U.S.job seekers saw online job ads dwindle this summer, according to a survey from The Conference Board. Advertised vacancies fell 108,700 in August to 4,684,800, the industry group said.
Jonathan Basile at Credit Suisse noted that the combined drop of 262,000 jobs for July and August was the biggest two-month decline since the last recession.
U.S. manufacturing activity shrank for a second straight month in July as recent economic weakness spilled into the third quarter, according to the Institute for Supply Management’s closely watched index. But that wasn’t the worst of it: new orders, a gauge of future business activity, also shrank for a second month, albeit at a slightly slower pace.
Tom Porcelli at RBC explains why the status quo may not be good enough to keep the economy expanding:
The U.S. Treasury Department announced on Wednesday it would begin issuing floating rate notes (FRNs), even if such a new program is at least a year away from implementation. The rationale behind these short-term securities is to give investors protection against the possibility of a sudden spike in interest rates. The Federal Reserve has held overnight rates near zero since late 2008, helping to anchor borrowing costs of all maturities.
But is issuing variable rate securities really a good idea from the taxpayers’ standpoint? Stephen Stanley, chief economist at Pierpoint Securities, thinks not. He believes Treasury officials are getting played by sell- and buy-side investors and their respective vested interests. The Treasury has made the decision in part due to the recommendations of the Treasury Advisory Borrowing Committee (TBAC), made up exclusively of members of the financial industry.
WASHINGTON (Reuters) – The Treasury is working on allowing investors to bid on securities that offer negative interest rates, another sign that officials expect borrowing costs to stay very low for a long time.
The government also is planning to issue floating-rate notes for the first time, but said such securities would not be brought to market for at least another year.
WASHINGTON, July 27 (Reuters) – Ben Bernanke heads the most
powerful central bank in the world. Yet the Federal Reserve
chairman says he was largely powerless to stop what some are
calling the biggest financial fraud in history: the systematic
manipulation of a key global interest rate.
It’s a line of argument that has fallen flat with some
lawmakers and investors, who want to know why Bernanke and other
key U.S. regulators did not do more to end a potentially
criminal rigging of interest rates affecting trillions of
dollars in financial contracts.
The opening passage of Hitchhiker’s Guide to the Galaxy, Douglas Adams’ cult book, is remarkably apropos for a world caught in seemingly perennial financial crises and turmoil. It reads:
Far out in the uncharted backwaters of the unfashionable end of the Western Spiral arm of the Galaxy lies a small, unregarded yellow sun. Orbiting this at a distance of roughly ninety-eight million miles is an utterly insignificant little blue green planet whose ape-descended life forms are so amazingly primitive that they still think digital watches are a pretty neat idea.
BUENOS AIRES, July 26 (Reuters) – Germany has replaced Spain
as the biggest buyer of biodiesel from top global exporter
Argentina after Madrid curbed purchases from the South American
country, industry sources say.
Spain barred imports of biodiesel produced outside the
European Union in April in retaliation for Argentina’s decision
to seize control of energy company YPF from Spain’s
It’s a report that gets little attention normally (We at Reuters geek out on Fed data a lot, and even we don’t write a story about it). But an unusually sharp contraction in the Richmond Fed’s services sector index for July caught the eye of some economists. The measure took a nosedive, falling to -11 this month, the lowest in over two years, from +11 in June.
Tom Porcelli at RBC says the plunge in new orders was downright scary:
Richmond Fed manufacturing got absolutely walloped in July. In fact, the all-important new orders component sank to an abysmal -25 from -7 in June and -1 two months ago. This is by far the weakest print since the recession. In fact, at no point has this metric been this low when we have not been in a recession.
WASHINGTON (Reuters) – Deliberate manipulation of market prices such as has taken place in bank-to-bank loan rates poses significant risks to financial stability and must be monitored by authorities, the Treasury’s Office of Financial Research said on Friday.
The newly minted department within the Treasury, headed by former Morgan Stanley chief economist Richard Berner, was created to address gaps in financial and economic data that might be useful to regulators and other policymakers. Its first ever annual report, totaling 143 pages, contained a cursory nod to the recent Libor scandal, but offered little detail on how to fix the problem.
WASHINGTON (Reuters) – The Federal Reserve is able to influence long-term interest rates even though it only has direct control over short-term borrowing costs, according to a new paper from Fed Board Governor Jeremy Stein.
The author, a Harvard professor who joined the Fed in May, argues that standard theories presuming the central bank exerts very limited influence on longer-term interest rates are flawed.