Breakingviews

Fed stress-tests idea of negative interest rates

February 2, 2016

That’s part of the “severely adverse” scenario that big U.S. banks have to run this year to satisfy regulators. The ECB and now the Bank of Japan are giving it a try. The Fed has started pushing rates upward – but going negative is becoming a very plausible downturn assumption.

Cox: How gun control is like zero interest rates

January 5, 2016

A White House order to require more dealers selling their wares at gun shows to conduct background checks has kicked off the third firearms bubble of Obama’s presidency. As in previous booms, bringing forward future demand stores up trouble down the road for the weapons trade.

Managerial competence makes the difference in 2016

January 5, 2016

Markets are getting choppier. Capital is becoming more expensive in the world’s largest economy. Globalization is taking big knocks. Economic growth is middling. Good managers will distinguish winners from losers as much as valuable assets do from lousy liabilities.

Fed liftoff will reinvigorate key market gauges

December 15, 2015

Everyone used to watch fed funds futures like hawks (or doves). Seven years of zero rates made them a less important indicator. Along with Eurodollar futures and other traded hints on rates and inflation, though, they are due fresh attention – even if their meaning has morphed.

Jobs and wages mean rate hikes are go!

December 4, 2015

Barring market meltdown at home or abroad, American job creation in November looks strong enough to allow Janet Yellen’s Fed to lift interest rates this month after seven years near zero. The shift in stance is overdue, but unexciting growth will keep the central bank wary.

Investors get too comfy over US-euro divergence

November 19, 2015

Twin the prospect of higher U.S. policy rates with the chance of more euro zone easing and the result is eye-catching divergences in currency and interest rate markets. The problem is, such price trends are vulnerable to setbacks even if rate-setters do what’s expected of them.

Banks need more than Fed’s help to boost earnings

October 19, 2015

Execs and shareholders alike place a lot of faith in rate hikes improving the bottom line. Lenders’ stated benefits of an upward move, though, aren’t just unrealistic - they also won’t do much for returns. Higher borrowing costs also tend to hit banks with unforeseen problems.

Uncertain central bankers leave markets stranded

October 16, 2015

Investors can’t get a straight story on when interest rates will rise, or why. And they’re not sure whether delay is good or bad for stocks. So markets behave capriciously. In the murk, one thing is becoming painfully clear – the diminishing effectiveness of all monetary policy.

China’s sensible rate cut sends dangerous signals

August 25, 2015

The central bank has lowered interest rates by a quarter point and reduced the amount lenders must hold in reserve. It helps ease the slowdown and offsets capital outflows. But by responding to two days of stock market turmoil, policymakers run the risk of stoking moral hazard.

Fed might fret about emerging market “spillback”

June 16, 2015

Weak investment and import demand in developing nations is threatening to drag down U.S. growth just as the Federal Reserve mulls raising interest rates. The central bank was able ignore the effects of its bond-buying on others. But a spillback could choke the American recovery.