The Financial Times – Tracy Alloway: Scoping market liquidity, with stick figures Last week the yield on 10-year US Treasuries fell precipitously before moving sharply upwards – what some commentators have deemed to be a mini “flash crash” in US government debt. Dealer-banks saw this spate of severe volatility as an excellent opportunity to whine… Continue reading More On Market Liquidity
<Click on chart for larger image> Bloomberg.com – Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE Holding bonds on the Fed’s balance sheet limits the supply of securities trading on the public markets, which helps keep prices up and yields lower than they otherwise would be. That provides stimulus to the economy… Continue reading Levels Versus Flows
Money Marketing – Beyond Abenomics: Is there more to Japan? Investors who are keen to determine the progress of Japan’s Abenomics policy are probably focused on the country’s disappointing macroeconomic data. But, underneath, could the prospect of earnings growth and cheaper valuations among corporates offer a more attractive investment outlook? Japan received the biggest downgrade… Continue reading Abenomics Is Not Working
The New York Times – Neil Irwin: Markets Are Calmer, but Worrying Signs Remain In other words, nothing has happened either in the economic data or anecdotally in the last few weeks to make one doubt that the United States economy remains on a path of gradual improvement. Nothing, that is, other than bond, currency… Continue reading What Is Market Weakness Telling Us?
The Telegraph (UK) – Interest rates could stay low permanently, says Bank of England deputy governor Global interest rates declined “before as well as since the financial crisis”, Ben Broadbent, deputy governor of the Bank of England says. Interest rates could now be permanently lower, a prominent member of the Bank of England’s committee of… Continue reading Will Rates Stay Low Forever?
The Financial Times – The jingle that sounds the road to economic recovery It sometimes pays to wipe the debt slate clean rather than sweep problems under the carpet Perhaps that will eventually change. The new, looming, round of bank stress tests from the European Central Bank could prompt lenders to get tougher. And on… Continue reading Debt Reform
The Economist – The euro zone: The world’s biggest economic problem Deflation in the euro zone is all too close and extremely dangerous THE world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan’s economy is struggling and China’s growth is now slower than at any… Continue reading Sick Europe
MoneyBeat (WSJ Blog) – Don’t Blame Central Banks for Wealth Gap A senior Bank of England official Thursday pushed back against critics who claim central bank policies only benefit the wealthy. Those critics say ultralow interest rates and central-bank asset purchases have fueled a surge in asset prices without spurring durable economic growth, benefiting the… Continue reading The BOE Doth Protest Too Much On Inequality
The Economist – Exchange-traded funds: Emerging Trouble in the Future? Regulators are worried that a trendy new product will sow instability Investors can sell their holdings in ETFs throughout the day, but the assets of some ETFs may be hard to sell immediately. One obvious area is the corporate-bond market, where banks have retreated from… Continue reading ETFs
The Wall Street Journal – Why Rising Rents Haven’t Pumped Up Inflation The Labor Department asks homeowners to estimate how much it would cost to rent their own homes. In a period of still-rising home prices and greater demand for rental properties, it is not surprising that the estimates–called owners’ equivalent rent–are rising this year.… Continue reading Rising Rents And Low Inflation
<Click on chart for larger image> Reuters – U.S.-based stock funds post $5.8 billion outflows in latest week: ICI Bond funds posted $4.5 billion in net outflows, marking their third straight week of net withdrawals. Hybrid funds, which can invest in stocks and fixed income securities, posted outflows of $1.2 billion, the most since November… Continue reading Bond Funds