Spain doesn’t need financial help. That was the verdict from euro zone ministers on Monday – quickly followed by a selloff in Spanish stocks and bonds on Tuesday. The trouble with that line of thinking is that it again leaves policymakers behind the curve, reacting to events rather than preempting them, write currency strategists at Brown Brothers Harriman in a research note:
For several weeks now Germany Finance Minister Schaeuble has argued against the need for Spain to request aid. France and Italy, in contrast, have been reportedly encouraging Spain to ask for assistance, which they assume would ease financial pressures within the region as whole. The Eurogroup meeting of euro area finance ministers endorsed Schaeuble’s position. Spain is taking necessary measures to overhaul the economy, they said. Spain is able to successfully fund itself in the capital markets. Aid is simply not needed now.
The pace of Federal Reserve speeches intensifies next week, with Vice Chair Janet Yellen kicking off the calendar on Tuesday with a speech on financial stability. Yellen will be speaking in Tokyo at an IMF meeting panel. The cacophony picks up on Wednesday, with remarks from Minneapolis Fed president and recent dovish convert Narayana Kocherlakota, the board’s regulation-czar Dan Tarullo and the ever hawkish Richard Fisher from Dallas. On Thursday, Yellen will directly address monetary policy in another speech, while board governors Jeremy Stein and Sarah Raskin offer a rare peak into their macroeconomic views. Philadelphia Fed President Charles Plosser and Jim Bullard of the St.Louis Fed, both of whom have opposed QE3, are also on tap. Jeff Lacker, the lone dissenter on this year’s FOMC, will close the week on Friday.
WASHINGTON, Oct 4 (Reuters) – The U.S. Federal Reserve may
adopt numerical thresholds for inflation and joblessness that
would serve as guideposts for policy, according to minutes from
a September meeting that revealed some reticence about the
central bank’s latest stimulus.
The Fed last month launched a third round of large-scale
bonds buys, announcing an open-ended program that kicks off with
$40 billion per month of new mortgage debt purchases.
As Americans get ready or tonight’s presidential debate, there’s one candidate they won’t be seeing on television and may not even have heard of: Jill Stein, a Harvard-trained doctor and Green Party candidate. Stein is promising a Green New Deal that she says could create more than 20 million jobs, 16 million through a government-sponsored program for full employment and millions more due to the increase in demand that would come from the new investments. She wants to expand Medicare coverage for all Americans and sharply reduce military spending, and says her policies would reduce the deficit by boosting tax revenues. She spoke to Reuters recently by telephone. What follows is an abbreviated transcript of the interview.
The Green Party does not appear to have realistic chance to win a major election at the moment. What is the goal of your candidacy?
Spain will not seek aid imminently, says Prime Minister Mariano Rajoy. And by imminently, he means, not this weekend. Just the latest twist in a European crisis plot that now sees Spain as its primary actor.
The focus on Spain’s reluctance to see foreign aid, a pre-condition for additional European Central Bank purchases of its bonds, is ironic given the country’s record of goading weaker counterparts into similar rescue packages earlier in the crisis.
Federal Reserve Chairman Ben Bernanke has been trying for some time to fend off critics of his bond-buying policies who argue the central bank is making it easier for the federal government to run deficits. In remarks to the Economic Club of Indiana on Monday, he seems to have found a useful way to help illustrate his point.
It follows logically that those who say the Fed is abetting profligate governments might want to see higher interest rates that would discourage excess federal borrowing. Bernanke pursues this line of thinking to its natural conclusions – and is very uncomfortable with the results:
In a historic shift in the way the Federal Reserve conducts monetary policy, theU.S. central bank last week announced an open-ended quantitative easing program where it has committed to continue buying assets until the country’s employment outlook improves substantially. Bank of America-Merrill Lynch credit analysts captured Wall Street’s reaction:
With an open-ended QE program to buy agency mortgages, and an extremely dovish statement, the Fed managed to provide a positive surprise for a market that was expecting a lot.
By Pedro Nicolaci da Costa
(Reuters) – A string of speeches from top Federal Reserve officials on Tuesday suggested the U.S. central bank is willing to be aggressive in its drive to beef up economic growth, yet also highlighted a small but vocal minority opposing fresh stimulus.
As Fed policymakers took to the podium following their announcement of an open-ended bond-buying program last week, William Dudley, the New York Federal Reserve Bank’s influential president, said officials are committed to accelerating the pace of economic recovery.
The European crisis has thinned the ranks of countries considered safe-havens for investors, and may be contributing to an increase in foreign ownership of Canadian assets. Canada, whose comparatively robust banking sector helped it weather the 2008-2009 financial crisis better than many peers, saw capital inflows in July that helped reverse a June decline, according to the latest figures.
Foreigners resumed their net purchases of Canadian securities in July, taking on C$6.67 billion ($6.88 billion) after having reduced their holdings by C$7.76 billion in June, Statistics Canada said on Monday. Canadian authorities have said foreign investors view Canada as a safe haven. So far this year foreigners have made C$41.23 billion in net purchases, a substantial amount though down from C$54.31 billion seen in the first seven months of 2011.
WASHINGTON (Reuters) – The U.S. Federal Reserve appears set to launch a third round of unconventional monetary stimulus on Thursday while signalling that a weak U.S. economy may warrant ultra-low interest rates for at least another three years.
Not everyone believes the Fed will embark on another bond- buying spree, and plenty of doubts remain about the likely efficacy of such a move.