monetary policy, inflation and money supply, have been weak. Private sector lending has been […]

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Deflation and the ECB

Deflation and the ECB

The ECB continues to argue that there is no deflation risk in the Eurozone though many people dispute this. The ECB must act, and politicians in the Eurozone must allow it to do so. Treaties be damned.

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Could Mario Draghi’s implementing QE help Matteo Renzi raise the Italian deficit?

Could Mario Draghi’s implementing QE help Matteo Renzi raise the Italian deficit?

The aim of the above header is to link two names in people’s minds, both of them Italian: Mario Draghi and Matteo Renzi. Naturally the idea is not original, the FT’s Peter Spiegel recently published an entire blog post (Does Renzi owe his job to Draghi?) trying to establish some sort of connection between the arrival in office of Italy’s Matteo Renzi and the recent German Constitutional Court ruling. But this post is not about rumour, it is about coincidences.

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FOMC Minutes and Thoughts on Forward Guidance

FOMC Minutes and Thoughts on Forward Guidance

As high income economies improve and the financial sectors stabilize, central bankers understandably and rightly, want to move away from the unorthodox policies that were necessary to avoid an even larger collapse and more suffering.

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The shrinking MBS market

The shrinking MBS market

The supply of mortgage-backed securities (MBS) continues to fall behind the potential demand – even with the Fed’s taper in place. New issuance has steadily declined over the past year, with the Fed becoming an increasingly larger proportion of that market.

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