Reuters blog archive
Russia’s next move remains the great unanswered question for Ukraine but there are glimmers that things might be starting to move elsewhere.
IMF chief Christine Lagarde said last night she would send a technical support team to Ukraine soon if Kiev makes a request. It can’t do so until an interim government is formed, probably tomorrow. That would be step one, but only step one, down the road to an international aid package.
The European Union's foreign policy chief promised Ukraine's new leaders strong international support but offered up no specifics and there will be no meaningful bailout until after elections slated for late May although EU budget commissioner Janusz Lewandowski said bridging aid of 1 billion euros might be available.
The situation is clearly urgent though the assertion from Kiev that money must come within two weeks looks overblown.
There is jockeying for position in Kiev with allies of newly freed former premier Yulia Tymoshenko trying to take key positions and opposition leader and ex-world boxing champ Vitaly Klitschko declaring he would run for president. The formation of an interim administration will be the main internal focus for now.
from Photographers' Blog:
By Umit Bektas
Sunday mass has just begun in Mort Shmuni Syriac Orthodox Church. It is seven o’clock in the morning and the streets of Midyat, where the majority of the population is Muslim Kurdish, are empty.
But despite the calm outside, the historical church is overcrowded with a community of three hundred people, mostly children. Candles are lit, hymns are sung and prayers are made.
from Anatole Kaletsky:
What has caused the sudden anxiety attack that overwhelmed financial markets after the New Year? We may find out the answer at 8.30 on Friday morning, Eastern Standard Time.
Almost all agree that the market turmoil has been linked to alarming events in several emerging economies -- including Turkey, Thailand, Argentina and Ukraine -- that has spilled over into concerns about more important economies, such as China, Russia, South Africa, Indonesia and Brazil.
from Global Investing:
Despite all the doom and gloom surrounding capital-hungry Fragile Five countries, real money managers have not abandoned the ship at all.
Aberdeen Asset Management has overweight equity positions in Indonesia, India, Turkey and Brazil -- that's already 4 of the five countries that have come under market pressure because of their funding deficits. The fund is also positive on Thailand and the Philippines.
Slowing growth in the Chinese and U.S. factory sectors earlier this week did nothing to soothe frayed market nerves and put a firm focus on today’s service sector PMI surveys in Europe along with the equivalent U.S. report and a weekly jobless number there.
While the world’s two largest economies suffered a hiccup, euro zone factories had their best month since mid-2011 in January. But it is the service sector that dominates in Europe. Flash readings, which are not usually revised much, showed the euro zone services reading hit a four-month high with France lagging Germany again although even its number rose. Today we’ll get the first numbers for Italy, Spain and Britain.
The European Central Bank meets on Thursday with emerging market tumult bang at the top of its agenda.
It’s probably too early to force a policy move this week – particularly since the next set of ECB economic and inflation forecasts are due in March – but it's an unwelcome development at a time when inflation is already uncomfortably low, dropping further to just 0.7 percent in January.
On Thursday, this column suggested that a bunch of stock markets selling off in tandem did not satisfy the definition of contagion. Central banks dumping U.S. assets, weak auctions of government debt in seemingly less related countries, and big sell offs in less affected currencies? That's getting closer to the mark.
Foreign central banks cut their holdings of U.S. debt stored at the Federal Reserve by the most in seven months in the past week, in a bid to defend weak currencies. "It makes sense," said Scott Carmack, fixed income portfolio manager at Leader Capital, which has $1 billion under management. "It will probably continue as emerging markets try to prop up their currencies."
So, it's been a few days. Which means the markets have hit that point in the Star Trek episodes when the Klingons were temporarily short of torpedoes, which gave the Enterprise crew time to suss out what was going on.
Some of the missiles were fired. Big rate hikes from Turkey and South Africa, that followed a rate hike from India, and a few conclusions are inescapable:
From Turkey, which hiked its overnight lending rate by an astonishing 425 basis points in an emergency meeting on Tuesday, to India which delivered a surprise repo rate hike a day earlier, central banks are increasingly looking to "shock and awe" markets into submission with their policy decisions.