Forecasters once again closer to the mark on U.S. rate outlook

March 17, 2016


All the talk and the drama on trading floors may be how much the Federal Reserve has bowed to the will of financial markets in its surprisingly more cautious tone on interest rates.

What do Sunday’s German state elections mean for Merkel?

March 13, 2016
Germany's Chancellor Angela Merkel arrives at an EU-Turkey summit in Brussels, Belgium, as the bloc is looking to Ankara to help it curb the influx of refugees and migrants flowing into Europe, March 7, 2016.       REUTERS/Francois Lenoir

Germany’s Chancellor Angela Merkel arrives at an EU-Turkey summit in Brussels, Belgium, as the bloc is looking to Ankara to help it curb the influx of refugees and migrants flowing into Europe, March 7, 2016. REUTERS/Francois Lenoir

Negative U.S. rates? “Simply not a good idea.”

March 11, 2016

Federal Reserve Chair Janet Yellen smiles at the Federal Reserve's ninth biennial Community Development Research Conference focusing on economic mobility in Washington April 2, 2015. More research is needed to understand what policies allow people to move up the economic ladder and what holds them back, Yellen said on Thursday, returning to a controversial topic for the U.S. central bank. REUTERS/Yuri Gripas - RTR4VVN7

Whatever the pros and cons of negative rates, turned into official policy by five major central banks around the world, the chances of the U.S. Federal Reserve following suit are apparently minuscule.

Draghi finds some things are best left unsaid

March 11, 2016

It had all been going to plan until 2:56 pm Frankfurt time. The euro had dipped as ECB President Mario Draghi announced new rate cuts to record lows, promised more bond-buying stimulus and offered to pay banks to borrow cash for lending into the real economy. The big bazooka was firing once again and this time it was hitting the target. Then, in a comment which he perhaps thought would show his confidence that everything was under control, Draghi said he doubted any more rate cuts would be needed. Although many in the market might have come to a similar conclusion themselves, the effect was devastating, sending the euro higher and so effectively wiping out much of the stimulus effect he had achieved only minutes earlier. The response of the market is not wholly logical and is probably best understood in terms of a cheap Hollywood romance: “I knew it had to end sometime, Mario — but I can’t bear to hear you say it.” Whatever. Draghi’s reputation as a verbal enchanter is compromised for a second time, the full impact of this last batch of stimulus has been squandered and the secret is out that central bankers are running out of ammunition. Over to the Fed, Bank of Japan and Bank of England next week.

What to look for when three German states vote on Sunday

March 10, 2016

Three German states — prosperous Baden-Wuerttemberg in the south, the western wine region of Rhineland-Palatinate and Saxony-Anhalt in the east — hold elections on Sunday in what is widely being seen as a litmus test for Chancellor Angela Merkel and her refugee policies. Regardless of the results and despite suggestions to the contrary in some media, it seems highly unlikely that Merkel will leave office before her third term as chancellor is up in 2017. But poor results for her Christian Democratic Union (CDU) on Sunday could increase pressure on her to adopt a tougher line on refugees and raise doubts about her prospects of running for a fourth term next year.

U.S. jobless claims still showing no signs of any slowdown

March 9, 2016

Attendees at a job fair line up to gather information about a prospective employer in a Washington hotel, August 6, 2009. The number of U.S. workers filing new claims for jobless benefits fell sharply last week, a government report showed on Thursday, boosting views that the labor market and the economy were stabilizing.    REUTERS/Jason Reed   (UNITED STATES BUSINESS EMPLOYMENT) - RTR26GVC

The U.S. economy may have had a few fits and starts of late, first in manufacturing and then non-manufacturing industries, but weekly jobless claims data are likely to keep at bay speculation the job market is about to come unhinged.

1.3 million euros a minute

March 9, 2016

A year ago today, the European Central Bank began its programme of quantitative easing — money printing to buy assets — with a view to lifting sub-zero inflation back up towards the target of just under 2 percent. One year on, it has spent over 700 billion euros buying assets — mainly sovereign bonds, but also debt issued by some European institutions, as well as asset-backed securities (ABS) and covered bonds — at a pace of 1.3 million euros a minute.

Euro parity calls fade away even as ECB set to pile on more stimulus

March 8, 2016

The European Central Bank is set to open its monetary stimulus taps even wider this week but the euro isn’t likely to budge very much.

Federal Reserve’s loss is Bank of Canada’s gain

March 3, 2016

The Federal Reserve Bank of San Francisco produces some of the U.S. central bank’s best research on labor markets and monetary policy. And it’s from there that the Bank of Canada plucked its newest deputy governor,

U.S. services not set for big rebound yet

March 3, 2016

An Amish boy jumps on a trampoline at his home in Lancaster County, Pennsylvania August 9, 2014. It's that Old World charm of the Amish that draws 8 million tourists - and $1.9 billion - each year to Pennsylvania's Lancaster County, home of the nation's largest Amish community of 31,000. What the Amish don't do, supporters say, is tote rifles as part of a violent protection racket - as depicted in the television show "Amish Mafia" - or regularly defy their religion, like in "Breaking Amish" and "Breaking Amish: Brave New World." And, Amish horror stories are not the norm, despite the plot lines of the upcoming "Amish Haunting." Filmmaker Mary Haverstick is leading a push to eject the shows, airing on the Discovery Channel and related networks, from Lancaster County. The movement is gathering support because of what some see as a demeaning, inaccurate portrayal of the gentle, devout group. But some wonder if the hard-edged reality TV approach is that different from the soft exploitation of the Amish by the local tourism industry. In both, the Amish are unpaid, costumed "extras." Picture taken August 9, 2014.   REUTERS/Mark Makela (UNITED STATES - Tags: RELIGION ENTERTAINMENT MEDIA) - RTR42PO2

As U.S. manufacturing fell into the dumps – along with manufacturing elsewhere around the globe – we’ve been repeatedly told by economists not to be distracted by what likely is a passing phase.