Bloomberg.com – Negative Rates for the People Arrive as German Bank Gives In German cooperative sets -0.4% rate on funds over EU100,000 Move comes two weeks after ECB says no risk of cash hoarding When the European Central Bank introduced a negative interest rate on lenders’ deposits two years ago, few thought things would ever go… Continue reading Negative Rates Reach The Public
<Click on graphic for larger image> The Financial Times – Investors pour more money into EM equity funds Investors allocating money into emerging market equity funds hit a 58-week high as low interest rates intensified the search for higher returns beyond developed world assets. Emerging market equity funds saw inflows of $5.1bn during the week ending… Continue reading Emerging Market Investor Flows
The Financial Times – Paul Singer says bond market is ‘broken’ Paul Singer, head of $28bn hedge fund Elliott Management, has warned that the global bond market is “broken”, and predicted that the end of the current environment is “likely to be surprising, sudden, intense, and large”. The prominent Republican former lawyer is famous for having… Continue reading Paul Singer Speaks
The Financial Times – ECB hints at taking further monetary policy action in September Aftershocks from the Brexit vote and poor health of Europe’s bank risk derailing economic recovery The European Central Bank has hinted at taking further action next month should economic conditions in the eurozone fail to improve, with its top policymakers saying the… Continue reading More Doping From The ECB?
<Click on graphic for larger image> The Economist – Housing in America: Nightmare on Main Street America’s housing system was at the centre of the last crisis. It has still not been properly reformed WHAT are the most dysfunctional parts of the global financial system? China’s banking industry, you might say, with its great wall of… Continue reading Is Housing About To Be A Problem Again?
The Financial Times – Gillian Tett: The tri-party repo sector needs careful attention The hidden pipes of finance may be furring up as the banks reshape their business models A decade ago JPMorgan Chase looked like a financial octopus: its tentacles reached into almost every part of the Wall Street money machine. But some of those… Continue reading More On Repo
The Washington Post – Larry Summers: What we need to do to get out of this economic malaise John Williams has written the most thoughtful piece on monetary policy that has come out of the Federal Reserve in a long time. He recognizes more explicitly than others that r*, the neutral interest rate, is now very… Continue reading Larry Summers Speaks
This is when some members of the FOMC deem it will be appropriate to raise rates pic.twitter.com/tgfjHp5DOE — InterestArb (@InterestArb) August 18, 2016 <Click on cartoon for larger image> <Click on cartoon for larger image>
MoneyBeat (WSJ Blog) – People Are Getting Emotional About Fed’s ‘Schizophrenic’ Debate The market has no choice but to pay attention to what the Federal Reserve does, and says, and plans, and forecasts. The central bank is, after all, the prime mover in the monetary policy of the world’s reserve currency, the dollar. You can’t… Continue reading Yet Another Reason The Markets Largely Ignore Fedspeak
<Click on graphic for larger image> Liberty Street Economics – A Closer Look at the Federal Reserve’s Securities Lending Program The Federal Reserve lends specific Treasury and agency debt securities held in its System Open Market Account (SOMA)—and accepts general Treasury securities as collateral—through its daily securities lending program. The program supports Treasury and agency… Continue reading The Fed’s Security Lending Program
<Click on graphic for larger image> Bloomberg.com – Narayana Kocherlakota: The U.S. Recovery Is Not What It Seems Economists regularly point out that the U.S. has recovered from the recession of 2007 to 2009 much more strongly than other countries. If only it were so. True, the U.S. stands out if one looks only at… Continue reading Comparing Economic Recoveries Through A Different Lens
<Click on chart for larger image> Bloomberg.com – China Crackdown on Illegal Money Flows Sees 450 People Arrested Suspects said to use offshore companies, ‘underground banks’ Officials grappling with risk of more capital outflows Chinese authorities said 450 suspects have been arrested this year in a crackdown on using offshore companies and “underground banks” to transfer… Continue reading China Jails Capital Flight, Wall Street Cheers