Senior
http://www.bloomberg.com/news/2014-0...b-meeting.html
Euro volatility surged to the highest in a year and price swings in Treasuries rose to a two-month high as investors speculated on the extent to which the European Central Bank will ease monetary policy today.
Ultimate Underdog
Really "raising" interest rates. What a joke.Originally Posted by Arcachon
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
Senior
Everyone talking about "raising interest" should read more.
Newbie
Is the title of this thread a pun?
According to BBC, ECB has cut its interest rate:
http://www.bbc.com/news/business-27717594
Senior
This thread is for those "interest rate going up" group to read.
Senior
The European Central Bank (ECB) has lowered its benchmark interest rate to 0.15% from 0.25% in an effort to stimulate economic growth and avoid deflation in the eurozone.
It has also reduced its deposit rate below zero, to -0.1%, which means commercial banks will have to pay to lodge their money with the central bank, rather than receive interest.
The idea is to incentivise the banks to lend to businesses, thereby stimulating growth.
The ECB is the first of the "Big Four" central banks (the ECB, the US Federal Reserve, the Bank of Japan and the Bank of England) to do this.
What will happen when Singapore Bank interest rate is 3.5%.
Senior
WHICH do central banks hate more: low interest rates or rising inflation? They really, really hate low rates, that's for sure. Searching the Federal Reserve's website for "reach for yield" returns a nice long list of speeches in which Fed officials warn against the dangers of a long period of low rates. And yet...
A piece in this week's print edition looks at the outlook for interest rates. Despite recent ticks upward in the expected path for policy rates in America, markets think both America and Britain will by 2016 be closing in on nearly a decade of ultra-low rates. The path forward for the euro area is even flatter; markets don't anticipate the ECB getting back to 2% until at least 2020. And this is all assuming that things go according to plan. In 2007 the Bank of Japan thought it was close to putting 13 years of sub-1% rates behind it; the onset of global crisis meant it is instead nearly 20 years into its liquidity trap.
Two decades appears to have been enough. Alone among big rich economies, Japan is now actively trying to raise inflation, in hopes of finally kicking its low rate, low growth habit. Higher inflation is the only reasonable way forward:
This would let central banks cut effective borrowing costs despite the zero bound on interest rates, since inflation reduces the burden of repaying a given loan. Just as important, higher inflation would speed up interest-rate normalisation.Last November Fed economists published a paper arguing that lifting the inflation target to 3% would rapidly lower unemployment while allowing the Fed’s policy rate to rise higher, faster. The argument does not seem to have swayed the Fed’s monetary-policymaking committee, which continues to project inflation of at most 2% until the end of 2016. Markets reckon prices will rise even more slowly.
Not only is the Fed not raising its inflation target, it is tightening while inflation remains well below the 2% target (as it has about 90% of the time since the 2% target was announced in 2012); indeed, just today we learned that the Fed's preferred inflation gauge rose at just 0.9% in the year to February, down from 1.2% in January. Inflation is also falling in Britain (from 1.9% in January to 1.7% in February). And it is tumbling in Europe. New figures show that Spain has fallen into deflation, making five euro-area economies experiencing outright declines in the price level.
The rich world's central banks are behaving with a dangerous complacency. Low and falling inflation will retard ongoing recoveries. Perhaps more important, this path forward leaves the rich world with virtually no cushion against future shocks.
Central banks talk an awful lot about the importance of credibility. But talk is cheap. I'm not sure how the Fed can expect anyone to take its word seriously when it has undershot its target nearly every month that target has been in place, when its forecasts make clear that it fully intends to undershoot that target for years to come and indeed on average, and when it is busy pulling away support to the economy while inflation falls ever farther below 2%. It's a joke.
http://www.economist.com/blogs/freee...-and-inflation
Senior
European stocks rose, trading near a six-year high, and Germany’s DAX Index briefly topped 10,000 for the first time after European Central Bank President Mario Draghi unveiled new plans to stimulate the region’s economy.
Banks posted some of the biggest gains in the region, with Mediobanca SpA, Banco de Sabadell SA and Commerzbank AG climbing more than 3 percent each. Smith & Nephew Plc rose 2.3 percent as Medtronic Inc. was said to consider a takeover of the U.K. company. Asos Plc (ASC) tumbled the most on record after cutting its profitability forecast, dragging online retailers lower. Deutsche Bank AG fell 3.8 percent after offering shareholders a discount of more than 20 percent to buy new stock.
The Stoxx Europe 600 Index added 0.4 percent to 344.99 at the close of trading in London after rising as much as 1.2 percent. Draghi unveiled an unprecedented round of measures to avoid the threat of deflation, saying officials will speed up preparations related to the purchases of asset-backed securities. The DAX added 0.2 percent to 9,947.83 after climbing to 10,013.69. The Euro Stoxx 50 Index of euro-area equities gained 0.9 percent to 3,267.05, the highest level since September 2008.
“Draghi’s big statement for me is that the ECB is accelerating plans for QE,” Alan Higgins, who helps oversee about $48 billion as U.K. chief investment officer at Coutts & Co. in London, said in an interview. “He’s been quite explicit. What’s driving risk assets today is that if inflation continues to fall and the euro continues to rally, the ECB will do conventional QE.”
ECB Liquidity
The ECB opened a 400-billion-euro ($542 billion) liquidity channel tied to bank lending, and officials will begin work on an asset-purchase plan. The ECB cut its deposit rate to minus 0.1 percent, becoming the first major central bank to take one of its main rates negative. It lowered its benchmark interest rate to a record low of 0.15 percent, compared with a median estimate of 0.1 percent in a Bloomberg News survey. All but two of the 60 economists surveyed had forecast a cut in the main refinancing rate.
National benchmark indexes rose in 12 of the 17 western European markets open today. France’s CAC 40 climbed 1.1 percent, and the U.K.’s FTSE 100 slid 0.1 percent. Markets in Denmark were closed for the Constitution Day holiday.
The volume of shares changing hands on Stoxx 600-listed companies was 29 percent greater than the average of the past 30 days, data compiled by Bloomberg show.
Banks Rally
A gauge of lenders in the Euro Stoxx 50 rallied 1.3 percent. Italy’s Mediobanca rose 4 percent to 7.65 euros, while Spain’s Banco de Sabadell advanced 3.6 percent to 2.52 euros and Commerzbank, Germany’s second-largest bank, gained 3.2 percent to 11.81 euros.
Smith & Nephew advanced 2.3 percent to 1,088 pence. The maker of medical devices is aware of Medtronic’s interest, as are investment banks, said people familiar with the matter. Medtronic’s preparations for a bid are at an early stage and no offer is imminent, they said.
Bellway Plc added 2.2 percent to 1,436 pence. The British homebuilder said demand for new homes remains robust and predicted an operating margin of about 17 percent for the year ending July 31 from less than 14 percent.
Asos tumbled 31 percent to 3,120 pence, its lowest price since April 2013. The online fashion retailer forecast that earnings before interest and taxes will be about 4.5 percent of sales for the year through August, compared with a previous margin estimate of 6.5 percent. Retail sales increased 25 percent in the quarter through May after rising 26 percent in the two months through February, the company said.
Online Retailers
Investment AB Kinnevik fell 6 percent to 253.40 kronor. The Swedish company owns a stake in Zalando AG, a German online shoe and clothing retailer.
Milan-based Yoox SpA, which competes with Asos, retreated 6.1 percent to 21.75 euros. Boohoo.com Plc lost 9.1 percent to 45 pence, extending losses since its March initial public offering to 10 percent.
Deutsche Bank fell 3.8 percent to 28.58 euros. Europe’s biggest investment bank said it will offer 6.75 billion euros worth of new shares to investors at 22.50 euros apiece, exceeding an original target of 6.3 billion euros.
Volvo AB (VOLVB) slipped 2.9 percent to 93.70 kronor. UBS AG cut its rating on the world’s second-largest truckmaker to sell from neutral. Analysts led by Fredric Stahl said its recovery in Europe will disappoint because the improvement in truck demand doesn’t come from all markets but mainly from Italy.
To contact the reporter on this story: Sofia Horta e Costa in London at [email protected]
http://www.bloomberg.com/news/2014-0...efore-ecb.html
Senior
Ultimate Underdog
New CM on the way if this persists!
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
Ultimate Underdog
I can already picture Mr Khaw acting as Gandalf with his staff firmly on the ground and bellowing, "You shall not pass!"
The three laws of Kelonguni:
Where there is kelong, there is guni.
No kelong no guni.
More kelong = more guni.
Senior
Interesting to watch with ECB injecting Euro400 billion and interest rate below zero.
Junior
more like kena choke slam by the ECB undertaker and followed by a tombstone finishing move
Junior
Japan Seeks Faster Pension Fund Revamp
By ELEANOR WARNOCK CONNECT
June 5, 2014 9:04 p.m. ET
TOKYO—Japan's welfare minister said he would ask the nation's nearly ¥130 trillion ($1.27 trillion) public pension fund to accelerate a reallocation of its portfolio currently set to take place by the end of March 2015.
The Government Pension Investment Fund is the reserve fund for Japan's public pension system and is the largest public pension fund in the world.
It is overseen by the health, labor and welfare ministry. A change in its portfolio to include more shares could help boost Japan's stock market.
Junior
Every govs in the world now are urgently re allocating paper money wealth into hard assets.
They disguised it as "low inflation" and "lack luster share market". Are they mad? Inflation is so high now and share markets are hitting record high.
Blue blood
The Business Times @BTBreakingnews 11m
Gold firm after ECB policy easing; all eyes on #US jobs report http://www.btd.sg/1mXWjVb
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