Posts from Thursday Sep 13 2012

The Closer


FT markets round-up: “Stocks on Wall Street jumped while the US dollar fell after the US Federal Reserve outlined a series of measures aimed at keeping borrowing costs low to stimulate growth in the world’s largest economy. The S&P 500 rallied to close up 1.6 per cent to 1,459 – touching its highest level since late 2007 – as the Fed said it would keep monetary policy stimulative for a considerable time, “at least through mid-2015”. That helped push yields on agency mortgage bonds to fresh lows. The yield on 30-year Fannie Mae-guaranteed mortgage debt fell 18 basis points to touch a low of 2.18 per cent. Longer-dated US Treasuries initially sold off, with the yield on the 30-year bond briefly rising above 3 per cent. The 10-year note yield, which was lower before the announcement, initially jumped 5 basis points, but it closed little changed at 1.73 per cent.” (Financial TimesRead more

US Markets Live transcript 13 Sep 2012

Live markets commentary from 

FOMC economic projections, 13 Sept 2012

We’ll be discussing these, the earlier FOMC statement, and of course covering the presser in Markets Live starting in just a few minutes. Click below to open:

FOMC statement – 13 Sept 2012


– Well, open-ended QE is what we anticipated, and open-ended QE is what we got — specifically an additional $40bn of monthly agency MBS purchases. And the purchases were indeed tied to economic outcomes, though in vague terms: Read more

The OMT, and the plumbing

Charts on a certain broken transmission mechanism are popping up everywhere.

First, a chart from Exotix — ECB data from March show that 42 per cent of small businesses in Greece couldn’t get the loans they asked for: Read more

PSI lost

Hard to believe it was six months ago.

If you think the fat lady hasn’t yet belted it out on the possibility of future sovereign debt restructuring in the eurozone… (and who’d rule it out, ECB actions notwithstanding) Read more

US Markets Live today, Bernanke presser special edition

Tune in at 2:05pm EST (7:05pm in London) today for a special edition of US Markets Live and join the rabble to watch The Bearded One be questioned by our colleagues in the media.

Our preview of today’s Fed activity is here, and we also recommend Robin “Hip Specs” Harding’s post at Money Supply. Read more

Outing the aluminium squeeze, Deripaska style

When the chief executive of UC Rusal, Oleg Deripaska, takes to the pages of the FT to air his frustrations about his industry, you’ve got to sit up and listen. Especially when he concludes that output caps are needed to overcome the problems.

Rusal, of course, is one of the world’s top aluminium producers and Deripaska, it turns out, wants output caps because he is worried about the  strange anomalies which are gripping his market. Read more

Does the world really need China’s rapid growth?

The mood at the World Economic Forum this week in Tianjin has been a study in contrasts — bullish foreigners and gloomy Chinese.

As the FT’s Jamil Anderlini reportsRead more

Markets Live transcript 13 Sep 2012

Live markets commentary from 

When the US sneezes at the edge of a fiscal cliff, the rest of the world should worry

Remember ‘stall speeds’? It’s the idea that when economic growth falls below a particular threshold, it becomes a prelude to likely recession or at the least, makes the economy far more vulnerable to recession.

It’s been kicked around a lot in the past year or so, particularly in regard to the US economy. While it’s not universally agreed upon, it was apparently influential within the Fed ahead of the QE2 launch last year and a popular paper by Fed researcher Jeremy Nalewaik published in April 2011 says there is empirical evidence of such an effect. Read more

The (early) Lunch Wrap

Good morning New York…


Preview for 13 September 2012 FOMC statement and presser

In a great post over at Money Supply, Robin Harding explains the main source of suspense for today’s FOMC statement and presser (our emphasis):

For me, the question of what the Fed will do is far less interesting – and far less in doubt – than how the Fed will do it. This will not be a pro forma repeat of previous actions. As Mr Bernanke’s speech shows, the Fed is trying to address grave concerns about the labour market. The crucial issue is whether and how they tie any action to the state of the economy. Read more

The SNB’s decision pictorially represented

Image by Neal Fowler

That’s the Swiss franc floor abiding, unchanged at SFr1.20 despite the recent rumour mongeringRead more

Further reading

Elsewhere on Thursday,

- An interesting hour with Ray DalioRead more

More adventures in iron ore – updated

Just when you thought everything had been sorted at the New Force in Iron Ore….

From the Australian Financial ReviewRead more

The 6am Cut London

Asian shares were little moved as investors waited to see if the US Federal Reserve on Thursday outlines another bout of quantitative easing, or at least reaffirms its commitment to intervene should economic conditions warrant it. Japan’s Nikkei was up 0.5 per cent while South Korea’s Kospi was up 0.1 per cent and Australia’s S&P/ASX 200 was off 0.3 per cent. In Hong Kong the Hang Seng was flat and on the mainland the Shanghai Composite was down 0.5 per cent. (Financial Times)

It’s QE3 day — maybe. “Many economists are confident the Fed’s policy-setting Federal Open Market Committee will deliver a third round of quantitative easing, or QE3. On median, they see a 60 percent chance, according to a Reuters poll.” The decision is due at about 12.30pm New York time or 5.30pm in London. (ReutersRead more