Search

The Federal Reserve's decision to lower interest rates has raised hopes for additional cuts as inflation slows. While some sectors, like real estate and the car market, have already felt the impact of lower rates, it may take longer for the benefits to reach the whole economy. The neutral policy rate, which is the level at which interest rates neither stimulate nor hinder the economy, is believed to be lower than the current benchmark rate, indicating that further rate cuts may be necessary. The housing market has seen a boost, with mortgage rates at two-year lows and increased interest in buying homes. However, consumer sentiment regarding homebuying conditions remains negative. The car market has also responded positively to rate changes, with lower rates encouraging more people to buy cars. Small businesses have been negatively affected by high rates, and optimism in the sector has declined. While retail sales have unexpectedly risen, there is evidence of some consumers struggling to repay loans. The Federal Reserve has indicated that interest rates will be lowered over time, but there is no predetermined course. It is important for the Fed to follow through on rate cuts to prevent rates from increasing again and to avoid potential stock market corrections. [Extracted from the article]

The Philippine peso may weaken to 59 against the dollar if geopolitical worries and risks related to the US election persist, according to central bank Governor Eli Remolona Jr. The recent slump in the peso is not causing concern for the Bangko Sentral ng Pilipinas, and the easing path set by the governor remains unchanged. The central bank plans to gradually reduce its benchmark interest rate to 4.5% by the end of 2025, with another quarter-point cut expected in December. [Extracted from the article]

Global public debt is projected to reach $100 trillion, or 93% of global GDP, by the end of 2024, with the US and China being the main contributors, according to the International Monetary Fund (IMF). The IMF warns that governments will need to make difficult decisions to stabilize borrowing, as debt is expected to approach 100% of GDP by 2030. The report highlights that countries such as the US, Brazil, France, Italy, South Africa, and the UK are expected to see an increase in debt, and urges governments to rein in debt to avoid adverse market reactions and limited budgetary flexibility. The IMF also notes that countries where debt is not projected to stabilize make up over half of global debt and about two-thirds of global GDP. The IMF's "debt-at-risk" framework reveals that in an extreme adverse scenario, future debt levels could reach 115% of GDP in three years, significantly higher than baseline projections. The metric for advanced economies has decreased from pandemic peaks but remains at 134% of GDP, while it has risen to 88% for emerging market and developing economies. The IMF emphasizes that current fiscal adjustment plans are insufficient to ensure debt stabilization or reduction. [Extracted from the article]

The article discusses the Sahm Rule recession indicator developed by former U.S. Federal Reserve System (FRS) economist Claudia Sahm. Topics explored include the measurement of economic conditions particularly unemployment data by the Sahm Rule, the economic outlook offered by Sahm following the interest-rate hikes announced by the FRS, and brief details about the economic background and achievements of Sahm.

According to an analysis by the International Monetary Fund (IMF), the US has captured almost one-third of all global investment flows since the start of the COVID-19 pandemic. This is a significant increase from the pre-pandemic average of 18%. The US has attracted foreign investment due to high interest rates and incentives for renewable energy and semiconductor production. In contrast, China's share of global inflows has more than halved since the pandemic. However, the US advantages may not last, as potential policy changes and a divisive presidential election could impact investor confidence. [Extracted from the article]

Major central banks in advanced economies are expected to reverse less than half of the interest-rate hikes they implemented in the past two years, with only 575 basis points of reductions projected by the end of 2025. This outlook has been influenced by the strong performance of the US economy and higher-than-expected inflation readings. The investment landscape has been reshaped, providing opportunities for investors to lock in high yields and make relative-value bets as some central banks ease monetary policy before others. The Federal Reserve, European Central Bank, Bank of England, and Bank of Japan are expected to conduct a cumulative amount of around $3 trillion worth of quantitative tightening by 2025, requiring private-sector investors to absorb government debt. [Extracted from the article]

A new era of global rearmament is underway, posing significant financial challenges for western governments already grappling with unstable public finances. Despite record defense spending of $2.2 trillion in 2023, European Union nations are just beginning to consider the requirements of 21st-century security, including an assertive Russia, a volatile Middle East, and the expansion of the Chinese military. Military budgets may need to reach Cold War levels of 4% of GDP to meet NATO's targets, which would amount to over $10 trillion in additional commitments over the next decade for the US and its Group of Seven allies. This surge in defense spending will have transformative effects on defense companies, public finances, and financial markets. The US and its allies face the challenge of increasing their defenses in eastern Europe while countering China's ambitions in the Pacific. The implications of this rearmament will create a new fiscal paradigm for most NATO members, potentially stalling post-pandemic debt consolidation and forcing painful choices between borrowing, budget cuts, or tax increases. The surge in military budgets is a global phenomenon, with China, Malaysia, and the Philippines among the countries experiencing significant growth in defense spending. The US, despite already having a large military budget, may need to double its spending as a percentage of GDP. The financing of this remilitarization will become a pressing political question, especially with the possibility of a second term for NATO-skeptical Donald Trump. NATO members are unlikely to commit to spending 4 [Extracted from the article]

Labor markets in developed economies are defying expectations by remaining strong, leading to a delay in anticipated interest rate cuts. Factors such as an aging workforce, a shortage of skilled labor, and companies retaining employees are contributing to the high demand for workers. Despite economic slowdowns, the unemployment rate in developed economies remains near record lows. This resilience has caused a sell-off in stocks and bonds. Central banks, including the Federal Reserve and the European Central Bank, are closely monitoring tight labor markets as they consider interest rate decisions. However, inflation remains the primary driver of policy. [Extracted from the article]

The article focuses on the increase in consumer spending in the U.S. during the Covid-19 pandemic, resulting to inflation in other countries. Topics discussed include the role of the retailers in the increase in consumer spending in the country, the change in the global economy following the pandemic, and the increase in interest rates by the U.S. Federal Reserve to combat inflation.

The article discusses the economic outlook for the interest rate and fiscal policy decisions of key central banks in 2024. Topics explored include the potential impact of debt repricing on businesses and households, the schedule of the final policy meetings of the European Central Bank (ECB), the U.S. Federal Reserve System (FRS), and the Bank of England, and the economic conditions in France, Canada, and Sweden.

The article discusses the economic concerns of small business owners in the U.S. Topics explored include the economic optimism expressed by these owners according to the November 2023 survey conducted by the National Federation of Independent Business (NFIB), the impact of increasing interest rates on small business operations, and the weak sales and waning consumer confidence reported by River Rock Outfitter shop owner April Peterson.

The article discusses the economic conditions in the U.S. as of November 2023. Topics mentioned include the possible move by the Federal Reserve to end the interest rate hike, the relation between consumer spending and labor market, the effect of a decline in U.S. Treasury yields on mortgage rates and borrowing costs, the drop in purchasing managers index, and the expansion in the service sector.

The article examines the threat posed by China's Covid-19-related lockdowns on global economic growth. It suggests the potential impact of disruptions in China's exports on inflation and interest rates that could lead to recession, as well as the possibility of a halt in production in industries that feed into global supply chains if restrictions are imposed in Shenzhen. It reports the lower than target economic forecast for China for 2022 and the buildup of congestion at some Chinese ports.

The article explores that effects of higher U.S. interest rates in 2023 on other countries in addition to China's slowdown. Cited are the risk of triggering destabilizing capital outflows facing many middle- income and developing nations, how higher U.S. rates can cause currencies to depreciate, and international ripple effects of the cooling of the Chinese economy.

The article reports on the increase in new business applications in the U.S. in 2022. Topics discussed include the increase in new jobs from 1995 to 2021 which may be attributed to small companies, the impact of inflation and interest rate hikes on the operations of small businesses, and the way the availability of online resources benefited would-be entrepreneurs in the country.

The article looks at how economists have been revising the timing of a U.S. downturn, pushing recession calls later into 2023. Topics discussed include interest rate hikes, unemployment rate, and consumer spending. It notes that the vast majority of forecasters still see a recession as highly likely.

The article discusses possible reasons behind the persistent high inflation rate in the U.S. Topics explored include the interest rate hikes launched by the U.S. Federal Reserve System (FRS) to address inflation, the continuous increase in the prices of services such as education and air travel, and the outlook for consumer price index (CPI) inflation in 2024.

The article reports on updates in the U.S. banking industry, particularly the alleged move by banks to limit their lending activities amidst the interest rate hikes imposed by the Federal Reserve (Fed) to address high inflation. Also cited are the failures of regional lenders and how they could hasten a possible recession, and how the tightening lending standards by small and medium-size banks could affect households, property prices, and the midsize companies.

"This downgrade was caused by both debt ceiling risks and by very large budget deficits." (Bloomberg) -- The move by Fitch Ratings to downgrade US government credit has put a renewed focus on the nation's debt trajectory, just when the world's largest economy is shaking off forecasts for a looming recession. [Extracted from the article]

(Bloomberg) -- The move by Fitch Ratings to downgrade US government credit has put a renewed focus on the nation's debt trajectory, just when the world's largest economy is shaking off forecasts for a looming recession. Read More: Yellen's Debt Yardstick Belies American Angst Over US Borrowing While the immediate US outlook may be improving, the ratings analysts at Fitch are looking through the recession debate. [Extracted from the article]

(Bloomberg) -- The world's major central banks meet in the coming week to set monetary policy amid continued signs that the worst inflation crisis in decades is easing. Bank of Japan Ueda continues to signal that a major pivot toward tighter policy is some ways off, even as prices continue to rise at a faster pace than the BOJ's 2% inflation target. Here's a look at the major central bank decisions due this week: Federal Reserve Fed policymakers are poised to hike rates Wednesday to the highest rate in 22 years, while retaining a tightening bias that signals the possibility of an additional move later in the year. [Extracted from the article]

Goldman Sachs Group Inc. have lifted their forecast for the pace of interest rate hikes by the Federal Reserve. [ABSTRACT FROM AUTHOR]

The author discusses the possible occurrence of economic bubbles. He mentions the cycles of bubbles on asset prices that have lead to previous recessions, the current trend towards negative interest rates, and the increasing ratio of debt to income which lead to purchases of existing assets rather than the creation of new ones.

Evidence of the potential for market turmoil in response to a BOJ pivot was clear in December when the central bank decided to allow 10-year yields to rise to about 0.5%, up from a previous limit of 0.25%, while keeping both short- and long-term benchmark interest rates unchanged. (Bloomberg Businessweek) -- A decade ago the Bank of Japan led the way with an unprecedented experiment in monetary stimulus. Under Kuroda, the BOJ stuck with a loose monetary policy even as inflation ticked higher and global peers raised interest rates. [Extracted from the article]

The article discusses the possible effects of the move by the U.S. Federal Reserve (Fed) to increase interest rates to address high inflation to the emerging markets. Also cited are the possible limited effects of the move to markets that have increased their foreign exchange reserves and reduced their current-account deficits, and the comment by Peterson Institute economist Maurice Obstfeld on the market.

In the UK, where rates on most mortgages reset after two or three years, debt payments are on track to exceed 10% of all household income (not just for mortgage borrowers). Global Debt Costs Are Soaring. That's because many borrowers face a relentless increase in their interest payments, as the Federal Reserve and other central banks raise rates at the fastest pace in decades to subdue inflation. [Extracted from the article]

If that's happened in the US, and Chair Jerome Powell says it's a possibility, the Fed might have to raise rates as high as 6%, tipping the world's biggest economy into a longer and deeper recession. Next Year's Economic Risks Are Already Here History says the Federal Reserve's high-speed interest-rate hikes may well tip the US into recession in 2023. [Extracted from the article]

Taiwan Taiwan's central bank won't necessarily follow the Fed's latest hike with an increase of its own, Governor Yang Chin-long said. Philippines The Philippine central bank will increase its benchmark interest rate by 75 basis points at its Nov. 17 meeting to match the Fed hike, Governor Felipe Medalla said. (Bloomberg) -- The Federal Reserve's latest 75 basis points interest-rate hike reverberated through Asia, triggering some central banks to warn further policy tightening will be needed. [Extracted from the article]

(Adds reference to Bank of Japan after "BOJ, Fed" subheadline.) The following figures illustrate the scope of operating losses or mark-to-market balance-sheet losses now materializing: Fed remittances owed to the US Treasury reached a negative $5.3 billion as of Oct. 19 -- a sharp contrast with the positive figures seen as recently as the end of August. (Bloomberg) -- Profits and losses aren't usually thought of as a consideration for central banks, but rapidly mounting red ink at the Federal Reserve and many peers risks becoming more than just an accounting oddity. [Extracted from the article]

(Bloomberg) -- The world economy is showing signs of a rapid downshift as it contends with a series of shocks -- some of them self-inflicted by policymakers -- increasing the likelihood of another global recession and the danger of major financial disruptions. "The global economy is in the eye of a new storm", Reserve Bank of India Governor Shaktikanta Das said Friday after lifting rates again. [Extracted from the article]

(Bloomberg) -- This week's blitz of interest rate hikes is unlikely to mark the end of a campaign by central banks to crush inflation even as they run the mounting risk of driving their economies into recession. Philippines The Philippine central bank raised its policy rate for a fifth time this year to quell inflation pressures amid a slumping currency and a hawkish Fed. Bangko Sentral ng Pilipinas raised the overnight reverse-repurchase rate by 50 basis points to 4.25%. [Extracted from the article]

The US lender now expects rate hikes of 75 basis points in November, 50 basis points in December and 25 basis points in February for a peak funds rate of 4.5%-4.75% compared with 4%-4.25% before, economists led by Jan Hatzius said in a research note. Analysts at Barclays Plc also raised their projections for Fed rate hikes and now expect another 150 basis points on top of Wednesday's 75 basis points, with the target range peaking at 4.50%-4.75% in the first quarter of next year. [Extracted from the article]

Fueled by the Federal Reserve's most aggressive tightening cycle in more than a generation, the stronger greenback is pushing rival currencies lower, driving up the cost of imported goods, constricting financial conditions and feeding inflation in other economies. While global ripples from Fed tightening aren't new, this is the first episode in recent years where serious dollar strength has been more notable against developed-nation currencies as a group than versus emerging economies. [Extracted from the article]

Fueled by the Federal Reserve's most aggressive tightening cycle in more than a generation, the stronger greenback is pushing rival currencies lower, driving up the cost of imported goods, constricting financial conditions and feeding inflation in other economies. While global ripples from Fed tightening aren't new, this is the first episode in recent years where serious dollar strength has been more notable against developed-nation currencies as a group than versus emerging economies. [Extracted from the article]

Essentially,inflation was high when year-on-year price changes weremeasured against a time earlier in the pandemic wheneconomies stalled and costs slumped. (Bloomberg) -- "Team Transitory" hasn't given up hope ofwinning the great inflation debate. [Extracted from the article]

A rising currency should help the Fed cool prices and support American demand for goods from abroad, but it also threatens to drive up the import prices of foreign economies, further fueling their inflation rates, and sap them of capital. (Bloomberg) -- The soaring dollar is propelling the global economy deeper into a synchronized slowdown by driving up borrowing costs and stoking financial-market volatility -- and there's little respite on the horizon. [Extracted from the article]

(Bloomberg) -- The global shift away from easy money is poised to accelerate as a pandemic bond-buying blitz by central banks swings into reverse, threatening another shock to the world's economies and financial markets. Investors fear the unknown as liquidity is drained from bond markets that have been flooded with central-bank money over a period that stretches back to the 2008 financial crisis. The U.S. central bank will achieve this by letting its holdings of government bonds and mortgage-backed securities mature, rather than actively selling the assets it bought. [Extracted from the article]

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast. Here's the latest news and analysis from Bloomberg Economics to help you start the day: Brexit-related trade barriers have driven a 6% increase in U.K. food prices, adding to a squeeze on consumer spending power, according to a new report British households are increasingly relying on food banks for emergency assistance, indicating a cost-of-living crisis is accelerating and likely to drag more people into poverty Bloomberg Economics warns that if the Europe energy crisis escalates -- either because Russia cuts off supply for more countries or because Europe moves ahead with sanctions -- Germany and other major euro-area economies may face significant disruption, potentially tipping the block into recession The Fed is likely to need to engage in the most aggressive monetary tightening since the 1980s, Deutsche Bank says U.S. consumer confidence deteriorated slightly in April Sales of new U.S. homes fell in March to a four-month low, showing signs hot demand and tight supply are rebalancing Lael Brainard was confirmed as vice chair of the Federal Reserve Board of Governors Tuesday in a 52-43 Senate vote, but a combination of Covid-related absences and a political spat threatens to delay three other Fed nominees China will step up infrastructure construction to bolster the economy A lockdown in Beijing would hit more than growth, Bloomberg Economics says Satellite data shows the extent of China's lockdowns New Zealand's central bank said it will design a framework to impose debt-to-income mortgage lending restrictions Australia's core inflation breached the top of the central bank's 2-3% target for the first time since 2010, sending the currency higher and boosting the case for an interest rate hike just weeks out from an election ©2022 Bloomberg L.P. [Extracted from the article]

Nomura expects the Fed to push their funds rate beyond neutral and into restrictive territory with six 25 basis point hikes at each consecutive meeting until May 2023, giving a terminal funds rate of 3.75-4.00%. (Bloomberg) -- Nomura Holdings Inc. now expects the Federal Reserve to lift interest rates by 75 basis points at both its June and July meetings, moves that would follow up on an expected 50 basis point hike in May. [Extracted from the article]

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast. Here's the latest news and analysis from Bloomberg Economics to help you start the day: Achieving high marks at university pays off, especially for men and people who attend the most selective institutions, a study of British graduates found A payroll tax increase to fund U.K. health care will cause a significant number of firms to cut back on spending and job creation, according to a new survey Austria's government will start policy discussion on more lasting measures to temper the impact of accelerating consumer prices, Finance Minister Magnus Brunner told reporters late Tuesday Anger over the cost of living that blindsided Emmanuel Macron early in his five-year term is simmering again, turning this Sunday's face-off with nationalist leader Marine Le Pen for the French presidency into a much closer contest Chinese banks maintained their lending rates for a third month, with the central bank's cautious easing measures and a weaker yuan reducing the scope for further reductions in borrowing costs China's pledges for more economic support are mounting as a worsening Covid outbreak and efforts to contain infections threaten to upend global supply chains and push a critical government growth target out of reach The Federal Reserve's most hawkish official cracked open the door to discussing the first 75 basis-point interest-rate hike since 1994, a move economists say would be a last resort in case inflation further spirals out of control Japan's exports advanced at a slower pace in March from a year ago as car shipments fell, while imports continued to surge on higher energy prices, extending the trade deficit to an eighth-straight month ©2022 Bloomberg L.P. [Extracted from the article]

China's economy slowing under the weight of rolling lockdowns to curb the spread of Covid-19 has prompted a wave of downgrades to China's growth forecasts. (Bloomberg) -- Investor outflows from China reflect a deepening divergence in monetary policy between the world's two biggest economies. [Extracted from the article]

The rate moves in lockstep with the Fed's rate since the Hong Kong dollar is pegged to the U.S. currency. (Bloomberg) -- The Hong Kong Monetary Authority raised its benchmark interest rate by 25 basis points, after the U.S. Federal Reserve did the same, saying it wants to maintain stability in the financial system amid heightened market volatility. [Extracted from the article]

(Bloomberg) -- Once accused of pushing their currencies lower to spur growth, top central bankers are now looking to appreciating exchange rates to help fight the menace of inflation. To be sure, not every economy will enjoy an inflation buffer due to a stronger currency -- much depends on the make up of their inflation basket and on local dynamics, like wage gains. [Extracted from the article]

Keywords: %CHF; %EUR; %JPY; %SEK; 8301@JP; SNBN@SW; ALLTOP; ASIA; BRAZIL; BUSINESS; CMD; COS; ECB; ECOTOP; EUROPE; EURTOP; FIN; FRX; GOV; INDUSTRIES; JAPAN; LATAM; MARKETS; NORTHAM; REL; TOP; US; WORLD; WWTOP; WWTOPAM; WWTOPAS; WWTOPEU EN %CHF %EUR %JPY %SEK 8301@JP SNBN@SW ALLTOP ASIA BRAZIL BUSINESS CMD COS ECB ECOTOP EUROPE EURTOP FIN FRX GOV INDUSTRIES JAPAN LATAM MARKETS NORTHAM REL TOP US WORLD WWTOP WWTOPAM WWTOPAS WWTOPEU (Bloomberg) -- Once accused of pushing their currencies lower to spur growth, top central bankers are now looking to appreciating exchange rates to help fight the menace of inflation. To be sure, not every economy will enjoy an inflation buffer due to a stronger currency -- much depends on the make up of their inflation basket and on local dynamics, like wage gains. [Extracted from the article]

It's a remarkable turnaround from when they last met in October, a period when Federal Reserve Chair Jerome Powell was still describing inflation as "transitory" and markets were pricing in at most two Fed rate increases this year. And across G-10 economies, swaps futures show traders expect the average central bank rate to be 1 percentage point higher in a year, the steepest projected pace of tightening since January 2010, according to Bloomberg calculations. [Extracted from the article]

Goldman Sachs Group Inc. sees the Federal Reserve raising interest rates seven times this year to contain hotter-than-expected U.S. inflation, rather than the five it had expected earlier. "More limited evidence of waning inflation pressures in the back half of the year suggest that the Fed will continue their more aggressive response for longer", economists at the German bank said in a note. Keywords: ALLTOP; BON; BUSINESS; GLOBALMACR; GOV; MARKETS; NORTHAM; US; WORLD; WWTOP EN ALLTOP BON BUSINESS GLOBALMACR GOV MARKETS NORTHAM US WORLD WWTOP Goldman Sachs Group Inc. sees the Federal Reserve raising interest rates seven times this year to contain hotter-than-expected U.S. inflation, rather than the five it had expected earlier. [Extracted from the article]

Meanwhile, Australia's 10-year yields jumped 9 basis points after the country's central bank upgraded its inflation and employment outlook. "Negative bund yields are going to be a memory soon", said Althea Spinozzi, senior fixed-income strategist at Saxo Bank A/S. She's planning to raise her year-end forecast for two-year German yields to about 0.1% after the ECB turned more hawkish on Thursday. (Bloomberg) -- The world's enormous pool of negative-yielding debt shrank by a record 20% in just a day, signaling that negative yields might be a thing of the past if ever-bolder bets on policy normalization pay out. [Extracted from the article]

(Bloomberg) -- The world's enormous pool of negative-yielding debt shrank by a record 20% in just a day, signaling that negative yields might be a thing of the past if ever-bolder bets on policy normalization pay out. "Negative bund yields are going to be a memory soon", said Althea Spinozzi, senior fixed-income strategist at Saxo Bank A/S. She's planning to raise her year-end forecast for two-year German yields to about 0.1% after the ECB turned more hawkish on Thursday. The yield on 30-year inflation-protected Treasuries was about two basis points shy of turning positive Friday, having surged on Fed tightening bets. [Extracted from the article]