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Apr 18, 2012
via MacroScope

Election fever hits the markets

We’re not talking about the U.S. presidential vote, though that does cast another layer of uncertainty over the outlook. Rather, investors are focused on even shorter-horizon events, as evidenced by this jam-packed electoral worry list from Marc Chandler, currency strategist at Brown Brothers Harriman:

This weekend’s first round of the French presidential election kicks of the quarter that will include:

Apr 18, 2012
via MacroScope

Selective transparency at the Fed

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It’s something of a dissonant communications strategy: Fed officials are willing to tell us what they think will happen three years from now, but not what they discussed three years ago.

The Federal Reserve’s public relations arm holds up the chairmanship of Ben Bernanke as a model of transparency. And it’s true. Press conferences and federal funds rate forecasts are major steps forward for a central bank that until the mid-1990s didn’t even tell the markets what it was doing with interest rates.

Apr 17, 2012
via MacroScope

U.S. housing slump: Six years and counting

Just as Americans begin to regain some hope that the housing sector might be on the mend, we get another batch of data showing the sector’s not quite there yet.

Groundbreaking on homes fell unexpectedly in March to an annual rate of just 654,000, down from 694,000 in February and well short of the 705,000 Reuters consensus forecast. Some context: permits peaked above 2.2 million in early 2006, at the apex of the housing bubble. On the bright side, permits for future construction rose to their highest level in 3-1/2 years.

Apr 17, 2012
via MacroScope

Foreign investors still buying American

Overseas investors have yet to sour towards U.S. assets despite high government debt levels, according the latest figures on capital flows.

Including short-dated assets such as bills, foreigners snapped up $107.7 billion in U.S. securities in February, following a downwardly revised $3.1 billion inflow for January. At the same time, the United States attracted a net long-term capital inflow of just $10.1 billion in February after drawing an upwardly revised $102.4 billion in the first month of 2012.

Apr 17, 2012

Fed tries to steer clear of controversial bond buys

WASHINGTON (Reuters) – The U.S. Federal Reserve is independent but it does not exist in a vacuum, as waning appetite at the central bank for contentious bond purchases suggests.

Minutes from the Fed’s March meeting released this month showed support thinning for further bond purchases. Officials are unlikely to develop any more appetite for them by their meeting next week, despite disappointing March jobs figures.

Apr 16, 2012

Preview: Fed tries to steer clear of controversial bond buys

WASHINGTON (Reuters) – The U.S. Federal Reserve is independent but it does not exist in a vacuum, as waning appetite at the central bank for contentious bond purchases suggests.

Minutes from the Fed’s March meeting released this month showed support thinning for further bond purchases. Officials are unlikely to develop any more appetite for them by their meeting next week, despite disappointing March jobs figures.

Apr 12, 2012

Economy would likely have to worsen for Fed to act

WASHINGTON (Reuters) – U.S. Federal Reserve officials, out on a speaking spree on Thursday, suggested the economy would have to deteriorate for the central bank to consider additional monetary stimulus.

Policymakers did hint at the possibility of further action, with Fed Board Governor Sarah Raskin saying the Fed stands ready to do all it can to support the economic rebound, while New York Fed President William Dudley emphasized the recovery’s fragility.

Apr 12, 2012
via MacroScope

Federal Open Mouth Committee – Today’s lengthy list of Fed speakers

Thursday, April 12

SYRACUSE, N.Y. – Federal Reserve Bank of New York President William Dudley speaks on regional and national economic conditions before the Center for Economic Development, 0715 EDT/1115 GMT. Audience Q&A expected.

ATLANTA – Federal Reserve Bank of Atlanta President Dennis Lockhart moderates “Bridging the Border: Reinforcing Ties Between the U.S. and Mexico” panel discussion presented by the Federal Reserve Bank of Atlanta and the World Affairs Council of Atlanta

Apr 12, 2012
via MacroScope

Central bank balance sheets: Battle of the bulge

Central banks across the industrialized world responded aggressively to the global financial crisis that began in mid-2007 and in many ways remains with us today. Now, faced with sluggish recoveries, policymakers are reticent to embark on further unconventional monetary easing, fearing both internal criticism and political blowback. They are being forced to rely more on verbal guidance than actual stimulus to prevent markets from pricing in higher rates.

How do the world’s most prominent central banks stack up against each other? The Federal Reserve was extremely aggressive, more than tripling the size of its balance sheet from around $700-$800 billion pre-crisis to nearly 3 trillion today. Still, the ECB’s total asset holdings are actually larger than the Fed’s – it started from a higher base.

Apr 11, 2012
via MacroScope

Hysterical about hysteresis

Economists at times fancy themselves scientists – and they like to borrow from scientific lingo to lend their theories some extra gravitas.

The U.S. unemployment crisis is a case in point. There is a long-running debate among economists as to whether the bulk of joblessness is cyclical, resulting from a lack of demand in a depressed phase of the business cycle, or structural, the product of more fundamental issues such as skills mismatches. The latter problem is more intractable, economists say, and less amenable to treatment via an easy monetary policy.

    • About Pedro

      "Pedro da Costa has been covering economics and financial markets since 2001. He is currently based in Washington and focuses on the Federal Reserve and macroeconomic policy. Da Costa earned a Master's in international relations at the University of California San Diego and studied sociology and political science as an undergraduate at the University of Chicago and the London School of Economics. He grew up in Rio de Janeiro, Brazil."
      Joined Reuters:
      2001
      Languages:
      English, Portuguese, Spanish, French
      Awards:
      2011 Deadline Club Award from the Society of Professional Journalists' New York Chapter
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