Surprise plunge in bond yield forecasts may spell more trouble ahead

June 22, 2012

By Rahul Karunakar

The spread between 2- and 10-year U.S. Treasury yields will shrink to 180 basis points in a year according to the latest Reuters bonds poll – the narrowest margin since August 2008, the month before Lehman Brothers collapsed.

BoEasing

June 22, 2012

The Bank of England is finally catching a break. With Britain’s economy officially in recession, the BoE had been constrained from further monetary easing by a stubbornly high inflation rate. But as the global economy stumbles and Europe’s crisis rages unabated, UK price pressures may be giving way.

Forecasting gymnastics on the BoE’s printing presses

June 7, 2012

The fluctuating fortunes of the British economy in the last year have left forecasters in a fix, unable to make up their minds how much longer the Bank of England’s money printing presses need to roll on.

Who’d be a central banker?

By Mike Peacock
March 28, 2012

The focus is already on the euro zone finance ministers meeting in Copenhagen, starting on Friday, which is likely to agree to some form of extra funds for the currency bloc’s future bailout fund. What they come up with will go a long way to determining whether markets scent any faltering commitment on the part of Europe’s leaders.

There be feudin’ at the BoE

February 28, 2012

The once-good relationship between Bank of England Governor Mervyn King and his most likely successor, Deputy Governor Paul Tucker, is coming  under increasing strain, according to a new book by former Daily Telegraph journalist Dan Conaghan.  It  alleges   King’s management style and and alleged disdain for the financial markets is to blame.

Fed hasn’t silenced markets, Williams says

February 15, 2012

Federal Reserve policymakers have long watched markets to gauge what investors think is in store for interest rates and the economy. Some – like former Fed Governor Kevin Warsh – have worried that the Fed’s unprecedented purchases of trillions of dollars of U.S. Treasuries and its long-term guidance on the future path of interest rates shuts off a key source of policy-guiding information. The Fed’s recent decision to publish policymakers’ interest-rate forecasts will make the problem worse, he predicted in a speech at Stanford University last month.

Channeling Milton Friedman

December 30, 2011

Ask not what your monetary policy can do for you, but what you can do for your monetary policy. That’s the jist of a 1968 paper by Milton Friedman, the poster-child for monetarist economics, entitled “The Role of Monetary Policy,” whose key questions remain hotly debated more than four decades on. Friedman’s answer is simple (some might argue too simple), and all too familiar to those who read the speeches of present-day Federal Reserve hawks – focus on the only thing monetary policy can truly control, which in Frideman’s view is price stability.

Monetary policy as improv

By Peter Rudegeair
November 29, 2011

Should central bankers be more like Miles Davis — experimental, improvisational, and out in front — or a Dixieland band — traditional, predictable, and in the background?

No, the Fed isn’t powerless: Let’s do the twist

By Amer Bisat
August 22, 2011

By Amer Bisat
All opinions expressed are his own.

In recent weeks, financial markets have behaved as if the global economy is a plane crashing with no parachute in sight.  The price action is not entirely irrational.  Global growth has indeed fallen sharply and suddenly.  At the same time, the ability of policy makers to engage in bold counter-cyclical measures is being severely constrained by budgetary and political realities.

Primary dealers driving the printing presses

November 10, 2010

The U.S. Federal Reserve’s hotly-contested $600 billion renewal of its quantitative easing programme is roughly the size of the Gross Domestic Product of Switzerland.