FT markets round-up: “Fresh evidence of slowing global growth prompted further falls for industrial commodities, US stocks and the dollar, and gains for Treasury bonds, even as the Federal Reserve backed away from previous hints that the pace of its asset purchase programme might be curbed. Copper fell 3.7 per cent in London to $6,795 a tonne while Brent crude oil settled $2.42 lower at $99.95 a barrel. Gold, meanwhile, fell $20 to $1,456 as it suffered a significant interruption to its rebound from a recent two-year low. Equity trading, was thinned by holiday-related closures in many financial centres, including much of Europe. There also appeared a general reluctance to take on new positions before the European Central Bank announces its decision on interest rates on Thursday. The S&P 500 fell 0.9 per cent from Tuesday’s record high. while the FTSE 100 in London rose 0.3 per cent. The caution on growth triggered a strong session for US government bonds with the yield on the 10-year Treasury down 4 basis points at 1.63 per cent, having earlier touched a six-month low of 1.61 per cent.” (Financial Times) Read more
During the presser following the March FOMC meeting, Ben Bernanke made two comments suggesting that its communications policy regarding asset purchases would shift in the direction of its policy for interest rates.
With apologies for rehashing lines from an earlier post, in case anybody would have noticed… Read more
Two notable changes from the March statement:
— The FOMC writes that it is “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.” Read more
Ahead of the Thursday meeting, a chart via Gavyn Davies (full post recommended, of course): Read more
Barclays economists write that the gap between core CPI and core PCE in the United States has widened to its largest in about a decade. They have an interesting note explaining some of the reasons why, though not all of them are clear and right now this is mainly an academic issue:
People outside of Wall Street might reasonably complain that economics coverage often focusses too much on the numbers to the exclusion of clear explanation and stories about Main Street, the impact on “real” people, etc.
There are several possible ways to remedy this problem where it exists, but a group of Republicans has skipped the niceties and decided that it would be better if said coverage was entirely anecdotal and number-less. Because the numbers would not exist. Read more
Just as your risk of a dodgy bailout is determined by your size so too, perchance, is your risk of an odd ratings action. On Tuesday Slovenia’s credit rating was junked by Moody’s, forcing it to call off a planned US dollar debt sale.
Those we have talked to are pretty baffled by this one. Not only does the timing seem strange but the critiques leveled are questionable (more on that below) particularly when you take into account the depth of the cut from Baa2 to Ba1. Read more
The Telegraph’s Willard Foxton notes the online black market portal Silk Road has been experiencing some serious outages the last few days. The problems may be linked to a hacker and extortion attempt. The portal, rather ironically for an illicit website, is now offering a reward for information leading to the arrest and conviction of whoever is behind the attempt.
Though Silk Road has been experiencing other problems too, not least the hyperdeflationary effects of the Bitcoin rally: Read more
There’s been a lot of speculation about what really drove the volatile gold price move this month. Some are still defiantly searching for conspiracies or under-handed activities by authorities.
But it’s probably Nouriel Roubini who has provided one of the best and most logical explanations. In his opinion every bit of the gold move can be explained by shifting inflation expectations. Read more
Live markets commentary from FT.com
After Chinese first quarter GDP missed expectations, there was some hope that the relatively strong manufacturing PMIs in March would point to a better second quarter.
Now that we know China’s April PMIs are definitely not supporting that notion, it is worth revisiting, again, the whole question of the country’s recent surging credit growth. The significance of the debt-to-GDP ratio can be argued over, and it’s impossible to say at what level it might become a big problem. But here are a couple of ideas to consider. Read more
Apple sells the largest corporate-bond deal in history || Fed weighing tougher bank capital rules || End of mining boom hits equipment makers || FOMC decision today || China official manufacturing PMIs fall || Osborne warns BoE not to harm growth in pursuit of stability || Martin Wolf on the Baltic states model || Elusive smartphone productivity gains Read more
Elsewhere on Wednesday,
– Apple’s bond issue, aka tax evasion deal.
– Natural resource scarcity is a real thing.
– And now… some special criticism for the ECB. Read more
Asian stocks fall || Fed weighing tougher bank capital rules || FOMC decision today || China official manufacturing PMIs fall || Osborne warns BoE not to harm growth in pursuit of stability || Martin Wolf on the Baltic states model || Elusive smartphone productivity gains Read more