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Hot Brendan Keenan's "Bleak Omens" for Europe!

Discussion in 'Europe' started by Dublin 4, Dec 8, 2017.

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  1. Tadhg Gaelach

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    Dow Jones Newswires, 10 Oct 2017 04:48 EDT
    Global Forex and Fixed Income Roundup: Market Talk


    0848 GMT - The U.K.'s trade deficit widened in August, suggesting trade was still a drag on growth in the third quarter despite a weak pound. The deficit in goods trade widened to GBP14.2 billion in August, compared with a revised GBP12.8 billion in July, the Office for National Statistics says. That was the widest deficit on record. Including services, the deficit for August was GBP5.6 billion, compared with GBP4.2 billion the previous month. Import volumes rose 4.2% on the month, as the U.K. sucked in chemicals and machinery, while exports rose only 0.7%. The figures underscore how a hoped-for rebalancing of the U.K. economy towards exports and investment and away from consumption remains elusive. (jason.douglas@wsj.com)

    0843 GMT - If Catalonia declares independence and Spanish government triggers Article 155 of the constitution, the end result could be higher market volatility, according to Barclays economists. After Article 155 is invoked, pro-independence groups could "paralyze activity" in major Catalan cities, the economists add. They also don't rule out clashes with the police. Spanish and Catalan bonds have already suffered losses: bid yields on the June 2018-maturing bond of the Region of Catalonia have ballooned to 3.97% from 1.12% in July, while the gap between 10-year Spanish and German government bonds has widened 25 basis points to 125 bps in recent weeks. (tasos.vossos@wsj.com; @tasosvos)

    0816 GMT - Germany's April 2026-dated inflation-linked Bund is trading rich versus surrounding 2023- and 2030-dated linkers but still offers value versus conventional Bunds, says ING rates strategist Martin van Vliet ahead of a EUR1 billion tap auction on Tuesday. With eurozone core inflation projected to gradually move higher over the next six to 12 months, he expects German breakeven inflation rates to remain supported. (emese.bartha@wsj.com; @EmeseBartha)

    0815 GMT - Sterling trades higher against the euro and the dolllar, with EUR/GBP down 0.1% at 0.8930 and GBP/USD up 0.3% at 1.3183, before a string of U.K. economic data at 0830 GMT, including industrial and manufacturing production, trade and construction output. ING expects EUR/GBP to trade "well within" Monday's 0.8905-0.8985 range. U.K. industrial and manufacturing production are expected to rise by 0.7% and 1.8% year-on-year, respectively, in August, according to a WSJ poll. (olga.cotaga@wsj.com; @OlgaCotaga)

    0804 GMT - Yields on the 4.75% bond issued by the Region of Catalonia in 2008 that matures in 2018 have been surging before and after the independence referendum, but this is not the first sell-off this issue suffers. Only last year, yields more than doubled to 5% from 2.45% in the second half of March 2016, when then recently elected Catalan President Carles Puidgemont put the issue of independence on the table. And in the summer of 2012, yields rocketed to 13.5% at the height of the eurozone debt crisis, based on Factset data. But what's especially interesting about the latest sell-off is that when a bond which has less than a year left to maturity its price would typically be expected to return toward par, or face value. This sell-off highlights the exceptional circumstances facing Catalonia.(tasos.vossos@wsj.com; @tasosvos)

    0751 GMT - Spanish bond trade marginally weaker after a slight underperformance within the eurozone this morning, as markets await the Catalan parliament's discussion later in the day, with a potential uniletaral declaration of independence. The 10-year Spanish bond is trading at a yield of 1.68%, up about 1.5 basis points, according to Tradeweb. The 10-year Spanish-German spread is trading at 124 bps, up about 1.3 bps. Barclays economists Apolline Menut and Antonio Garcia Pascual say that "it seems that the most likely path forward is one of escalation by the separatists with a declaration of independence this week most likely on Tuesday." (emese.bartha@wsj.com; @EmeseBartha)

    0750 GMT - The euro rises in a sign of confidence that for now the risk of Catalonian independence is just a Spanish problem, says Thu Lan Nguyen at Commerzbank. Euro gains are small but still EUR/CHF reaches a two-week high 1.1526, according to Factset, and EUR/USD its highest in nearly a week at 1.1789. "We have seen so far that the euro has reacted very little to the political events in Spain," says Ms. Nguyen. However, it could be vulerable if risks of Catalonia separating become more imminent, with Catalan President Carles Puidgemont due to speak to the regional parliament later Tuesday. A weaker dollar also helps EUR/USD as investors remain skeptical of U.S. rates rising much beyond the expected December rise, Ms. Nguyen says. (olga.cotaga@wsj.com; @OlgaCotaga)
    0733 GMT - Use debt and cash from the operating company to finance the acquisition of Multimedia Polska and you will be downgraded. That could be what Moody's is trying to tell UPC Holding as it cuts its outlook on the Liberty Global subsidiary's Ba3 rating to negative from stable, according to UniCredit analyst Jonathan Schroer.Moody's cites the "weaker operating momentum" in Switzerland, but UniCredit is "a bit surprised" as weaker trends in Switzerland have been evident for a while. (tasos.vossos@wsj.com; @tasosvos)


    0728 GMT - Sterling trades mixed before a batch of U.K. data for August at 0830 GMT, including industrial and manufacturing output data, trade and construction output. GBP/USD is up 0.2% at 1.3172 as the dollar weakens, but EUR/GBP is up 0.1% at 0.8941. Industrial output is expected to rise by 0.6% month-on-month and manufacturing by 0.3% from July, according to the consensus in a WSJ poll. The trade deficit is expected to narrow slightly. This could be enough to lift the pound, although a weak construction output number could offset better news elsewhere. "The [construction] sector seems to have been hardest hit by Brexit-related uncertainty," says Unicredit, while RBC notes construction is "set to be a small drag" on 3Q GDP. (jessica.fleetham@wsj.com)

    0727 GMT - The People's Bank of China will try keeping the yuan stable in the run up to and throughout the 19th Party Congress that starts next week, say ANZ's Irene Cheung. That could prove difficult given global markets moving to price in a Fed hike in December, she says. On Tuesday, the PBOC fixed the yuan stronger by the biggest margin in over a month. The offshore yuan closely tracks its onshore counterpart, taking cues from the daily fixing. The USD/CNH pair Tuesday dropped to its lowest level since Sep. 22 and is now down 0.5% at CNY6.5821. Influenced by the PBOC's daily fixes, the USD/CNH gains to likely be capped at below CNY6.70 in the near term, says Cheung, at an about 50% Fibonacci retracement between the high for the pair in December 2016 and its low in September 2017. (kenan.machado@wsj.com)

    0706 GMT - Mizuho is bullish on rates of eurozone core issuers--such as Germany or Finland--and feeling positive about the belly of the yield curve "in particular." This approach bodes well for the Finnish and German five-year debt auctions on Tuesday and Wednesday, respectively. Mizuho says Finland's April 2022-dated bond has widened versus its German peer in the past month, but not enough to justify buying it instead of the longer 2023 and 2024-dated issues. Accordingly, when it comes down to a choice between Finland's April 2022 or Germany's October 2022 bond, Mizuho prefers the German one. (emese.bartha@wsj.com; @EmeseBartha)

    0658 GMT - Givaudan's positive 3Q sales data, combined with the Swiss fragrance firm's room for credit deterioration without sacrificing its rating, support Vontobel's decision to maintain its A- shadow rating. Sales accelerated more than expected in 3Q, while the management confirmed its 2016-20 targets of 4-5% annual organic growth and 12-17% free cash flow margin. Vontobel expects Givaudan's Swiss franc bonds to perform in line with similarly rated peers. (tasos.vossos@wsj.com; @tasosvos)

    (END) Dow Jones Newswires
     
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    TUESDAY, OCTOBER 10, 2017

    TOP NEWS

    [size=2][font=arial][size=2][font=arial][size=2][font=arial]Euro zone debates bailout fund future, sees backstop, crisis prevention role[/font][/size][/font][/size][/font][/size]
    Euro zone finance ministers discussed on Monday the role of their bailout fund in euro zone integration, with support for the fund to stay owned by governments, play a role in crisis prevention and become a backstop for a bank resolution fund. The ministers are the governors of the fund, the European Stability Mechanism (ESM), which was created at the height of the sovereign debt crisis as a lender of last resort to governments. It has a lending capacity of 500 billion euros. "Everyone agreed that the ESM has a very strong role to play not only the crisis management but also in the prevention of future crises," the chairman of the talks Jeroen Dijsselbloem told a news conference.

    China says will have no problem meeting 2017 growth target, may beat it
    China will have no problem meeting its economic growth target of around 6.5 percent this year, and may even beat it, the head of the Statistics Bureau said, confirming widespread market expectations. Steps taken by the government to rein in the overheated property market have also been effective and will remain in place, Ning Jizhe told reporters in a briefing in Beijing. Analysts have expected that full-year growth would meet or exceed the government's target after the economy expanded by a stronger-than-expected 6.9 percent in the first half, fueled by heavy government infrastructure spending and a property boom. If growth does beat last year's 6.7 percent - the lowest in 26 years - it would mark the first acceleration in the growth rate in seven years.

    Bill Gross of Janus blames U.S. Fed for 'fake markets'
    Influential bond investor Bill Gross of Janus Henderson Investors said on Monday that financial markets are artificially compressed and capitalism distorted because of the U.S. Federal Reserve's loose monetary policy. "I think we have fake markets," Gross said at a Janus Henderson event. Investors should brace for higher Treasury bond yields as the Fed begins to unwind its quantitative easing program but yields will edge up "only gradually," he said. Gross said the Fed's loose monetary policy had resulted in investors chasing yield and thus producing tight corporate spreads everywhere around the globe. Gross reiterated his warning that Fed Chair Janet Yellen and other global policy makers should not rely on historical models such as the Taylor Rule and the Phillips curve "in an era of extraordinary monetary policy."

    ECB policy hawk calls for winding down asset buys
    The European Central Bank should reduce its asset buys from next year with the aim of ending them altogether, ECB Executive Board member Sabine Lautenschlaeger said on Monday, just weeks before policymakers decide whether to curb stimulus. Advocating one of the most hawkish positions among rate setters, Lautenschlaeger argued that the factors holding down inflation are temporary so even if patience and stimulus were still needed, swelling the ECB's balance sheet any further is not needed. "I think we should begin reducing our bond purchases next year," Lautenschlaeger,who has frequently opposed past stimulus measures, said in Stuttgart. "This should be done gradually, until we are no longer purchasing additional bonds." "From my point of view, it is important that we really move towards the exit – step by step, but steadily and in a clear direction," she said.

    Fifty-one euro zone banks vulnerable to rate shocks, ECB says
    Fifty-one large euro zone banks are leaving themselves exposed to a sudden change in interest rates and may need to aside more capital against that risk, the European Central Bank said on Monday. "What we need to do is have intense discussions and check with the banks if they're aware of the... risk and if they have enough capital if things go wrong," Korbinian Ibel, a senior supervisor at the ECB, said. Results of the test, which started in February, are incorporated into the ECB's guidance on how much capital each lender on its watch should hold. Ibel said the 51 banks may, in principle, see their capital demands rise by up to 25 basis points, although any decision would depend on the individual circumstances of each firm. Similarly, the remaining 60 banks could see their guidance reduced by the same amount.



    EURO ZONE PERIPHERY GOVERNMENT BOND YIELDS
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    COLUMN


    Hedge funds stick to their misfiring FX guns
    By Jamie McGeever

    Struggling to make money amid ultra-low market volatility, misfiring hedge funds are sticking to their guns with their currency and bond bets on a weaker dollar, stronger UK pound and rising U.S. interest rates.
    The latest futures market positioning data from the Chicago Mercantile Exchange, however, suggests the two foreign exchange trades of that trio will be giving fund managers some sleepless nights.
    Hedge funds and other speculators are at their most bullish in over three years on sterling, just as the currency has registered its biggest weekly fall in a year.
    Their bets on a weaker dollar - the largest net short dollar position since January, 2013 - were largely unchanged in the latest week. But the greenback is on the up, and has appreciated four weeks in a row, or almost 4 percent from its Sept. 8 low.
    Their short-term U.S. bond market bets appear to be more fruitful. Just as another U.S. rate hike this year seems a nailed on certainty, the short position on two-year Treasuries is the largest since late July, and has been larger in only seven other weeks since comparable records began in 1995.

    The most eye-catching of these three trades' positioning last week was sterling. According to the Chicago Futures Trading Commission, hedge funds and other speculators were net long sterling to the tune of 19,949 contracts in the week to Oct. 3.
    That's the most bullish bet on the pound since September, 2014, just before the Scottish independence referendum. Political instability, the Brexit vote and latterly a slump in UK growth has ensured a virtually unbroken short position since.
    The question now is whether hedge funds stick with their new-found enthusiasm for the pound, or revert to their default bearish stance.
    Prime Minister Theresa May is under intense pressure following a disastrous showing at her party's annual conference last week, and the Bank of England appears set on raising rates just as the economy has gone down another gear.
    That's the backdrop to the pound's worst week in exactly a year. It fell 2.5 percent against the dollar last week and more than 2 percent on a trade-weighted basis.
    Hedge funds' dollar bets haven't gone well recently either. Their net CFTC short dollar position against a wide range of currencies was worth an estimated $21.01 billion in the latest week, virtually unchanged from $21.13 billion the week before.
    That was the biggest net short position since January, 2013, according to Reuters calculations. Yet the dollar has risen for four straight weeks as Fed chair Janet Yellen and her colleagues have put another rate hike this year firmly back on the table.
    Money markets now put an 80 percent likelihood on a rate rise in December. Hedge funds haven't changed their FX bets accordingly, even though they are betting fully on short-term U.S. bond yields going up.
    The net short two-year Treasuries position - a bet that short-term yields will go up - was increased in the latest week to 226,840 contracts, the biggest since late-July. It's only been bigger seven weeks in the CFTC's 22 years of tracking this data - four in July this year and three in May 2007.
    The two-year yield last week hit a nine-year high of 1.528 percent. Some immediate interest rate relief for hedge funds' FX ills.
     
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    Dow Jones Newswires, 11 Oct 2017 02:49 EDT
    Global Forex and Fixed Income Roundup: Market Talk


    0648 GMT - Investors should remain cautious toward Spanish assets despite government bonds opening firmer on Wednesday because the Catalonia independence issue is still on the table, KBC analysts say. "Uncertainty remains high at this stage and continues to warrant some cautiousness vis-a-vis Spanish assets, while it might even support some safe haven flows in the Bund," especially if the Spanish government gives a strong verbal response to the regional Catalan government's independence efforts. (emese.bartha@wsj.com; @EmeseBartha)

    0646 GMT - Portuguese government bonds enjoy a solid backdrop ahead of Wednesday's debt auction. Hopes of further ratings upgrades after S&P Global Ratings' move to upgrade Portugal to investment grade in mid-September, and the associated reinclusion in benchmark indices, has meant that Portuguese government bonds have been largely shielded from the recent widening of Spanish and Italian government bonds, say ING rates strategists. Portugal's debt office will offer a total of EUR1 billion to EUR1.25 billion in October 2022 and April 2027 bonds. (emese.bartha@wsj.com; @EmeseBartha)

    0639 GMT - Frankfurt stocks are expected to open firmer amid some relief, even if temporary, over Catalonia's deferred independence. Lang & Schwarz forecasts the DAX to open about 0.1% firmer at 12,967. Analysts at Helaba say the psychological mark of 13,000 points for the DAX does not currently look conquerable, partly due to the lack of fresh purchase stimulus. The upcoming earnings season, however, might provide this impetus. On Wednesday, multi-assets investors are likely to look at Germany's EUR3 billion tap auction of October 2022-dated Bobl as well as debt sales by eurozone peers Portugal and the Netherlands. (emese.bartha@wsj.com; @EmeseBartha)

    0631 GMT - Bond markets' main focus Wednesday should be on Spanish Prime Minister Mariano Rajoy's address in parliament, where he could announce the triggering of Article 155 of the constitution, ING strategists say. Invoking this article would allow the central government to run an autonomous region. On Tuesday, Catalan President Carles Puigdemont stopped short of declaring independence immediately. As "confusion is still prevailing" in Spain, Commerzbank recommends buying into bund dips. German 10-year bonds slip early Wednesday, with yields rising 2 basis points to 0.46%. (tasos.vossos@wsj.com; @tasosvos)

    0621 GMT - Spanish government bonds are firming Wednesday morning, with yields falling and yield spreads over bunds tightening, in response to the Catalonia region's suspended independence bid. The 10-year Spanish bond yield trades at 1.64%, down about 5 basis points, while the spread over bunds narrows 7 bps to 118 bps, according to Tradeweb. Yet headlines on the region's independence efforts will continue impacting bond markets. "Spain will continue dominating spread sentiment with [Spanish Prime Minister Mariano] Rajoy set to provide his rebuttal to [Catalan President Carles] Puigdemont's 'forward declaration of independence' today [Wednesday]," says Christoph Rieger, head of rates and credit research at Commerzbank. Commerzbank sticks to its recommendation to buy spreads and duration into dips. (emese.bartha@wsj.com; @EmeseBartha)

    0609 GMT - Helping fuel further gains in Indian inflation for September was likely food prices, says Morgan Stanley. As it predicts CPI climbed to 3.8% from August's 3.4%, the investment bank estimates that food inflation quickened to 2.2% from 1.5%. Also impacting overall inflation is further GST-related price revisions and the impact of a higher home-rent allowance for government employees. The data are due Thursday. (debiprasad.nayak@wsj.com)

    0506 GMT - Hong Kong Chief Executive Carrie Lam gave an upbeat view on the city's economy during her inaugural policy speech this morning, saying 2017 GDP likely to grow faster than 3.5%, the midpoint of the government's raised August forecast and above the 2.9% annual average of the past decade. That as 1H's growth was 4% amid a tight labor market. (chester.yung@wsj.com; @chester_yung)

    (END) Dow Jones Newswires
     
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    WEDNESDAY, OCTOBER 11, 2017

    TOP NEWS

    Japan Aug core machinery orders rise in signs of pick-up in capex
    Japan's core machinery orders rose for a second straight month in August, handily beating market expectations, signaling a pickup in capital expenditure that should encourage Prime Minister Shinzo Abe ahead of a general election this month. Cabinet Office data showed that core orders rose 3.4 percent on-month in August. That beat the median estimate of a 1.1 percent increase seen in a Reuters poll of economists, following an 8.0 percent gain in July. The value of core orders stood at 882.4 billion yen, the highest since July 2016. Orders from manufacturers jumped 16.1 percent month-on-month in August, while service-sector orders grew 3.1 percent, led by orders for boilers and turbines.

    Global investors raise China bond holdings the most in a year in Sept despite yuan drop
    Offshore institutions increased their holdings of Chinese bonds for a seventh consecutive month in September, indicating resilient overseas demand for the securities despite a weakening yuan. Holdings of all forms of Chinese bonds held by offshore investors and cleared by China Central Depository and Clearing Co rose by 38.7 billion yuan in September, to 896 billion yuan, according to Reuters calculations based data from the clearing house. It was the largest increase in holdings by offshore investors since September 2016, and contrasted with a 1.7 trillion yuan decrease in overall Chinese bond holdings by all investors.

    Fed's Kaplan says low 10-year yield an 'ominous' sign
    Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday he wants to see more signs of upward inflation before raising interest rates again, but that low long-term borrowing costs may limit how far and fast rates can be raised. The Fed has raised rates twice this year, and is widely expected to do so again in December. But even as the short-term interest rate targeted by the Fed has climbed, the yield on the benchmark 10-year Treasury has fallen, a reversal of what usually happens and a development that Kaplan said he sees as "a little ominous." "I view that as a comment on future economic growth," Kaplan said at the Stanford Institute for Economic Policy Research. "And what I don’t want to see us do is raise rates so fast that we get an inverted yield curve because history has shown an inverted yield curve has tended to be a precursor to a recession."

    Germany to raise economic growth forecast for 2017 to 2 pct - source
    The German government will raise its 2017 growth forecast for Europe's biggest economy to 2.0 percent, a sharp increase from its earlier estimate of 1.5 percent and the strongest rate since 2011, a source told Reuters on Tuesday. Berlin also plans to lift its 2018 forecast for GDP to expand 1.9 percent, up from its earlier forecast of 1.6 percent, the person familiar with the projections said. Economy Minister Brigitte Zypries will present the government's updated forecasts today. The International Monetary Fund on Tuesday raised its growth forecast for the German economy to a calendar-adjusted 2.0 percent in 2017 and 1.8 percent in 2018.

    EXCLUSIVE-Global regulators close to final deal on bank capital - sources
    Global banking regulators are close to a final deal on capital rules that aim to ensure banks can withstand financial shocks, with Europe and the United States set to compromise on a major sticking point, banking and regulatory sources said on Tuesday. Completion of these regulations, known as Basel III, would mark a pause in a near decade long effort by global regulators to put banks on a sounder footing after many were bailed out by taxpayers in the 2007-2009 financial crisis. The Basel Committee met last week to try to finalise this final part of the regulatory package, which has faced some resistance. Europe and the United States have disagreed over the extent to which banks can use their own risk models to calculate their capital requirements. Europe has wanted a floor set at 70 percent, while the United States has called for 75 percent. A deal at 72.5 percent now looks on the cards, the sources said.



    JAPAN CORE MACHINERY ORDERS
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    COLUMN


    COLUMN-Is the Fed wary of sub-2 percent Treasury yields?
    By Jamie McGeever
    As the Bank of Japan explicitly targets zero percent 10-year government bond yields, a case could be made that U.S. Federal Reserve is more quietly nudging long-term Treasury yields up from 2 percent.
    It's clearly not official policy and policymakers would be quick to dismiss any targeting outside of the Fed's constitutional mandates. But timing of Fed guidance and market behaviour this year indicates a distinct reluctance at the central bank to seeing 10-year Treasury yields slip back below prevailing inflation rates.
    The 10-year yield, the U.S. and global benchmark, has not dipped below 2 percent this year - although it came very close last month - and every time a slide towards or a break below that threshold has looked on the cards it has snapped back some 20 basis points or more.
    Curiously, each one of those spikes has coincided with a welter of hawkish commentary in some form or other from Fed officials talking up the outlook for U.S. growth and inflation, or downplaying asset bubbles and financial instability risks.
    It goes without saying that there has been no direct or even indirect Fed intervention in the bond market to steer the 10-year yield higher. But it's safe to say Fed officials are more comfortable with it moving up, further away from 2 percent than falling back towards 2 percent.
    "I don't think they have an explicit target but they probably believe that 2 percent is very low given how tight the labor market is," said Torsten Slok, managing director and chief international economist at Deutsche Bank in New York.
    "Financial markets are overheating and gradually increasing long rates would be a good tool to try to slowly tighten financial conditions and thereby prolong the current economic expansion," he said.
    The Fed has raised rates a quarter of a percentage point four times since December 2015. Almost a decade on from the onslaught of the financial crisis, it will begin reducing its QE-inflated balance sheet later this year.
    To say the Fed is proceeding cautiously is an understatement. Rate rises have been moderate in size and gradual in pace, and the balance sheet unwind is coming after a full three years of being kept steady at a record $4.2 trillion.
    Yet the Fed is still tightening. Its vision of policy "normalization" won't include a depressed or falling 10-year yield. Policymakers have downplayed the persistently flat yield curve, arguing that it doesn't have the predictive powers of economic slowdown or recession it once had.
    It's in this light that the ebb and flow of the 10-year yield this year set against Fed commentary is illuminating.

    GOTTA GET A MESSAGE TO YOU
    On Jan 18, with the yield down more than 30 basis points over the preceding month at 2.31 percent, Fed chair Janet Yellen gave a speech to the Commonwealth Club of California in San Francisco.
    "Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road - either too much inflation, financial instability, or both," she said.
    Less than a week later, the 10-year yield was up at 2.55 percent.
    The next month the yield was on the slide again, revisiting 2.31 percent on Feb. 24 before bouncing all the way up to 2.62 percent over the following three weeks.
    No fewer than four Fed officials delivered upbeat comments on the U.S. economy between Feb. 20-22, suggesting that rates would soon go up again. They were duly raised on March 15.
    On April 18, the 10-year yield was at its lowest point of the year around 2.17 percent. Between April 18-20 four Fed officials, including deputy governor Stanley Fischer, talked of the need to unwind the Fed's balance sheet, the benefits of raising rates and the dangers of waiting too long to do so.
    Barely two months later the yield was even lower, bottoming out at 2.10 percent on June 14. That very day the Fed raised rates, citing continued economic and labour market strength, and announced it would begin cutting its holdings of bonds and other securities this year.
    In her news conference, Yellen struck an upbeat note on the economy, said the recent weakness in inflation was transitory and noted that the QE unwind could start "relatively soon". The yield rose 30 basis points over the next month.
    Most recently, on Sept. 8, the benchmark Treasury yield was 2.02 percent and the yield curve close to its flattest in a decade. A break below 2 percent seemed likely.
    That same day New York Fed President William Dudley, one of the most influentialFed officials, said the yield curve wasn't too flat and that inflation and wage growth were poised to rise. Lags in policy means the Fed should still act even with inflation below its 2 percent target, he added.
    It may be coincidence, but the 10-year yield then rose nearly 40 basis points, hitting a five-month high of 2.40 percent last Friday.
    Another rate hike this year is a nailed on certainty, if market pricing is to be believed, and the Fed will soon begin shrinking its balance sheet. The two-year yield is its highest in nine years, meaning the yield curve remains extremely flat.
    This is not good for banks, who make money by borrowing at lower, short-dated rates and lending at higher, longer-term rates. Should the 10-year yield lurch lower again towards 2 percent, don't be surprised if Fed officials start talking up the economy and rates again.
     
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    Dublin 4 Legend Donator Battle Royale Political Irish Political Irish

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    Dublin 4

    Dublin 4 Legend Donator Battle Royale Political Irish Political Irish

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    Dublin 4

    Dublin 4 Legend Donator Battle Royale Political Irish Political Irish

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    [​IMG]
     
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