Bloomberg Business – World Bank Joins IMF in Urging Fed to Delay Rate Rise Until 2016 The World Bank joined the IMF in urging the Federal Reserve to hold off raising rates until next year, citing an uneven U.S. recovery and the risks to emerging markets of tightening policy any sooner. “My concern is that… Continue reading Discussing A Fed Hike
Bloomberg – Axel Weber Tells Yellen, Draghi & Co: You’re Doing it Wrong Inflation Targeting Needs to Be Rethought, Ex-Bundesbanker Argues In a paper released this week on Project-Syndicate.Org, Weber argues that the orthodox regime of inflation targeting that exists at most of the world’s major central banks — the U.S. Federal Reserve, the ECB, the Bank of… Continue reading Weber Tells Central Banks They Are Doing It Wrong
The Financial Times – Bond market liquidity dominates conversation Data illustrates sharp deterioration in bond trading conditions |The fear is that when the bond market faces an inevitable test — and the Federal Reserve could provide a big one as early as September — a correction could deepen into a full-blown crash. Scarred by the… Continue reading Your Daily Installment On Lousy Bond Market Liquidity
<Click on graphic for larger image> The Financial Times – Zimbabwe finally ditches ‘worthless’ currency for the US dollar One of the few central banks to make 1920s Germany look like a period of monetary prudence and stability is finally ditching its national currency. The Reserve Bank of Zimbabwe said that it will begin a… Continue reading How To Turn 100 Trillion Dollars Into Nothing
The Economist – Buttonwood: The wrong solution Fund managers are not like banks IMAGINE how the financial crisis of late 2016 might play out. A surge in wage inflation, caused by a tight labour market, prompts the Federal Reserve to push up interest rates more quickly than the markets expect. Both government and corporate bonds… Continue reading Fund Managers Are Not Banks!
None Today
<Click on chart for larger image> Comment We first showed the chart above yesterday. It shows the worst one-year total return declines in bond history. The thick brown line shows the decline since January 30 (top axis). The thick blue line shows the worst total return decline ever (2008/2009). Also on the chart are the… Continue reading The Bond Rout
<Click on chart for larger image> Bloomberg.com – Pimco Issues Inflation Warning at a Time When Costs Are Falling Pacific Investment Management Co. says U.S. inflation is poised to quicken — at a time when costs are falling at the fastest pace in five years. Pimco, which runs the world’s biggest actively managed bond fund,… Continue reading Pimco Warns On Inflation
<Click on chart for larger image> The Financial Times – The Federal Reserve risks inflating another US housing bubble Is this a bubble? To answer that question, you have to turn to some method of “fundamental” valuation, which gives you some measure of what prices would be if you separated out the froth. In the… Continue reading Housing Bubble 2.0?
The Financial Times – Treasury volumes raise liquidity concerns One of the more worrying aspects of the sell-off in the US Treasury market is the relative paucity of actual selling. While the 10-year Treasury yield has risen from below 1.9 per cent in mid-April to a peak of almost 2.5 per cent this week, traders… Continue reading Liquidity Concerns
<Click on chart for larger image> <Click on chart for larger image> CNBC – US retail sales jump in May, brighten growth outlook U.S. retail sales surged in May as households boosted purchases of automobiles and a range of other goods even as they paid a bit more for gasoline, the latest sign economic growth… Continue reading Retail Sales
MoneyBeat (WSJ Blog) – ECB Would ‘Re-Assess’ Greek Lending If Debt Conditions Change The European Central Bank could be forced to reconsider its provision of emergency loans to Greek banks should the country’s debt situation further worsen or if its banks are no longer able to post adequate collateral, a member of the ECB’s Governing… Continue reading Greece