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Jun 6, 2013
via MacroScope

Inflation, not jobs, may hold key to Fed exit

It’s that time of the month again: Wall Street is anxiously awaiting the monthly employment figures – less because of its interest in job creation and more because of what the numbers will mean for the Federal Reserve’s unconventional stimulus policies.

As one money manager put it all too candidly: “Bad news is good news in this market lately because it keeps the Fed buying bonds and interest rates low.”

Jun 5, 2013

U.S. economy expanding, but still sluggishly: Fed Beige Book

WASHINGTON (Reuters) – The U.S. economy expanded at a “modest to moderate” pace since mid-April while hiring remained relatively subdued, according to a Federal Reserve report based on discussions with business contacts.

Consumer spending picked up and housing continued to show signs of strength, the Fed’s Beige Book showed. The previous report cited “moderate” growth, so the addition of the word “modest” may hint at some weakening.

Jun 5, 2013

Economy expanding, but still sluggishly: Fed Beige Book

WASHINGTON (Reuters) – The economy expanded at a “modest to moderate” pace since mid-April while hiring remained relatively subdued, according to a Federal Reserve report based on discussions with business contacts.

Consumer spending picked up and housing continued to show signs of strength, the Fed’s Beige Book showed. The previous report cited “moderate” growth, so the addition of the word “modest” may hint at some weakening.

Jun 4, 2013
via MacroScope

MacroScope presents: ask the economist

MacroScope is pleased to announce the launch of ‘Ask the Economist,’ which will give our readers an opportunity to directly ask questions of top experts in the field. We are honored that Michael Bryan, senior economist at the Federal Reserve Bank of Atlanta, has agreed to be our first guest. In his role, Bryan is responsible for organizing the Atlanta Fed’s monetary policy process. He was previously a vice president of research at the Cleveland Fed.

The process is simple. We give you a heads up on our upcoming featured economist. You tweet us your question using the hashtag #asktheeconomist, or via direct message if you prefer. We select a handful of the most interesting queries this week, ship them over to our economist du jour. She or he will then answer each one in writing and we will post their response as a blogpost. And of course, you’ll be cited for asking the pithy question.

May 28, 2013
via MacroScope

The rationale for a December Fed taper

Vincent Reinhart, a former top Federal Reserve researcher who is now chief U.S. economist at Morgan Stanley, believes the U.S. central bank will begin pulling back on the pace of asset purchases in December. Here’s how he arrives at that timeline:

We believe the Fed is going to need to see four employment reports averaging net gains in nonfarm payrolls of at least 200,000 to justify reducing the pace of its asset purchases. The arithmetic of the calendar would then put the earliest date of tapering/tightening in September, which conveniently for the Fed is a meeting followed by a press conference.

May 28, 2013
via MacroScope

Why a German exit from the euro zone would be disastrous – even for Germany

Let’s face it: “Gerxit” doesn’t roll of the tongue nearly as smoothly as a “Grexit” did. While Europe continues to struggle economically, fears of a euro zone break-up have receded rapidly following bailouts of Greece and Cyprus linked to their troubled banking sectors.

Mounting anti-integration sentiment in some of region’s largest economies, raise concerns about whether the divisive monetary union will hold together in the long run. Indeed, the rise of an anti-Europe party in Germany begs the question of what would happen if one of the continent’s richer nations decided to abandon the 14-year old common currency. Never mind that, viewed broadly, the continent’s banking debacle has actual saved Germans money so far.

May 22, 2013
via MacroScope

Is Congress the ‘enabler’ of a loose Fed?

We heard it more than once at today’s hearing of the Joint Economic Committee featuring Fed Chairman Ben Bernanke: the central bank’s low interest rate policies are allowing Congress to delay tough decisions on long-term spending.

As U.S. senator Dan Coats asked pointedly: “Is the Fed being an enabler for an addiction Congress can’t overcome?”

May 21, 2013

Argentina says 2013/14 wheat area to expand 40 percent

BUENOS AIRES (Reuters) – High wheat prices, a government tax rebate plan and expected good weather will prompt Argentine farmers to expand planting of the grain by 40 percent this season compared with the 2012/13 crop year, Agriculture Secretary Lorenzo Basso said on Tuesday.

“The area will be close to 4.5 million hectares, for sure,” Basso told the Reuters Latin America Investment Summit.

May 20, 2013

Crisis-hit Argentine biodiesel sector eyes U.S. market

BUENOS AIRES (Reuters) – Argentina is pursuing U.S. environmental approval to export biodiesel more easily to that market and revitalize a local industry in “crisis” due to trade problems with the European Union, Argentina’s main biofuels chamber said on Monday.

The head of the chamber, known by its Spanish acronym Carbio, spoke to the Reuters Latin America Investment Summit on Monday.

May 20, 2013
via MacroScope

What to expect from Bernanke testimony and Fed minutes this week

Financial markets this will be keenly focused on congressional testimony from Fed Chairman Ben Bernanke and minutes from the central bank’s April 30-May 1 meeting, particularly given a thin data calendar. The latter may be the more interesting one, since it will offer hints into how far Fed officials are leaning in a direction of curbing the pace of its bond-buying stimulus, potentially late this summer.

The economic backdrop has been just mixed enough to leave policymakers cautious about taking their foot off the gas. Still, if we get a few more months of strength in the labor market, Fed officials may just be able to say “substantial progress” has been made in the outlook for the labor market – their stated precondition for an end to asset buys.

    • 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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