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LAGE DATA2 yang mendukung PENUNDAAN THE FED FUND RATE k 2016 (3) 000ps

suasana STIMULUS BANK SENTRAL yang TLAH DIPREDIKSI, terbukti BENAR, tuh



























































ada kemiripan TREN: Dow Jones Industrial Average Index dg IHSG ... saat FED SCARE (kecemasan the Fed MENAEKKAN bunga / the FED FUND RATE), maka ke2 indeks TURUN ...
saat the FED tidak terbukti (pertengahan 2015), maka indeks2 tersebut NAEK lage ... lalu kecemasan @ the fed fund rate TINGGI lage, maka tren indeks TURUN lage @ Desember 2015, namun saat tlah terjadi kenaekan, ekh, indeks MALAH NAEK lage... nah ULANGAN PERISTIWA 2015 @ THE FED sedang TERJADI @ MAY-JUNE 2016 ... kemungkinan ada kemiripan bisa berulang :)
hukum ekonomi: EKUILIBRIUM ... keseimbangan baru pada setiap kali perubahan ... nah, biasanya setiap ada perubahan kebijakan bunga the fed maka terjadi reaksi PASAR ... jika bunga naek, tentu aza pasar bereaksi melemah karna terjadi peralihan MODAL ke instrumen bank sentral yang berimbal hasil naek ... namun, kemudian, biasanya terjadi reaksi PEMBALIKAN ARAH (rebound, redirection, antagonistic move) BUNGA TURUN, DUNIA TUMBUH, malah menuju KEMBALInya MODAL (repatriasi negatif, capital inflow, hot money) ke instrumen yang TERNYATA MALAH TETAP BERIMBALHASIL LEBE TINGGI (misalnya, saham, obligasi negara berkembang) ... itu sebabnya PENDULUMISASI EKONOMI GLOBAL slalu TERJADI seh :)



 

Bisnis.com, JAKARTA – Bursa saham AS ditutup melemah tipis karena investor masih menimbang arah kebijakan moneter Federal Reserve menyusul data ekonomi yang mixed.
Indeks Standard & Poor’s melemah tipis 0,01% atau 0,32 poin ke level 2.186,15 pada penutupan perdagangan, sedangkan indeks Dow Jones Industrial Average melemah 11,98 poin atau 0,06% ke 18.526,14.
"Data ekonomi yang keluar pada minggu terakhir tergolong lemah," kata Walter Todd, kepala investasi Greenwood Capital Associates LLC, kepada Bloomberg.
"Ada sedikit sensasi mengenai kenaikan suku bunga The Fed pada September, tapi sekarang kita kembali ke posisi sebulan yang lalu, mempertanyakan apakah mereka akan meningkatkan suku bunga tahun ini," lanjutnya.
Data yang dirilis Rabu menunjukkan lowongan kerja naik ke rekor tertinggi enam bulan terakhir pada Juli. Secara terpisah, survei Beige Book Fed mengenai kondisi daerah menyatakan ekonomi tumbuh pada kecepatan yang moderat pada bulan Juli dan Agustus karena pasar tenaga kerja yang kuat tidak mampu mendorong kenaikan upah dan harga.
Pada perdagangan Rabu, Bursa saham gagal menguat setelah saham bahan pokok membukukan penurunan terburuk dalam enam pekan terakhir, mengimbangi penguatan sektor teknologi dan energi.
Di antara saham yang membebani sektor bahan pokok, saham Whole Foods anjlok ke level terendah empat bulan terakhir, sementara saham Kroger merosot  ke level terendah sejak Maret, sedangkan saham Colgate-Palmolive Co dan Mead Johnson Nutrition Co melemah masing-masing 2% dan 5,5%.

Memperkuat kelompok teknologi, Western Digital Corp melonjak 12% setelah menaikkan outlook kuartal fiskal pertama, sedangkan pesaingnya, Seagate Technology Plc, menguat 5,9% ke level tertinggi dalam lima bulan terakhir.

JAKARTA. Emas berjangka di divisi Comex New York Mercantile Exchange berakhir menguat pada perdagangan Senin atau Selasa pagi WIB), di saat pasar mempertimbangkan pidato Gubernur Federal Reserve AS Janet Yellen pada Jumat lalu.

Kontrak emas yang paling aktif untuk pengiriman Desember naik USid="mce_marker",2 atau 0,09% menjadi menetap di 1.327,1 dolar AS per ounce, seperti dikutip Antara, Selasa (30/8/2016).

Logam mulia mendapat dukungan karena pedagang mencerna pernyataan hawkish dari Yellen yang mengatakan akan terbuka kemungkinan kenaikan suku bunga pada bulan depan. Para pedagang tetap percaya Fed baru akan menaikkan suku bunga dari 0,50 ke 0,75 pada  pertemuan Komite Pasar Terbuka Federal (FOMC) Desember.

Menurut alat Fedwatch CME Group, probabilitas tersirat saat ini untuk menaikkan suku bunga dari 0,50 ke 0,75 adalah 24% pada pertemuan September 2016, 30% pada pertemuan November 2016, dan 55% pada pertemuan Desember.

Para investor sedang menunggu rilis beberapa data utama yang kemungkinan akan menunjukkan pemikiran mereka selama pertemuan FOMC September dalam beberapa minggu mendatang.

Laporan klaim pengangguran mingguan akan keluar pada Kamis (1/9/2016) dan laporan ketenagakerjaan besar pada Jumat (2/9/2016), bersama dengan data perdagangan internasional.

Logam mulia dicegah dari kenaikan lebih lanjut karena indeks dolar AS naik 0,06% persen menjadi 95,54 pada pukul 17.45 GMT. Indeks adalah ukuran dari dolar terhadap sejumlah mata uang utama.

Emas dan dolar biasanya bergerak berlawanan arah, yang berarti jika dolar naik maka emas berjangka akan jatuh, karena emas yang dihargakan dalam dolar AS menjadi lebih mahal bagi investor.

http://market.bisnis.com/read/20160830/235/579469/harga-emas-tak-yakin-fed-rate-naik-september-logam-mulia-menguat




Sumber : BISNIS.COM

- Associated Press - Monday, August 29, 2016

WASHINGTON (AP) — American consumers boosted spending at a slower pace in July, while their incomes accelerated slightly.
Spending grew 0.3 percent in July following a 0.5 percent increase in June, the Commerce Department reported Monday. The slowdown had been expected given an earlier report that retail sales were flat in July. Incomes grew 0.4 percent in July, up from a 0.3 percent increase in June.
Economists are counting on solid gains in consumer spending, which accounts for 70 percent of economic activity, to power overall growth in the second half of the year.
The deceleration in July is likely to be followed by stronger spending increases in coming months. For July, spending on durable goods such as autos rose by a solid 1.6 percent, but spending for nondurable goods fell.
The overall economy, as measured by the gross domestic product, grew at an anemic annual rate of 1.1 percent in the April-June quarter, marking a full year in which growth has limped along at an annual rate of 1.2 percent. But economists believe many of the headwinds that have been holding back growth are starting to diminish. They expect growth in the current quarter to rebound to above 3 percent, powered by strong consumer spending and solid employment gains.
Federal Reserve Chair Janet Yellen said in a speech Friday that the case for raising interest rates has strengthened in recent months in light of a solid job market and an improved outlook for the economy and inflation. Private economists said the Fed could raise rates as soon as September, but many believe the central bank will end up waiting until December. The Fed hiked rates by a small quarter point last December, marking the first increase after seven years of keeping its key rate at a record low near zero.



INILAHCOM, New York - Gubernur Fed, Janet Yellen mengisyaratkan kenaikan suku bunga Fed bisa tahun ini. Sebab data ekonomi kian membaik dalam beberapa bulan terakhir.
Fed masih memperhatikan beberapa data untuk menaikkan di bulan Desember mendatang. Tetapi juga memungkinkan dilakukan pada bulan September.
Pasar sejak pekan ini telah mengantisipasi pertemuan Jackson Hole untuk pidato yang hawkish. Ada kemungkinan untuk menaikkan lebih cepat dari Desember. Kemungkinan ini direspon positif oleh bursa saham yang mengalami reli, imbal hasil obligasi dan dolar AS melemah, seeperti mengutip cnbc.com.

Tetapi respon menjadi terbalik setelah wakil GUbernur Fed, Stanley Fishcher. Dia masih mempertimbangkan data pekerjaan bulan Agustus yang akan dirilis pekan depan. Dampaknya, bursa saham lebih rendah dan dolar pun melenggang ke area positif. Fischer mendatat data ekonomi telah memperkuat pertumbuhan [pekerjaan yang kuat dalam tiga bulan terakhir.


"Pandangan kami, jikta laporan kerja terus menunjukkan pasar tenaga kerja membaik, FOMC mungkin menaikkan suku bunga pada pertemuan September," tulis ekonom GOldman Sachs dalam ulasannya kepada investornya. "Sebagai hasilnya kami telah meningkatkan peluang dalam pertemuan bulan depan menjadi peluangnya 40 persen naik dari 30% sebelumnya."
Fischer menegaskan komentar Yellen ini konsisten kenaikan suku bunga pada bulan September. Bahkan tahun ini mungkin akan ada dua kali kenaikan. Tetapi Fed belum yakin tanpa melihat data ekonomi. Laju inflasi saat ini masih di bawah target Fed sebesar 2 persen dari target. "Kami cukup dekat dengan target di pasar tenaga kerja."
- See more at: http://pasarmodal.inilah.com/read/detail/2320310/suku-bunga-fed-lain-yellen-lain-fischer#sthash.69zWgHLm.dpuf


marketwatch: The pivoted higher in midday trade Friday after remarks from Federal Reserve Chairwoman Janet Yellen were somewhat less hawkish than investors had expected, analysts said.
The greenback fluctuated between gains and losses after Yellen said the case for raising interest rates had strengthened in recent months. Traders, having anticipated a much stronger signal from Yellen, were conflicted about whether her remarks represented a material shift toward a more-hawkish Fed.
Earlier in the week, a bevy of Fed officials, including Dallas Fed President Rob Kaplan, suggested interest rates could soon rise, helping lift the buck.
The ICE U.S. Dollar index DXY, +0.56% a measure of the dollar’s strength against a basket of six rivals, was up 0.3% at 95.0940 in recent trade.
“I don’t think it tells us anything we didn’t already know,” said Adam Cole, head of G-10 currency strategy at RBC Capital Markets.
Expectations for a rate hike by the end of the year have steadily recovered since the U.K. voted to leave the European Union back in June — a decision that briefly sent the probability of a rate hike to zero, as measured by the Fed funds futures market.
On Friday, futures traders were pricing in a more than 50% chance of a hike by the end of the year.
U.S. economic data released early Friday had little impact on the market. The highlight — a revised reading on the pace of U.S. economic growth in the second quarter — left the pace of growth at 1.1%, little-changed from the initial reading.
The dollar USDJPY, +0.96%  was changing hands at ¥101.12 in recent trade, compared with ¥100.58 late Thursday in New York. One euro EURUSD, -0.6203% bought $1.1236, compared with $1.1285 late Thursday.
That dollar bulls found little support in Yellen’s remarks suggests that investors are growing impatient with the Fed, said Jameel Ahmad, chief market analyst at FXTM.
“They’re not moving to the words anymore, whereas last year traders were moving to the beat of the statement,” Ahmad said.
Investors are now looking ahead to a report on U.S. jobs growth in August, a widely watched data point expected to be released next Friday.


Bisnis.com, TOKYO – Pergerakan bursa saham Asia dilaporkan menguat pada perdagangan pagi ini, Rabu (24/8/2016), dipimpin oleh pergerakan saham di Tokyo di tengah spekulasi bahwa bank sentral AS Federal Reserve tidak akan terburu-buru menaikkan suku bunganya akibat data ekonomi yang beragam. 
Indeks MSCI Asia Pacific naik 0,1% ke 139,34 pada pukul 09.07 pagi waktu Tokyo (07.07 WIB), sementara indeks Topix Jepang menguat 0,7% saat yen diperdagangkan di posisi 100,34 terhadap dolar AS.
Seperti dilansir Bloomberg hari ini, indeks S&P 500 ditutup di posisi mendekati level tertingginya setelah rilis laporan yang menunjukkan lonjakan pada penjualan rumah baru di AS. Namun di sisi lain, perlambatan pada manufaktur memberi pertanyaan akan sinyal hawkish beberapa pejabat The Fed baru-baru ini.
Menurut data Bloomberg, terdapat 29% kemungkinan penaikan suku bunga untuk September.
“Sementara data AS menunjukkan hasil yang beragam, isu dasar bagi The Fed kemungkinan adalah untuk menaikkan suku bunga ketika tidak ada alasan kuat untuk melakukannya,” ujar Kepala strategi pasar CMC Markets Michael McCarthy.
Lebih lanjut menurutnya, The Fed menyadari adanya risiko besar jika kondisi ekonomi memburuk maka hanya akan ada sangat sedikit ruang untuk bergerak.
Sejalan dengan pergerakan bursa Asia, indeks Kospi Korea Selatan naik 0,1%. Sementara, indeks S&P/ASX 200 Australia menguat 0,1% dan indeks S&P/NZX 50 New Zealand turun 0,1%. 

Tokyo, Aug 19, 2016 (AFP) 
 Tokyo stocks climbed in early trade on Friday, tracking a positive lead from Wall Street and as a rally in oil prices lifted sentiment.

US equities ended modestly higher on Thursday, a day after minutes from the Federal Reserve's July meeting suggested policymakers were not yet ready to go ahead with an interest rate hike next month.

Petroleum-linked shares got a boost after crude prices extended their rally Thursday following data showing a decline in US stockpiles, with Brent oil finishing above $50 a barrel for the first time in nearly two months.

In Tokyo, the jump in oil prices also boosted energy-linked shares, with Inpex up more than three percent in early deals and refiner JX Holdings gaining more than two percent.

About 20 minutes after the opening bell, the benchmark Nikkei 225 index climbed 0.47 percent, or 77.40 points, to 16,563.41, rebounding from the previous day's 1.6-percent drop.

The broader Topix index of all first-section shares rose 0.41 percent, or 5.31 points, to 1,296.10.

"Stocks will recover some of the sharp losses it saw yesterday, taking cues from the mild gain in US shares, even though investors are likely to remain wary over the recent strength in the yen," Juichi Wako, a senior strategist with Nomura Holdings, told Bloomberg News.

In forex markets, the Japanese currency eased somewhat against the dollar, with the greenback changing hands at 100.23 yen against 99.94 yen Thursday in New York.

A weaker yen is a plus for Japan's exporters, as it boosts the overseas profitability of exporters. 

On Wall Street on Thursday, the Dow closed 0.1 percent higher, while the broad-based S&P 500 and tech-rich Nasdaq both rose 0.2 percent.

dhl/sls

<org idsrc="isin" value="JP3386450005">JX HOLDINGS</org>

<org idsrc="isin" value="JP3294460005">INPEX</org>


New York - Kurs dolar AS melemah terhadap sebagian besar mata uang utama pada Senin (15/8/2016) waktu AS, karena data ekonomi lesu di Amerika Serikat baru-baru ini memperlemah harapan pasar untuk kenaikan suku bunga tahun ini.

Departemen Perdagangan pada Jumat (12/8) mengumumkan bahwa perkiraan awal penjualan ritel dan makanan AS untuk Juli mencapai 457,7 miliar dolar AS, hampir tidak berubah dari bulan sebelumnya dan di bawah perkiraan pasar naik 0,4 persen.

Indeks Harga Produsen untuk permintaan akhir menurun 0,4 persen pada Juli, disesuaikan secara musiman, meleset dari konsensus pasar untuk kenaikan 0,1 persen, Departemen Tenaga Kerja AS mengatakan Jumat lalu.

Para analis mengatakan data suram menimbulkan kekhawatiran pasar tentang kekuatan pertumbuhan ekonomi AS pada kuartal ketiga.

Sementara itu, para investor sedang menunggu risalah pertemuan terakhir Federal Reserve yang dipantau cermat, yang akan dirilis pada Rabu, untuk mendapatkan petunjuk tentang waktu kenaikan suku bunga Fed lebih lanjut.

Indeks dolar, yang mengukur greenback terhadap enam mata uang utama, turun 0,11 persen menjadi 95,618 pada akhir perdagangan.

Pada akhir perdagangan New York, euro naik menjadi 1,1185 dolar dari 1,1171 dolar pada sesi sebelumnya, dan pound Inggris merosot ke 1,2874 dolar dari 1,2911 dolar. Dolar Australia naik ke 0,7682 dolar dari 0,7650 dolar.

Dolar dibeli 101,23 yen Jepang, lebih tinggi dari 101,14 yen di sesi sebelumnya. Dolar jatuh menjadi 0,9723 franc Swiss dari 0,9742 franc Swiss, dan turun tipis menjadi 1,2912 dolar Kanada dari 1,2958 dolar Kanada.

http://pasarmodal.inilah.com/read/detail/2317452/data-ekonomi-lesu-benamkan-dolar-as




Sumber : INILAH.COM



market view: The Federal Reserve raises rates. Those five words should strike fear into any Latin American investor’s heart. After all, there are plenty of painful episodes in living memory when a US rate rise spelt disaster for the region.When Fed Chairman Paul Volker brought in eye-watering rates in 1979 to crush inflation, it was the trigger for Latin America’s ‘lost decade’. Then in 1994, another US rate rise sparked the ‘Tequila Crisis’. So with Latin America’s growth already struggling, you can see why analysts are worried about the impact of this latest rise.
But the pessimists are wrong. One or two of the badly-managed LatAm economies will suffer but for the rest this decision marks the beginning of an upturn.

What the Central Bank Governors told LatAm INVESTOR

Over the past year or so, LatAm INVESTOR has interviewed central bank governors across Latin America. And in every meeting we asked about the looming prospect of US tightening monetary policy. They all recognised it as a powerful factor – one that they couldn’t completely counteract through their own policies – but they were very sanguine about it. In fact, some even welcomed it.
One or two of the badly-managed LatAm economies will suffer but for the rest this decision marks the beginning of an upturn…
Obviously central bank governors can be keen to talk up their economies – it doesn’t look great if they tell journalists that they’ve lost control and it’s all going to hell in a hand basket. Yet their responses to our questions on tighter policy are very revealing.

Timing is everything

When LatAm INVESTOR spoke to Rodrigo Vergara, Governor of the Central Bank of Chile, he pointed out that it was all about managing expectations.
“With regards to the tightening of US monetary policy I think that a lot of it is already priced by the market. The Fed has been very clear about what we can expect… So if Fed actions more or less follow the expectations that have been laid out then I don’t expect Chile to be in much difficulty. Of course problems could arise if the US tightens much more quickly than expected. But even this could only be a short-term.”
Say what you want about the Fed but they certainly let us know this was coming. Wednesday’s rise was very predictable so investors, policymakers and central bankers have had time to adjust.

It’s happening for the right reasons

Adolfo Meisel , Co-Director of the Central Bank of Colombia, told LatAm INVESTOR that he felt that with all the fear about rising rates, people were forgetting that they were going up for a good reason.
If the US does have a big change and decide to tighten policy, it will coincide with their economy improving. As they are our main trading partner that would also be a positive for us.”
The US recovery isn’t just a good story for Colombia, all of Latin America should benefit, especially Mexico, Central America and the Caribbean.

Latin America is in a much stronger position now

Back in the 80s and the 90s Latin American countries were loaded up with dollar-denominated debt when US rates rose. That’s why the Fed decision hit them so hard. This time around they don’t just have lower debt levels, they also have a higher proportion of local borrowing, which is easier to service in times like these.
It’s something that Agustin Carstens, Governor of the Central Bank of Mexico, pointed out to LatAm INVESTOR.

Another positive change is that the main LatAm economies have floating exchange rates as opposed to fixed rates that come under pressure when the dollar rises. In past crises Latin American countries burned through billions of dollars of reserves trying to defend unrealistic currency valuations. Now most don’t and that’s something that Chile’s Vergara was keen to stress when he met with LatAm INVESTOR.
Investors have tended to differentiate between those economies with strong fundamentals and those with weaker positions. Mexico has adopted sound and credible macroeconomic policies and strengthened their economic fundamentals during the past years. And this has helped to create an environment of macroeconomic stability that has improved investors’ confidence. All of which, has significantly reduced the vulnerability to negative external shocks.”
“It is important to bear in mind that the policy framework in Chile contemplates a floating exchange rate, which allows for faster resource allocation, which we believe is one of our strengths. The Chilean peso acts as a shock absorber and it has already depreciated significantly in the last year.”

Good management

Of course not everything in Latin America’s garden is rosy. Even the countries with good fundamentals have some issues. But part of its new strength is that these economies are better managed. For example, Julio Velarde, Governor of the Central Reserve Bank of Peru, was at pains to explain to me how the country is slowly managing the dollar debt exposure that some of its companies have.

A generation of policymakers and technocrats that grew up during the crises of the 80s and 90s seems determined to not to repeat the same mistakes.
“In our case a currency depreciation, particularly if it is large and sudden, poses considerable risks; namely, households and firms with currency mismatches in their balance sheets may experience solvency problems triggered by a sudden depreciation. In order to mitigate these risks, the BCRP has implemented macro-prudential policies to reduce banks’ reliance on foreign currency funding and curb excessive credit expansion, particularly in exposed segments like car and mortgage loans.
Far from being the deathknell for Latin America the Fed’s decision highlights how far the region has come. This new found resilience is another great reason to be invested in Latin America.


usa today: U.S. Inc. is back in job-creation mode.
The sharp rebound in the U.S. job market in June and July has Wall Street buzzing again about a possible interest rate hike by the Federal Reserve at its September meeting. But a rate increase next month is still far from a sure thing, Wall Street economists say.
No question, the muscular July jobs report — 255,000 new jobs were created, a whopping 75,000 more than expected — on top of upwardly revised job gains of 292,000 in June, gives the Fed renewed ammunition to at least make a case for the first bump up in short-term rates this year. Back-to-back months of strong employment reports erase much of the fear sowed by the super-weak May report, when a feeble 24,000 jobs were created.
It's a "reassuring report," Mark Hamrick, senior economic analyst at Bankrate.com, said via email, noting that it dispels fears about the U.S. economy, which has been growing at a subpar 1% clip this year.
Stocks rallied on the news, with the Standard & Poor's 500 stock index climbing above its July 22 record closing high.
The renewed momentum in the employment market confirms the "job market is on solid footing," adds Sung Won Sohn, an economics professor at California State University Channel Islands.
But — and it's a big but — there are still enough blemishes on the U.S. economy's recent track record (namely weaker-than-expected 1.2% economic growth in the second quarter after tepid GDP growth of 1.1% in the first three months of the year) to keep the data-dependent Fed patient and hold rates steady next month, market pros say.
Add in the still unknown fallout from the June 23 vote by Britain to exit the European Union, tepid global growth, a new bear market for U.S.-produced oil and another spike in the value of the U.S. dollar, and its clear the Fed still has things to worry about before pulling the trigger on a rate hike.
The Fed will want to look at more data — including the August jobs report that will be released three weeks before the Fed's Sept. 20-21 meeting — to make sure the economy is strong enough to weather higher borrowing costs.
"The Fed will want to see more confirmation that the U.S. economy seems to be on solid footing," Tom Anderson, chief investment officer at Boston Private Wealth, told USA TODAY. "There are enough uncertainties out there, and this Fed will want to see a lot of supportive data before their next interest rate move."
The Fed last raised rates in December, the first hike in nearly a decade. The Janet Yellen-led U.S. central bank has held off because of foreign economic and market uncertainties, a wait-and-see approach related to Brexit, persistent slow growth in the U.S. and still-low inflation.
But despite talk of a September hike, the Fed will likely play it safe and hold off on a rate increase until its December meeting —  and after the presidential election, Anderson says.
Adds Sohn: "If the next payroll report before September is solid, there is a good possibility of a hike at the September meeting. Nevertheless, there are still uncertainties, including political, economic and global. Energy prices are falling again, and the Fed's 2% inflation target is unlikely to be met in the near future. Under the circumstances, there is no rush. The Fed may decide to wait a while longer."
Jesse Hurwitz, an economist at Barclays, says the key things to watch related to the Fed's rate-hike timetable are how strong the August jobs report comes in and Yellen's key policy speech in Jackson Hole, Wyo., on Aug. 26.

For now, the good news for Wall Street and Main Street is jobs are plentiful, the Fed is still likely on hold and stocks are on the rise.

Tokyo, Aug 1, 2016 (AFP) 
 Emerging market currencies jumped against the dollar on Monday as weak US growth data torpedoed speculation of an interest rate hike this year.

Friday's report showing the world's top economy expanded 1.2 percent in the April-June quarter poured cold water on expectations the US central bank will raise rates before year's end.

Analysts had expected growth closer to 2.6 percent.

"The GDP was a massive miss, so I'm not surprised by the huge dollar selloff that ensued," Thomas Averill, a Sydney-based managing director at Rochford Capital, a currency and rates risk-management company, told Bloomberg News.

"The immediate risk at the moment is for a bit of further weakness in the US dollar on the moderated monetary tightening view."

The greenback took a hammering on Friday in response to the below-par US growth figures and extended its losses Monday.

The oil-reliant Malaysian ringgit jumped 0.8 percent, with extra support coming from a pick-up in crude prices, while the South Korean won also was 0.8 percent higher.

Taiwan's dollar was up 0.6 percent and the Indonesian rupiah rose 0.5 percent, while the Thai baht and Philippine peso also booked solid gains.

However, the greenback rose to 102.61 yen from 102.07 yen in New York, although it is still down sharply from 103.58 yen in Tokyo earlier Friday before the US data release.

The euro ticked up to $1.1180 and 114.47 yen from $1.1177 and 114.09 yen in US trade.

Traders are now awaiting the release of details of a 28 trillion yen fiscal stimulus programme unveiled by Japan's government last week, with Prime Minister Shinzo Abe tipped to make a statement on Tuesday. 


TRIBUNNEWS.COM, JAKARTA - Pasca keluarnya Inggris dari Uni Eropa (Britain Exit/Brexit), berdampak kepada revisi target pertumbuhan ekonomi berbagai negara.
Brexit ternyata juga cukup kuat mempengaruhi kebijakan bank sentral Amerika Serikat The Federal (Fed) dalam menentukan suku bunga.
Kepala Departemen Kebijakan Ekonomi dan Moneter Bank Indonesia Juda Agung menilai The Fed sampai akhir tahun 2016, tidak punya keinginan yang kuat menaikkan suku bunga.
Hal ini disebabkan adanya Brexit yang merubah strategi belanja berbagai negara berkembang.
"Fed Rate (suku bunga acuan The Fed), setelah adanya Brexit, diperkirakan ditunda kenaikannya maksimal sekali," ujar Juda di kantor Kemenko Perekonomian, Jakarta, Senin (25/7/2016)
Juda menjelaskan jika The Fed menunda kenaikan suku bunga, otomatis memberikan sentimen positif dari segi moneter.
Karena pasca Brexit, dampaknya begitu kuat terhadap negara-negara di benua Eropa sekarang yang membutuhkan dorongan pertumbuhan ekonomi
"Sehingga memberi sentimen positif bagi sektor keuangan," ungkap Juda.
Juda memaparkan Brexit bisa berpotensi menurunkan pertumbuhan ekonomi global.
Dari prediksi BI kemungkinan ekonomi di dunia global tahun ini hanya tumbuh 3,1 persen, sedangkan tahun depan perkiraan BI turun dari target yakni 3,4 persen ke 3,2 persen.
"Yang perlu dicermati tentu saja respon-respon negara-negara ini terhadap Brexit," kata Juda.
Juda menambahkan jika The Fed menaikkan suku bunga pasca adanya Brexit, akan berdampak kembali kepada perekonomian Amerika Serikat.
"Katakan dampak Brexit terhadap AS cukup signifikan jadi dia juga khawatir kalau kenaikan suku bunga jadi. Karena apresiasi tentu pengaruh ke sektor manufaktur di AS," papar Juda.

The Federal Reserve left interest rates unchanged on Wednesday but said near-term risks to the U.S. economic outlook had diminished, opening the door to a resumption of monetary policy tightening this year.
The U.S. central bank said the economy had expanded at a moderate rate and job gains were strong in June. It added that household spending also had been "growing strongly," and pointed to an increase in labor utilization.
While Fed policymakers said they continued to closely monitor inflation data and global economic and financial developments, they indicated less worry about possible shocks that could push the U.S. economy off course.
"Near-term risks to the economic outlook have diminished," the Fed's policy-setting committee said in its statement following a two-day meeting in which it left its benchmark overnight interest rate in a range of 0.25 percent to 0.50 percent.
It noted, however, that inflation expectations were on balance little changed in recent months.
The Fed has held steady on rates since December, when it raised them for the first time in nearly a decade and signaled another four rate increases were in the offing for 2016.
That was scaled back to two hikes this year after central bank policymakers issued new projections in which they also lowered their longer-term growth estimates for the U.S. economy. The Fed is most likely to wait until December to raise rates, according to a Reuters poll of economists.
Wednesday's decision had little impact on financial markets with stocks, bonds and currencies all holding close to their levels prior to the Fed's statement.
"It sounded a reasonably upbeat tone, not a big difference from last time, but a reasonably upbeat tone," said Kathy Jones, chief fixed income strategist at Charles Schwab and Co.
ONE DISSENT
Despite a strong rebound in job growth last month and an economy near full employment, most Fed policymakers had urged caution in raising rates until there was concrete progress in moving inflation toward the central bank's 2 percent target.
The Fed's preferred inflation rate currently stands at 1.6 percent and has been below target for more than four years.
A global economic slowdown, financial market volatility and uncertainty over the impact of Britain's June vote to leave the European Union have repeatedly forced the Fed to delay another rate increase.
The U.S. economy, however, has suffered little initial impact from the so-called 'Brexit' vote. A string of better-than-expected economic data recently as well as an easing in financial conditions also have calmed nerves.
There are three more Fed policy meetings left this year - in September, November and December. A rate hike in November is generally seen as unlikely because that meeting would occur a week before the U.S. presidential election.
Fed officials will now turn their attention to this Friday's first initial estimate of second-quarter GDP, which is expected to show a healthy rebound from the previous quarter.
Kansas City Fed President Esther George was the only policymaker to dissent at this week's meeting. She has favored raising rates at three of the last four meetings.
(Reporting by Lindsay Dunsmuir, Howard Schneider and David Chance; Editing by Paul Simao)

JAKARTA kontan. Bursa Jepang melanjutkan pelemahan pada Kamis (7/7), setelah jatuh cukup dalam kemarin. Investor menimbang terbatasnya mendulang untung di pasar saham dengan ekspektasi yen akan terus melambung di hadapan dollar Amerika Serikat. 
Indeks Nikkei 225 di Tokyo melemah 44,48 poin atau 0,29% menjadi 15.334, 51 pada pukul 9:21 waktu setempat. Sedangkan indeks Topix jatuh 0,25% menjadi 1.231,13. 
Kemarin, bursa di Tokyo terpangkas sampai 1,8%, kejatuhan kedua terbesar sejak pengumuman Inggris keluar dari Uni Eropa Juni lalu. Ketika itu, bursa Tokyo jatuh sampai 7,3%. 
Kemarin, bank sentral Amerika Serikat, The Federal Reserve memutuskan untuk menunda kenaikan suku bunga sampai mendapat gambaran lebih jernih mengenai dampak Brexit. Hal ini mendorong yen terus menguat untuk hari ketiga terhadap dollar AS. 
"Tanpa kenaikan bunga AS dan keuntungan kebijakan moneter kini terbatas, investor melihat yen akan menguat sampai 95 per dollar AS dan itu akan membatasi keuntungan di pasar saham," kata Mutsushige Akino, Executive Officer di Ichiyoshi Asset Management Co di Tokyo seperti dikutip Bloomberg. Saat ini, yen diperdagangkan di 101,01 per dollar AS. 
Perhatian pasar mendatang diperkirakan tertuju pada laporan ketenagakerjaan AS pada Jumat mendatang. Data ini bahkan diperkirakan bisa mempengaruhi The Fed untuk mempertimbangkan pelonggaran moneter di sisa tahun ini.
Pasar AS
Keputusan The Fed berhati-hati melakukan pengetatan moneter lebih lanjut, melegakan pasar AS. Bursa Amerika Serikat untuk perdagangan Rabu (6/7) ditutup dengan penguatan, juga  ditopang kenaikan harga minyak.
Dow Jones Industrial Averagare pada perdagangan kemarin menguat 78 poin atau 0,44% menjadi 17.918,62. Indeks Standard and Poor's 500 juga bertambah 11,18 poin atau 0,54% menjadi 2.099,73. 
Harga minyak menanjak 1,78% atau 83 sen kemarin menjadi US$ 47,43 per  barel. Nanti malam, AS akan mengumumkan data cadangan minyak.  



U.S. stocks shook off worries tied to the U.K.’s vote late last month to exit the European Union, dubbed Brexit, and closed higher Wednesday.
A stronger-than-expected report on nonmanufacturing activity helped nudge investors back into equities, while minutes from the Federal Reserve’s June policy meeting showed the majority of policy makers were in favor of keeping rates on hold.
Some analysts attributed gains in the aftermath of Brexit to investors’ strategy of buying stocks when the market dips, which tends to lead to up-and-down trading.
“In a flat market like we had over the past year and a half, benefiting from a pullback is the only alpha investors can get, so I suspect there is a lot of that kind of ‘buy the dip’ mentality that’s driving the market,” said Steve Chiavarone, associate portfolio manager at Federated Global Allocation Fund.
The S&P 500 index SPX, +0.54% rose 11.18 points, or 0.5%, to finish at 2,099.73. The health-care and consumer discretionary sectors led gains, while sectors considered defensive, such as telecoms and utilities, declined. The Dow Jones Industrial AverageDJIA, +0.44%  gained 78 points, or 0.4%, to finish at 17,918.62.
Chiavarone said current levels for the main stock-market indexes aren’t justified given uncertainties around the globe.
“The S&P 500 is trading at 18 times future earnings at a time when we are in the middle of an earnings recession,” he said.
The bounce higher was most pronounced in the tech-heavy Nasdaq Composite Index COMP, +0.75% which advanced 36.26 points, or 0.8%, to settle at 4,859.16. The rally in Nasdaq was led by sharp gains in biotechnology shares. The iShares Nasdaq Biotechnology ETF IBB, +2.37%  was up 2.4%.
As markets slide, big banks are oversold

Sure, there are many reasons to worry about Goldman, J.P. Morgan, and other big financial institutions, but all that bad news is priced in.
Earlier sentiment was colored by a flight to assets perceived as safe, like gold and Treasurys, as the market wrestles with the long-term fallout from Brexit.
Treasury yields dipped to record lows in early trade but subsequently rebounded as the demand for safe assets waned. Yields and bond prices move in opposite directions.
The yield on the 10-year Treasury TMUBMUSD10Y, -0.44%  rebounded from an all-time low of 1.332% to settle at 1.385% on Wednesday.
Economic news: The minutes of the Fed’s June 14-15 policy meeting revealed that dovish policy makers had grown more vocal, pushing a divided committee firmly on the side of taking no action.
“It is difficult to see how the Fed would raise interest rates when everywhere else rates are low or negative,” said Tom Siomades, head of Hartford Funds Investment Consulting Group.
Fed Gov. Daniel Tarullo speaking at a WSJ Pro event in Washington, said markets have only seen the ‘first chapter’ of Brexit effect on U.S. economy. Tarullo backs waiting on interest-rate hike until inflation gets nearer to 2% target, saying the U.S. economy isn't running hot.
The U.S. trade deficit in May widened by 10% to a three-month high of $41.1 billion, thanks to higher oil prices and stronger demand by consumers for imports such as cellphones, sneakers and home furnishings.
The Institute for Supply Management’s service sector index jumped to 56.5% in June, a much stronger reading than expected and a sign the economy may have pushed past the rough patch it hit in May.

JAKARTA - Gubernur Bank of England (BoE) Mark Carney mungkin sedang menghadapi tugas paling pelik di dunia finansial.
Walau BoE jelas telah mengadakan banyak proses penilaian risiko sebelum hasil Brexit yang mengejutkan, penilaian hanyalah teori semata dan dibisa dipastikan bagaimana konsekuensi sebuah peristiwa bersejarah Brexit sebelum benar-benar terjadi.
Namun, VP of Market Research FXTM Jameel Ahmad mengungkapkan, ada satu elemen penting dari peristiwa tak terduga ini yang belum diperhitungkan dalam pasar finansial, yaitu dampaknya terhadap Federal Reserve Amerika Serikat.
"Federal Reserve jelas tidak mungkin melanjutkan rencananya untuk meningkatkan suku bunga AS. Selain itu ada spekulasi di akhir pekan bahwa Fed bahkan mungkin perlu berbalik arah secara drastis dan memotong suku bunga," ujar Jameel, Rabu (29/6/2016).
Dia berpendapat, bahwa ekspektasi peningkatan suku bunga AS jelas harus kembali ditunda belum benar-benar tergambarkan di harga dolar AS saat ini.
"Artinya dolar AS berisiko mengalami depresiasi tajam di masa mendatang," tutur dia.
(rzy)


Washington, June 23, 2016 (AFP) 
 Sales of new homes in the United States fell in May following a surge in April, but still remained solidly higher than last year in a growing housing market.

Sales of new single-family houses registered an annual rate of 551,000 units, down 6.0 percent from April, the Commerce Department said. Compared with a year ago, sales were up 8.7 percent. 

April's strong gain was downwardly revised to 586,000 units, the most robust pace since February 2008.

Analysts had expected new-home sales would decline in May, but estimated a smaller drop to 560,000 houses.

Sales fell in the Northeast, South and West, but rose in the Midwest.

With sales sluggish, the median sales price of new houses fell to $290,400, the lowest level in 11 months.

Despite the month-over-month volatility, the trend in new-home sales remained firm. In the first five months of the year, sales were up 6.4 percent from the same period in 2015.

"With employment rising strongly and mortgages easier to obtain, we think a sustained upward trend in new-home sales is now a reasonable bet," said Ian Shepherdson of Pantheon Macroeconomics.

He pointed to a rising trend in mortgage applications that bodes well for increased sales in the coming months.

Data published Wednesday for the much larger market of existing, or previously owned, homes in May showed strong demand in the crucial spring home-buying season.

The National Association of Realtors reported that existing-home sales grew 1.8 percent in May to an annual rate of 5.53 million units, the highest pace in over nine years.


MW : 
If the Federal Reserve’s “dot plot” reveals anything, it’s that the stewards of the American economy are even more pessimistic now than they were just a few months ago about how fast the U.S. can grow.
Not very long ago, top Fed officials were laying the groundwork for an interest-rate increase in June and talking optimistically about the economy. And now? They’ve put off an increase for the time being, see fewer hikes in the next few years and don’t think growth will speed up fast enough to push rates beyond 3% in the “longer run.”
The downshift is somewhat jarring.
Sure, the pace of hiring in the U.S. slowed sharply in May and April, but job openings remain at a record high, layoffs are near a four-decade low, wages are rising and small businesses are more optimistic than they’ve been in years. Fed Chairwoman Janet Yellen even said she and other central bank members think hiring will rebound.
If that’s the case, the Fed’s downshift in the size and timing of future interest-rate increases can only reflect broader worries about growth at home and abroad. Read: Fed’s Yellen still has doubts.
Yellen mentioned low business investment and productivity — they go hand in hand — in a press conference after the Fed meeting. The Fed’s own forecast sees U.S. growth topping out at 2% in the long run, well below the nation’s historic 3.3% growth rate. Looming in the background is persistently weak global growth.
“Yellen highlighted a large amount of uncertainty for various structural growth factors,” economists at BofA Merrill Lynch said in a note to clients. Read: Fed leaves interest rates unchanged.
That’s why the central bank on Wednesday trimmed its forecast for its benchmark fed funds interest rate, a short-term measure that helps determine how much it costs businesses and consumers to borrow money.
The Fed still expects to raise interest rates twice in 2016, from the current target range of 0.25% to 0.50%. But it only predicts three hikes in both 2017 and 2018, down from four in its March forecast.
The Fed’s indecision should not come as a surprise. The central bank has gone to the edge of a rate hike a number of times in the past few years, only to pull back.
“The FOMC is planning on waiting for conclusive proof of life in the labor market and the risk of global developments to fade before starting a sustained lift off of interest rates,” economists at UBS noted.
Although waiting poses its own dangers, the Fed clearly thinks it’s better to err on the side of passiveness.
It’s not all bad, though. That means the cost of borrowing will remain quite low.

“If you are still looking to refinance your mortgage, or buy a house or car, rates are likely to remain very attractive by historical standards,” said Scott Anderson, chief economist at Bank of the West.

marketwatch: The Federal Reserve is looking nowhere near raising interest rates this week, but by putting off another rate hike Chairwoman Janet Yellen and Co. risk setting the U.S. and the world up for another economic crisis, strategists warn.
Speaking at the Inside ETFs Europe conference in Amsterdam this week, several analysts argued the Fed should have started the tightening cycle years ago instead of letting outside events, such as China jitters, the commodity crash and stock market volatility determine the path of rate hikes.
“The Fed knows it is putting monstrous distortions on the domestic economy, because of the misallocation of resources that’s caused by having money mispriced,” said Kit Juckes, macro strategist at Société Générale.
“I would argue that the Fed having rates that were too low in [2002-2006] caused monstrous misallocations of capital throughout the world, whose effects we felt in [2008-2015] and currently also in 2016 and counting,” he added. “If the cure to the downside of this is to have the same misallocation of capital, the only thing I don’t know is exactly where the problems will show up next. But I can see the Chinese boom followed by a bust, I can see the commodity boom followed by a bust, and I wish we could get back to an even keel.”
The comments come as the Fed kicked off its two-day policy meeting on Tuesday, with investors hoping for guidance on the future of interest rates. The central bank indicated in minutes from its late April meeting it was getting ready to hike rates as soon as June, a view that was later strengthened by a string of hawkish comments from several Fed officials.
However, after a disappointing reading on nonfarm payrolls in May, expectations of a policy change have been dialed back significantly. According to the CME Fed Watch tool, financial markets are only pricing in a 1.9% possibility of a rate increase.
Markets aren’t even pricing in a rise until December, which would leave a full year between rate hikes. But according to strategists, the Fed would only hurt itself if it waits longer to tighten policy.
“The longer they leave rates low, the greater economic and asset-class instability it creates. It’s a bit like having a concrete pillar, and you are pulling that concrete pillar with an elastic band. It doesn’t really do much, but eventually it snaps back and hits you in the face. That’s the risk of having too low monetary policy for too long,” said James Butterfill, head of research and investment strategy at ETF Securities.
He explained that among most dangerous side effects of loose policy is a hit to the banking sector because the low interest rates make it harder for the banks to make a profit.
“That ends up creating a poor lending environment and eventually that squeezes economic growth. That’s the unintended economic consequences,” Butterfill said.
The warnings on ultraloose central bank echo concerns raised at the international FundForum conference in Berlin last week. There, key fund manages warned central banks were setting the global economy up for another “Lehman moment”.
The Fed meeting wraps up on Wednesday with the rate announcement due at 2 p.m. Eastern Time and Yellen’s press conference at 2:30 p.m.

Washington - The Federal Reserve atau bank sentral AS pada Rabu mempertahankan suku bunga utamanya tidak berubah, tetapi mengindikasikan bahwa meskipun pertumbuhan ekonomi lebih lambat masih bisa menaikkan suku bunga dua kali tahun ini.

The Fed memangkas prospek pertumbuhan untuk Amerika Serikat menjadi 2,0 persen untuk tahun ini dan 2017, tetapi juga mengindikasikan melihat inflasi meningkat sedikit tahun ini yang akan mendukung suku bunga federal fund lebih tinggi.

Dalam pernyataan kebijakan yang hati-hati pada akhir pertemuan dua hari, Komite Pasar Terbuka Federal (FOMC) mengatakan bahwa kegiatan ekonomi telah tampak meningkat sejak pertemuan terakhir pada April, dan pengeluaran rumah tangga telah menguat, tapi pasar tenaga kerja dan investasi bisnis keduanya melambat.

Ini mendekati perkiraannya bahwa inflasi akan naik ke targetnya di 2,0 persen "dalam jangka menengah" tetapi Fed terus mengawasi harga-harga.

The Fed juga menegaskan bahwa ia terus mengawasi perkembangan ekonomi dan keuangan global. Tapi pernyataan FOMC tidak menyinggung pemungutan suara di Inggris minggu depan tentang apakah negara itu keluar atau tetap di Uni Eropa, yang telah mendorong volatilitas di pasar di tengah kekhawatiran bahwa hal itu bisa mengakibatkan kerusakan ekonomi riil.

Secara umum, meskipun, FOMC menyatakan keyakinannya tentang kecenderungan kenaikan dalam ekonomi AS, dan anggota-anggota menunjukkan dalam rata-rata perkiraan mereka bahwa mereka memperkirakan peningkatan suku bunga federal fund dari saat ini 0,25-0,50 persen menjadi hampir 1,0 persen pada akhir tahun, yang berarti peningkatan dua perempat poin.

http://pasarmodal.inilah.com/read/detail/2303484/the-fed-pertahankan-suku-bunga-acuan




Sumber : INILAH.COM


JAKARTA. Keputusan bank sentral Amerika Serikat akan diketahui pada Kamis dini hari WIB (16/6/2016).

Kebijakan bank sentral makin menjadi fokus pasar, dan imbal hasil global terus anjlok.

â€Å“Saat ini peluang pemangkasan FFR (Fed funds rate) target di Juin 2016 turun ke 0%, tetapi volatilitas diperkirakan masih tinggi minggu ini,” kata Ekonom Samuel Sekuritas Indonesia Rangga Cipta dalam risetnya.

Sementara itu, ujarnya, bank sentral Jepang uga akan mengadakan pertemuan, tetapi diprediksi belum akan ada perubahan kebijakan BoJ.

Ditambah dengan bank sentral Eropa (ECB) yang mulai membeli obligasi korporasi serta ancaman Brexit.

â€Å“Imbal hasil US Treasury dan Bund diperkirakan terus turun. Inflasi AS ditunggu Kamis malam, diperkirakan tetap rendah. Dolar diperkirakan tetap lemah,” kata Rangga.

http://finansial.bisnis.com/read/20160615/9/557806/fed-boj-ecb-siap-gelontorkan-putusan-ekonom-prediksi-volatilitas-pasar-masih-tinggi-pekan-ini




Sumber : BISNIS.COM


cmc: Trading this week is off to a mixed start as traders assess the implications of Friday’s weak nonfarm payrolls, a number of Brexit polls showing the Leave side starting to pull away, and prepare for today’s comments from Fed Chair Yellen.
European trading this morning finds the FTSE up 0.9% and outperforming its continental peers where the Dax is up 0.1% and the CAC down 0.1%. US index futures are flat after Friday’s roller coaster ride which saw US stocks claw back most of their early losses. Commodity trading finds crude oil up nearly 1.0% today with Brent sitting on $50.00 once again and WTI trading above $49.00. Commodity gains are broad based with copper rising 0.5% plus corn and wheat gaining 1.5%.
Friday’s nonfarm payrolls report which showed jobs only increasing by 38K sparked an initially big knee-jerk reaction from traders who sent USD and stocks lower and gold higher on speculation that this could keep the Fed from raising interest rates in June or July as the central bank had previously been hinting.
Friday afternoon and into today, however, the initial flight to defensive havens has been fading. US stocks have regained all their early losses and remain supported. USD has stabilized at a lower level and has started to rebound today while JPY and gold are starting to drop back. The one defensive haven still attracting capital today is CHF which may continue attracting interest from some traders concerned about the potential for volatility in both the UK and continental Europe around this month’s Brexit vote and Spanish election.
There a been a lot of speculation from FOMC members in recent weeks about the potential for a US interest rate increase in June or July. Today, Fed Chair Yellen gets the last word before the blackout starts heading into next week’s FOMC meeting. While she appears likely to take a neutral stance again, traders will be looking to see if she shifts to dovish from neutral in response to the payrolls.
There are three ways the shockingly low nonfarm payrolls can be interpreted:
As a sign that the US economy is slowing and the Fed should wait for more data before raising interest rates, as was suggested by Fed governor Brainard, a known dove in her speech on Friday.
Considering that there was no warning about a low payroll figure from jobless claims through the month from jobless claims or ADP payrolls, and with the unemployment rate falling to 4.7% from 4.9%, the payroll data could be an outlier with the potential to be revised back upward. Over the weekend, Cleveland Fed President Mester indicated one data point doesn’t change her thinking on gradual rate increases.
A slowing in job growth could also be a sign that the US is nearing full employment. Boston Fed President indicated the 4.7% level has reached his estimate of full employment. He also suggested, however, that while he supports rate hikes over time, it remains to be seen if the May payrolls are an anomaly or the start of labour market slowing.
Where Chair Yellen lands on this divide could have a significant impact on trading in USD and stocks through the week as the big June meeting approaches. It also will be interesting to see if she makes any comments on whether the Brexit vote may influence their decision.
In early May, FOMC several speakers had suggested that they could hold off raising interest rates in June as their meeting is being held just a few day ahead of the UK Brexit referendum. After it was pointed out to them that letting events in Mother England influence their decision making could be seen as giving up US independence, Fed members changed their tune for a couple of weeks and downplayed the influence of Brexit on their thinking. With Friday’s nonfarm payrolls weakness giving the Fed another a domestic to hold off in June and wait to see the next payrolls report, Fed Governor Brainard raised Brexit risks in her speech although regional Presidents Mester and Rosengren appear to have stayed silent on the matter.
Today’s trading in UK markets in reaction to a series of polls showing the Leave side pulling out in front and gaining momentum indicates that the street appears to have already priced in the potential for a Brexit at current levels. GBP continues to come under pressure following polls favouring Leave, but each drop is getting smaller and shorter before support comes in. Meanwhile, the FTSE outperforming continental indices today on all the news favouring Leave momentum suggests that some traders could be thinking that the prospects for the UK should Leave win may be brighter than the prospects for an EU without the UK. It’s also possible the street could be seeing as getting the vote over with and moving on regardless of the result as a potential positive. Either way, it’s becoming clear that fear of a Brexit in the markets continues to fade away.
Canadian gold stocks staged major rallies on Friday outpacing to the gold price to the upside and could be vulnerable today with gold levelling off. Base metal miners could benefit from the rising copper price while energy producers could attract support with crude hovering near $50.

Last week's May jobs report, which showed the weakest hiring in six years, gave Janet Yellen all the cover she needed to kick the can down the road on interest rates and put off any hikes until July or September.
The markets reacted well, as you'd expect, but Yellen left the door open, saying the Fed was "on track" to raise rates "in the coming months." And with that statement, Yellen has consigned investors to yet another cycle of uncertainty and hand-wringing where the markets have to guess what the Fed will do in July or September.
Here's the thing – the vast majority of investors don't understand that rising rates can be terrific for you and your money if you know what to look for and how to identify the best stocks to buy ahead of time, before the markets price a move in.
If you're one of 'em, don't beat yourself up too badly. It's a common misconception.
The next "rate riot" can be a fabulous opportunity, just as it was 16 months ago when I brought three recommendations to your attention under very similar market conditions and circumstances. Anybody who jumped on board has had the opportunity to capture returns of 41.98% versus only 0.86% from the Dow Jones Industrials over the same time frame.
One of the three stocks remains an especially compelling choice today.
Don't miss your chance just because the U.S. Federal Reserve might hike rates.

Why Rate Hike Paranoia Defies History

Millions of investors mistakenly believe that rate hikes spell the death of equities.
The only problem is that's simply not true.
Don't get me wrong. A rate hike is not pretty.
There have been six rate hikes since 1983, and the markets were up an average of 14% over the 250 days immediately preceding the first rate hike, according to Nuveen Asset Management's Robert Doll and Scott Tonneson.
My numbers show that the markets dropped by about 10% "peak to trough" – meaning from top to bottom – when the rate hikes hit. But here's what most people are missing…
…in five of six cases, the markets were up an average of 14.4% only 500 days later.
fed-rate-chart
So much for conventional wisdom.
The other thing to think about is that investors are making a huge stink over what could be less than a quarter-point increase. Even if the Fed were to hike rates four quarters in a row, we'd still be talking about a fed funds rate that's only 1% to 1.25%. That's still extremely low in the scheme of things.
What's interesting about all this is that CEOs have been preparing for rising rates for a long time. That's why you're seeing billions spent on buybacks, mergers and acquisitions, and capital expenditures.
Unlike investors who fear the repercussions of rising rates, CEOs are taking steps to increase value when they eventually come to pass. When you hear me talk about why I'd bet on CEOs over politicians and individual sentiment, this is what I'm alluding to. They're making bets to ensure survival and profitability in anticipation of a time when the markets will make that seem like an impossibility.
My point is that low rates are not the limiter everybody thinks. Instead, they're a form of capital discipline that ultimately leads to far more stable performance over time and, most importantly, the best upside profit potential.
Speaking of which…










































































Keith Fitz-Gerald has been the Chief Investment Strategist for theMoney Morning team since 2007


Liputan6.com, Jakarta - Bank Dunia memutuskan memangkas perkiraan pertumbuhan ekonomi‎ dunia menjadi 2,4 persen pada 2016 dari sebelumnya 2,9 persen. Menteri Koordinator Bidang Perekonomian Darmin Nasution menilai keputusan itu hal yang wajar.

Darmin mengungkapkan perlambatan ekonomi dunia itu ditandai dengan data-data dari negara maju yang tidak seperti yang diharapkan. Di Amerika Serikat (AS), data jumlah penganggurannya tidak terlalu bagus.

‎"Kita mau tidak mau ada terkena dampaknya, tapi justru apa yang kita lakukan sebenarnya adalah mencari celah, mencari kans di dalam situasi seperti itu," kata Darmin di Istana Kepresidenan, Jakarta, Rabu (8/6/2016).

Darmin menuturkan modal utama sudah didapat Indonesia dari tahun lalu dengan pertumbuhan ekonomi Indonesia yang membaik setiap kuartalnya. Hingga kuartal I,pertumbuhan ekonomi Indonesia mencapai 4,9 persen. Pertumbuhan ekonomi Indonesia pun diperkirakan lebih baik pada 2016. 



Darmin mengakui, peningkatan investasi di sektor industri‎ dinilai tidak mudah. Di tengah tingkat konsumsi dunia yang melemah, para investor lebih memilih untuk wait and see. Berbeda dengan investasi di sektor infrastruktur.

‎"Beda dengan investasi pembangkit listrik, jelas dijualnya di sini, atau jalan tol, jelas pemakainya di sini. Dan itu jangka panjang," ujar Darmin.

Fokus pembangunan di sektor infrastruktur itu Darmin menuturkan sebagai sal‎ah satu modal Indonesia secara jangka panjang dalam melawan arus pelemahan ekonomi dunia.

‎"Jadi, Indonesia itu sudah menyiapkan langkah-langkah yang bagaimana untuk menjawab bagaimana kita agar tidak terseret. Tidak berarti tidak terpengaruh, pasti ada pengaruhnya," ujar mantan Gubernur Bank Indonesia itu.

Pemerintah sendiri menargetkan pertumbuhan ekonomi Indonesia sebesar 5,1 persen pada 2016. Angka itu lebih rendah dbandingkan perkiraan sebelumnya yang mencapai 5,3 persen. (Yas/Ahm)


Metrotvnews.com, Washington: Ketua Federal Reserve (The Fed) AS Janet Yellen mengatakan bahwa kenaikan suku bunga tetap sesuai dilakukan secara bertahap. Kenaikan ini memberikan pandangan optimistis secara hati-hati tentang prospek ekonomi AS, namun menghindari memberikan perkiraan waktu langkah bank sentral selanjutnya.

 "Kekuatan ekonomi yang positif telah melebihi negatif, dan meskipun perekonomian terus menghadapi tantangan, saya terus berharap kemajuan lebih lanjut menuju target lapangan kerja dan inflasi kami," kata Yellen dalam pidatonya di Dewan Urusan Dunia Philadelphia, Senin, seperti dikutip dari Xinhua, sebagaimana dilansir Antara, Selasa (7/6/2016).

Dalam sambutannya, ia menghindari memberikan petunjuk tentang batas waktu untuk kenaikan suku bunga lebih lanjut, tetapi mengatakan bahwa dia berharap suku bunga federal funds mungkin perlu meningkat secara bertahap dari waktu ke waktu untuk memastikan stabilitas harga dan kesempatan kerja maksimum yang berkelanjutan dalam jangka panjang.

 Sikap itu berbeda dengan komentarnya yang dibuat pada 27 Mei, ketika ia memperkirakan kenaikan suku bunga di bulan-bulan mendatang mungkin sesuai. Beberapa analis berpendapat bahwa alasan untuk pernyataan hati-hatinya saat ini mungkin ditemukan dalam data ketenagakerjaan yang mengecewakan
 baru-baru ini.

 Total penggajian (payroll) tenaga kerja nonpertanian hanya meningkat 38.000 pada Mei, kinerja terlemah sejak September 2010. Namun, Yellen mengatakan dalam pidatonya bahwa seseorang tidak harus melampirkan terlalu banyak kepentingan terhadap laporan bulanan tunggal, dan indikator-indikator tepat waktu lainnya dari pasar tenaga kerja telah lebih positif.

 Dalam sambutannya, dia menunjuk empat bidang ketidakpastian yang dihadapi ekonomi AS, termasuk investasi bisnis yang lemah, risiko-risiko luar negeri, pertumbuhan produktivitas yang rendah di AS, dan inflasi yang rendah.

 Fed AS telah mempertahankan suku bunga acuan jangka pendek tidak berubah setelah menaikkannya pada Desember lalu. Setelah rilis data ketenagakerjaan AS untuk Mei pada pekan lalu, pasar sekarang memperkirakan bahwa kenaikan suku bunga pada Juni tidak mungkin.

http://ekonomi.metrotvnews.com/globals/3NOYqzyk-ketua-fed-sebut-kenaikan-suku-bunga-dilakukan-bertahap




Sumber : METROTVNEWS.COM


New York, June 3, 2016 (AFP) 
 The dollar sank against most major currencies Friday after a shockingly weak US jobs report that essentially ruled out a Federal Reserve interest rate increase later this month.

The Labor Department report, showing the economy added a mere 38,000 jobs in May, the smallest number in nearly six years, caught investors by surprise. Analysts had expected 155,000, and the numbers for the two prior months were revised lower.

The dismal numbers were expected to give the Federal Reserve reason to hold rates steady at the June 14-15 policy meeting, and possibly in the coming months.

The dollar lost 2.0 percent to $1.1364 per euro, and fell 2.1 percent to 106.63 yen.

Recent remarks by Fed officials, including Chair Janet Yellen, had highlighted the prospect of a rate hike this month or the next. 

"The softness of today's report has caused the market to downgrade its expectations for a summer rate hike, and the question now is how that affects Janet Yellen's thinking," said Kathy Lien of BK Asset Management.

"The weakness of Friday's report will have investors eyeing every positive comment from Yellen with skepticism."

On Monday, Yellen is scheduled to give a speech on the economic outlook and monetary policy in Philadelphia, Pennsylvania.

The pound, which slid earlier in the week on uncertainty over Britain's June 23 referendum on whether to leave the European Union, clawed back some ground against the dollar.
<pre>   2100 GMT  Friday    Thursday
   EUR/USD  1.1364         1.1154
   EUR/JPY  121.17         121.44
   EUR/CHF  1.1092         1.1046
   EUR/GBP  0.7828         0.7733
   USD/JPY  106.63         108.88
   USD/CHF  0.9761         0.9903
   GBP/USD  1.4517         1.4424
</pre>

          


Bisnis.com, JAKARTA - Indeks dolar Amerika Serikat melanjutkan pelemahannya pada awal perdagangan pagi ini, Kamis (2/6/2016) setelah ditutup dengan pelemahan pada akhir perdagangan kemarin.
Indeks yang mengukur pergerakan kurs dolar AS terhadap sejumlah mata uang utama tersebut bergerak turun meski tipis sebesar 0,03% atau 0,029 poin ke level 95,426 pada pukul 06.46 WIB, setelah dibuka di zona merah dengan pelemahan tipis sebesar 0,01% ke level 95,443.
Pada perdagangan Rabu (1/6/2016), indeks dolar AS ditutup dengan pelemahan sebesar 0,45% atau 0,436 poin ke level 95,455, melanjutkan pelemahan sebelumnya.
Meski data manufaktur AS membaik, pasar masih khawatir bahwa gambaran perekonomian AS pada waktu mendatang akan membengkokkan prospek penaikan tingkat suku bunga oleh The Fed secepatnya pada bulan ini.
Data ekonomi AS terbaru, termasuk indeks kepercayaan konsumen yang dirilis pada hari Selasa, dianggap tidak cukup kuat bagi bank sentral tersebut untuk memastikan kebijakan moneter lanjutan.
Kinerja mata uang AS juga mengalami pelemahan terhadap yen pada perdagangan kemarin setelah Perdana Menteri Jepang Shinzo Abe menyatakan di Tokyo tentang penundaan penaikan pajak penjualan negara tersebut.
“Pergerakan dolar mengalami sedikit tekanan sejak rilis data (ekonomi) yang menurun,” kata Omer Esiner, kepala analis pasar Commonwealth Foreign Exchange Inc. “Hal itu memunculkan pertanyaan tentang apakah the Fed akan dapat menaikkan suku bunga.”  

Posisi indeks dolar AS
2 Juni 2016
95,426
(-0,03%)
1 Juni 2016
95,455
(-0,45%)
31 Mei
95,891
(+0,39%)







Sumber: Bloomberg Dollar Index



INILAHCOM, New York - Gubernur The Federal Reserve AS. Janet Yellen menegaskan kenaikan suku bunga acuan akan lebih cocok untuk beberapa bulan mendatang jika ada perbaikan dalam data perekonomian.
"Ini sesuai dengan yang saya katakan sebelumnya. Fed akan secara bertahap dan hati-hati dalam menaikkan suku bunga kami dari waktu ke waktu. Mungkin untuk beberapa bulan mendatang, langkah tersebut akan sesuai," katanya saat mengikuti sesi wawancara di Harvard Radcliffe Institute for Advanded Study, seperti mengutip cnbc.com.
Pernyataan tersebut menggugurkan pernyataan rekannya di komitie kebijakan The Fed bahwa target kenaikan suku bunga bisa lebih awal dari jadwal sebelumnya. Bahkan Yellen menyatakan tahun ini akan lebih berhati-hati. Alasannya tingkat inflasi masih di bawah target Fed yaitu 2 persen dan masih banyak risiko secara global.
The Fed mencermati perkembangan harga minyak dunia dan kurs dolar AS. Dua indikator ini yang akan membantu Fed mengarahkan tingkat inflasi sesuai target Fed bila dikelola dengan baik. Yellen juga menilai pertumbuhan ekonomi kuartal pertama bergerak lamban. "Perekonomian terus membaik," kata Yellen.
Komite Kebijakan The Fed akan melakukan pertemuan dua hari pada 14-15 Juni mendatang. Dalam risalah yang beredar pekan kemarin, rapat The Federal Open Market Committee bulan April lalu mengisyaratkan mendukung kenaikan suku bunga pada bulan Juni jika data ekonomi membaik sesuai harapan. Isyarat itu muncul dari beberapa pejabat komite tersebut.
- See more at: http://pasarmodal.inilah.com/read/detail/2298837/inilah-fatwa-yellen-bagi-umat-pasar-modal#sthash.m7IUoliU.dpuf

bloomberg: Federal Reserve Chair Janet Yellen said the ongoing improvement in the U.S. economy would warrant another interest rate increase “in the coming months,” stopping short of giving an explicit hint that the central bank would act in June.
“It’s appropriate -- and I’ve said this in the past -- for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said Friday during remarks at Harvard University in Cambridge, Massachusetts. “Probably in the coming months such a move would be appropriate.”
Yellen will host her colleagues on the Federal Open Market Committee in Washington June 14-15, when they will contemplate a second interest-rate increase following seven years of near-zero borrowing costs that ended when they hiked in December. A series of speeches by Fed officials and the release of the minutes to their April policy meeting have heightened investor expectations for another tightening move either next month or in July.
“The economy is continuing to improve,” she said in a discussion with Harvard economics professor Gregory Mankiw. She added that she expects “inflation will move up over the next couple of years to our 2 percent objective,” provided headwinds holding down price pressures, including energy prices and a stronger dollar, stabilize alongside an improving labor market.
Several regional Fed presidents, ranging from Boston Fed President Eric Rosengren to San Francisco’s John Williams, have in recent weeks urged financial market participants to take more seriously the chances of a rate hike in the next two months, pointing to continued signs of steady if unspectacular growth in the U.S. economy and the waning of risks posed by global economic and financial conditions.


























Left scale - hourly earnings; right scale - unemployment
Left scale - hourly earnings; right scale - unemployment

“It sounds like the committee is close to a rate hike, assuming the data hold up, but that no decisions have been made about the precise timing,” Laura Rosner, a senior U.S. economist at BNP Paribas in New York, said in an e-mail. “It will be a collective decision.”
The U.S. labor market has continued to expand even as the jobless rate has declined to 5 percent, which many economists consider to be close to or at full employment. Inflation and wages have also shown signs of edging up, a trend the Fed has longed for but is anxious to keep under control. The May employment report will be released on June 3, three days before Yellen is scheduled to speak publicly again, this time in Philadelphia.
More than incoming economic data, market sentiment over the June meeting has been shifted by FOMC member comments and by the April meeting minutes. Those records, released May 18, showed a majority on the committee favored a June rate increase if the economy continued to improve.



























Odds of a June rate hike implied by pricing in federal funds futures contracts were 32 percent following her remarks compared to 28 percent earlier on Friday and about 4 percent two weeks ago.
The FOMC accompanied its December rate hike with projections showing officials expected to raise rates four more times in 2016. Amid renewed worries over global growth and a bout of turmoil in financial markets in January and February, the committee has since held rates steady and cut its median projection for the number of 2016 quarter-point rate increases to two.
Yellen, 69, accepted the Radcliffe Medal, an award given annually by Harvard’s Radcliffe Institute for Advanced Studies to “an individual who has had a transformative impact on society,” according to its website. Supreme Court Justice Ruth Bader Ginsburg received the award in 2015.


World leaders meeting in Japan tangled over how to push the global economy toward growth amid an array of risks including geopolitical tensions, a slowdown in China and Britain’s potential exit from the European Union.
The Group of Seven industrial nations -- the U.S., Japan, Germany, the U.K, France, Italy and Canada -- sought a coordinated approach at a summit in central Japan amid discord over the best policy mix of fiscal spending, monetary stimulus or structural reforms.
G-7 nations will use “all policy tools -- monetary, fiscal and structural -- individually and collectively to strengthen global demand and address supply constraints while continuing our efforts to put debt on a sustainable path,” the group said in a statement Friday after the two-day meeting in Ise-Shima.
The show of comity disguised an undercurrent of dissent over how to create jobs and growth, whether through spending and stimulus measures championed by leaders like Japan’s Shinzo Abe and Canada’s Justin Trudeau, or an approach of budget discipline supported by looser labor markets and better competitiveness, the hallmark of German Chancellor Angela Merkel.
Regional differences played a role, as Asian economies feel the brunt of a Chinese slowdown, while the 19-member euro area struggles with seven years of crisis and a dearth of demand and the U.S. economy revives.

Uneven Dynamic

“It is not entirely surprising that a coordinated response to an unevenly felt dynamic could not be reached at the G-7 negotiating table,” Glenn Maguire, Asia-Pacific chief economist at Australia & New Zealand Banking Group Ltd. in Singapore, said in an e-mail.
“Moreover, the G-7 is obviously aware of the ‘announcement effect’ the official communique has,” he said. “In such a situation, warning of negative risks and sentiment can become self-fulfilling.”
Abe, the host, failed in his bid for the G-7 to warn of the risk of a global economic crisis after making a presentation to other leaders, including U.S. President Barack Obama, which showed an economy potentially veering into a crisis on the scale of the 2008 Lehman Brothers collapse.

Japanese Warning

Japan had pressed G-7 leaders to note "the risk of the global economy exceeding the normal economic cycle and falling into a crisis, if we did not take appropriate policy responses in a timely manner." That phrase was scrapped.
“We are not pessimistic about the global economy, but if we are not clearly aware of the risks, we will not be able to take the appropriate measures,” Abe told reporters at a press conference in which he repeatedly referred to Lehman. “We as G-7 leaders held a thorough debate on the world economy and agreed that we are facing a great risk."
Abe has frequently said he would proceed with a planned increase in Japan’s sales tax in April 2017 unless there is an event on the scale of Lehman or a major earthquake. He is expected to announce next week he is deferring the tax rise, Japanese media reported.
Non-member China loomed over the G-7 talks. A slowdown in the world’s most populous nation, alongside a global steel glut, has spurred concerns among developed economies that turmoil there could send ructions across the globe.

China, Brexit

“We want a good and thriving pace of economic growth for China,” Merkel said earlier Friday. “China also has great structural challenges, for which we wish that China can tackle them, because that’s in all of our interest.”
The leaders added in an 11th-hour warning on the U.K.’s referendum to leave the European Union, saying a so-called Brexit would "reverse the trend towards greater global trade and investment and the jobs they create, and is a further serious risk to growth." The warning wasn’t included in a draft of the communique as of Thursday evening.
Further threats to the world economy include escalating geopolitical conflicts, terrorism and refugee flows, the communique said.
Leaders reaffirmed their commitment to market-determined exchange rates. They warned that "excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability."

TPP Ratification

Trade is a key driver of growth, the document said. It lauds the 12-nation Trans-Pacific Partnership trade pact as "an important step forward" and called on each country to "complete its domestic process," while stopping short of a call to quickly ratify the agreement.
Final approval of the pact has faced delays in countries such as the U.S. and Japan, while Canada has not committed to ratification.
Leaders said they’ll work toward an agreement in principle on the U.S.-EU Transatlantic Trade and Investment Partnership as early as this year, while encouraging the EU and Canada to bring their trade pact into force as quickly as possible.

U.S. stocks joined a rally in European shares as growing conviction that the Federal Reserve will raise interest rates this summer sparked gains in financial equities. The dollar rose, while Treasuries fell as housing data reinforced confidence in the strength of the American economy.
Banks and technology shares drove the S&P 500 Index to its biggest advance in two months, while the Stoxx Europe 600 Index jumped the most since mid-April. The dollar climbed to its strongest level since March against the euro, denting demand for gold, which capped its longest losing streak since November. The pound strengthened on a poll showing the campaign to keep Britain in the European Union is gaining ground. The Turkish lira climbed after a cabinet reshuffle and a rate cut boosted confidence in the central bank.































After swinging around in the wake of the Fed’s April meeting minutes, markets seem to have grown comfortable with the elevated odds of a U.S. rate increase in the next two months. Traders are now pricing in a better-than-even chance of the central bank boosting borrowing costs at its July meeting, with Fed officials lining up to indicate their willingness to support such a move, should the current strength in the economy be sustained. Data Tuesday showed purchases of new homes surged in April to the highest level since the start of 2008. Investors will scrutinize comments from Fed Chair Janet Yellen later this week, as well as a key government jobs report due next Friday.
“Before there was a sense that higher rates would spell trouble, but the market has had time to digest that,” said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. “People may be coming around on the idea of a rate hike as an indication of economic strength. Maybe there’s a bit more of an optimistic view, and today we’re rallying through the close.”
Investors are also monitoring discussions by euro-area finance ministers on how to conclude Greece’s bailout review, which includes debt-relief measures and contingency plans in case the nation’s budget targets are missed.
Stocks
The S&P 500 jumped 1.4 percent to 2,076.06 as of 4 p.m. in New York. Financial stocks surged 1.6 percent as a group, with JPMorgan Chase & Co. and Citigroup Inc. jumping at least 1.7 percent as Treasury yields climbed to a three-week high.
Toll Brothers Inc. jumped the most in three years following the stronger-than-forecast new-home sales data and as the luxury house builder’s quarterly profit topped estimates. An S&P gauge of homebuilders posted its steepest climb since January 2014.
The Stoxx Europe 600 Index added 2.2 percent Tuesday, its biggest one-day rally since April 13, as insurers and banks led gains.
“People are testing whether the market has found a bottom, and there’s plenty of money sitting on the sidelines,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn, Germany. “We’ve had pretty calm, sideways trading this month even with another Fed rate hike looking more likely.”
The MSCI Emerging Markets Index of stocks fell 0.1 percent, while the Borsa Istanbul 100 Index jumped 3.5 percent.
Futures on equity indexes in Asia signaled a rebound, following the MSCI Asia Pacific Index’s 0.9 percent Tuesday. Contracts on Japan’s Nikkei 225 Stock Average jumped 1.6 percent to 16,750 in Osaka amid a 0.7 percent drop in the yen, while futures on benchmarks in Sydney, Seoul and Hong Kong climbed by at least 0.6 percent in most recent trading.
Currencies
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.3 percent after closing little changed for the previous three sessions. The euro slipped 0.7 percent to $1.1141, while the yen dropped to 109.99.
Sterling jumped 1.8 percent versus the euro and was up 1.1 percent against the dollar, the currency’s first advance versus the greenback in three days. An ORB survey for Britain’s Daily Telegraph newspaper found older voters, previously found to back leaving the EU, are switching sides.
The lira rose 1.6 percent versus the dollar as Mehmet Simsek retained his position as Turkey’s deputy prime minister. Simsek is the last man standing from the team of ruling party officials feted by investors as the driving force behind Turkey’s rapid growth years. The central bank also reduced the country’s overnight-lending rate by 50 basis points, matching the median estimate of analysts.
The yuan was the most resilient of 31 major currencies, gaining 0.02 percent versus the dollar and trimming this year’s loss to 0.9 percent. China’s central bank scrapped a market-based mechanism for managing the currency on Jan. 4, returning to a system whereby the exchange rate is based on what suits authorities the best, the Wall Street Journal reported, citing unidentified people close to the People’s Bank of China.
Commodities
Gold fell a fifth day, with bullion for June delivery slipping 1.8 percent to $1,232.20 an ounce. The prospect of higher U.S. rates damps the precious metal’s appeal as a store of value.
Zinc in London dropped 0.7 percent to its lowest level in more than a month, while nickel rose 0.8 percent as Chinese import data signaled a diverging demand picture for the two metals. Copper rose 0.9 percent.
West Texas Intermediate crude oil rose 1.1 percent to settle at $48.62 a barrel before U.S. data on the country’s inventories. The total volume traded was 29 percent below the 100-day average.
American crude stockpiles, which are near an eight-decade high, fell by 2 million barrels last week, according to a Bloomberg survey of analysts before the Energy Information Administration report due Wednesday.
Bonds
Two-year Treasury yields rose one basis point, or 0.01 percentage point, to 0.91 percent, after the difference between two- and 30-year rates shrank to 171 basis points Monday, the narrowest since 2008. The Treasury Department sold $26 billion of the securities Tuesday amid the highest demand since November. Yields on 10-year notes climbed by three basis points to 1.86 percent.
Greek bonds reversed with yields on sovereign securities due in a decade adding one basis point to 7.16 percent, after reaching the lowest since November.
Euro-area finance ministers convened in Brussels on Tuesday, primarily to discuss the disbursement of a proposed 11 billion euros in aid for Greece, but also for talks on how to ease its debt through lengthening loan maturities, lowering interest rates and postponing payments.

Senior Economic Analyst Kenta Institute Eric Alexander Sugandi memperkirakan FFR naik 25 basis poin (bps) ke level 0,75% pada semester II tahun ini dan bertahan hingga akhir tahun. Namun, penaikan itu kemungkinan akan menunggu hasil voting Brexit yang digelar pada Juni tahun ini.

“Jika Brexit terjadi, akan terjadi gejolak di pasar finansial global. Di samping membuat produk ekspor AS tidak kompetitif karena dolar AS menjadi terlalu kuat, itu juga bisa mengganggu investasi AS di Eropa karena dampaknya bisa menyebabkan ekonomi Uni Eropa terpukul. Jika Brexit tidak terjadi, The Fed akan aman menaikkan suku bunga,” papar dia.

Namun, untuk menopang upaya BI menjaga stabilitas nilai tukar rupiah, menurut Eric, cadangan devisa harus terus bertambah, baik melalui sumber balance of payments maupun non-balance of payments, misalnya mengunakan USD time deposit dan foreign exchange swap dari sistem perbankan domestik.

“Di sisi lain, inter vensi di foreign exchange market harus terukur sehigga tidak memboroskan cadev. Saya lihat, BI sudah melakukan kedua hal ini,” ucap dia.

Di pihak lain, kata Eric Sugandi, pemerintah harus mengambil andil menjaga nilai tukar rupiah dengan menjaga kepercayaan investor Surat Berharga Negara (SBN). Melalui langah ini, investor tidak akan menarik dana secara besar-besaran dari Indonesia ketika sinyal kenaikan FFR semakin kuat.

“Caranya adalah dengan menjaga agar defisit anggaran tidak membengkak tajam dan jangan mengumbar janji tentang pertumbuhan ekonomi tinggi. Jika tidak bisa men-deliver, kredibilitas akan rusak,” tandas dia.

Menurut Eric, tekanan terhadap nilai tukar rupiah karena isu kenaikan FFR lebih berkaitan dengan persepsi pelaku pasar, ketimbang faktor-faktor fundamental.

“Fundamental ekonomi kita tidak jelek, tapi tidak sangat bagus juga. Inflasi dan current account deficit terjaga, tapi ada risiko defisit APBN membengkak dan pemerintah tidak bisa men-deliver target pertumbuhan ekonomi,” ujar dia. (ID/gor)

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Tokyo, May 24, 2016 (AFP) 
 Tokyo shares opened lower on Tuesday, as a stronger yen hurt exporters and following a weak lead from Wall Street, with traders worried over US central bank policy.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange slipped 0.30 percent, or 49.56 points, to 16,605.04 in opening deals, while the broader Topix index of all first section shares was down 0.34 percent, or 4.57 points, at 1,334.11.


NEW YORK kontan. Bursa saham Amerika Serikat (AS) mengalami penurunan di menit akhir perdagangan, Senin (Selasa dini hari WIB) dengan Indeks S&P 500 bertahan dalam kisaran tipis dalam lima pekan terakhir. Para investor menunggu arahan lebih lanjut pada laju pertumbuhan ekonomi dan prospek suku bunga yang lebih tinggi.
Indeks S&P 500 turun 0,2 % ke level 2.048,34 pada pukul 16:00 sore waktu New York, memangkas keuntungan tahun ini untuk setengahnya. Indeks Dow Jones Industrials turun 0,05% atau 8,01 poin ke level 17.492,93 dan Nasdaq Composite berakhir turun 3,78 poin atau 0,08% ke level 4.765,78
Indeks acuan bergerak dalam volume yang sedikit setelah dalam seminggu berayun setiap hari antara keuntungan dan kerugian. Saham Monsanto Co naik ke level 10-bulan tertinggi setelah Bayer AG menawarkan untuk membeli sahamnya sebesar US$ 62 miliar.
Penguatan pada saham maker mendorong kenaikan pada saham bahan baku, sementara Apple Inc rally untuk ketiga kalinya dalam empat hari terakhir untuk meningkatkan kelompok teknologi sampai menit terakhir perdagangan.

Bisnis.com, JAKARTA- HP Financials mengemukakan sikap hawkish bank sentral AS dengan membuka kemungkinan untuk menaikan suku bunga dalam FMOC meeting bulan depan (14-15 Juni), menjadi sentimen negatif pasar.
Sikap tersebut mendorong aksi jual dan menekan pergerakan indeks pekan ini. 
Dikemukakan indikasi kenaikan Fed Rate tersebut kontras dengan data ekonomi AS yang mixed.
Ditambah lagi adanya pemangkasan proyeksi pertumbuhan ekonomi AS 2016 oleh Moody’s dari  2,3%  menjadi 2%.
“Tanpa rilis data ekonomi domestik, sentimen global tampaknya akan menjadi faktor yang menentukan arah pergerakan indeks pekan depan,” tulis HP Financials dalam risetnya yang diterima hari ini, Jumat (20/5/2016).
Sementara itu fiscal deficit, ujarnya, masih menjadi downside risk di tengah extra effort yang terus dilakukan pemerintah untuk menakan defisit.

the economist: THE members of the Federal Reserve's monetary-policy making committee have been desperate to hike rates, often, for most of the past year. They were keen to begin hiking in September, but were put off when market volatility threatened to undermine the American recovery. In December they managed to get the first increase on the books, and committee members were feeling cocky as 2016 began; Stanley Fischer, the vice-chairman, proclaimed that it would be a four-hike year. Instead, markets spent the first two months of the year in a near panic, and here we are in mid-May with just the one, December rise behind us.

But the Fed is feeling good about the state of the state of the economy and is ready to give higher rates another chance. Over the last few weeks, every Fed official to wander within range of a microphone warned that more rate hikes might be coming sooner than many people anticipate. And yesterday the Fed published minutes from its April meeting which were revealing: "Most participants judged that if incoming data were consistent with economic growth picking up...then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June." 

The committee members in favour of hiking make a few key arguments. Many of them reckon that labour-market slack is just about used up, and wages will soon rise at a much faster clip. Combined with higher oil prices, that should push up inflation, possibly above the Fed's target, possibly high enough that the Fed would need to rush through a lot of rate hikes to regain control, risking recovery in the process. Some argue that rates are excessively low, and are encouraging risky financial behaviour, sowing the seeds of future crises. Amusingly, some think that, "further postponement of action to raise the federal funds rate might confuse the public...and potentially erode the Committee’s credibility." Amusing, as the one thing the committee can credibly generate is confusion.

Pushing against these arguments are some quite substantial considerations. Worries about runaway inflation are based on a view of the relationship between inflation and unemployment that looks shakier by the day. Looking across the world, countries not suffering an acute political collapse seem to have an awful lot of difficulty sustaining even modestly positive inflation. It isn't hard to understand why. Many global labour and product markets are glutted (just this week, America put up punitive tariffs on China in an effort to stanche the flow of cheap steel imports). That constrains firms' and workers' ability to wield bargaining power. There is a global glut of investable savings too, which has pushed down long-run real interest rates around the world. That, in turn, constrains central banks, which cannot lift their rates very high without attracting a deflationary flood of capital. Over the last thirty years, central banks have found it much easier to push inflation down than up.

And it is worth focusing on the fact that the Fed does not have cause to try to push inflation down. Its preferred measure of inflation continues to run below the Fed's 2% target, as it has for the last four years. Somehow the Fed seems not to worry about what effect that might have on its credibility. All that undershooting has depressed market-based measures of inflation expectations, which suggest the public expects inflation to remain below target for some time. If the Fed's goal is to hit the 2% target in expectation, or on average, or most of the time, or every once in a while, or ever again, it might consider holding off on another rate rise until the magical 2% figure is reached. You know, just to make sure it can be done.

But the single biggest, overwhelming, really important reason not to rush this is the asymmetry of risks facing the central bank. Actually, the Fed's economic staff explains this well; from the minutes:

The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks. In addition, while there had been recent improvements in global financial and economic conditions, downside risks to the forecast from developments abroad, though smaller, remained. Consistent with the downside risk to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as skewed to the upside.

The Fed has unlimited room to raise interest rates. It doesn't want to have to jack up rates dramatically and quickly in response to surging inflation, but if it had to it could. It has almost no room to reduce rates. If an unexpected stretch of economic weakness comes along (and such a stretch is far more likely to come along than is dangerously high inflation) then the Fed is in a very serious bind indeed. Even if it is up for cutting rates as deep into negative territory as other central banks have dared to, that still leaves it very little room to cut. It has its unconventional tools available, but the Fed has proven none too anxious to roll them out in the past. If wages were growing as fast as they typically do during a healthy expansion, and if inflation had finally made its way back to and above target, then the Fed could be fairly confident that a rate increase wouldn't unexpectedly leave the central bank face to face with deflation and with few tools to respond. 

But the economy isn't there yet. Hiking now is a leap off a cliff in a fog; one could always wait and jump later once conditions are clearer, but having jumped blindly one cannot reverse course if the expected ledge isn't where one thought it would be.

The Fed's incautious behaviour is especially worrying given the state of the world. Not only would it struggle to restore growth if it turned out to have overestimated the strength of the American recovery; it would also push the world's largest economy into a slump at a moment of serious global economic and political vulnerability. The state of the world has been better. The Brazilian state and economy are looking dangerously weak. China continues to accumulate debt at a pace that cannot go on for much longer. Britain will vote on whether to leave the EU just a few days after the June Fed meeting; Austria is about to elect a far-right president—just the latest far-right leader to enjoy political success on the continent. This might not be quite the right moment to take a relaxed attitude about the possibility of inducing an American slump.

What is most unfortunate, however, is that committee members seem not to realise the effect their statements send. Yesterday, before the minutes were released, the estimated probability of a rate hike in June (derived from futures prices) was about 6%. This morning, that probability rose above 30%. With that shift in expectations, all the other market prices one would expect to move have moved. Emerging-market currencies began falling against the dollar, equities are off, and so on. The market ructions will deliver much the same effect an actual rate hike would. Ironically, the market wobbles might be enough to dissuade the Fed from pulling the trigger when the June meeting rolls around. But a lot of harm will already have been done.


marketwatch: Federal Reserve Chairwoman Janet Yellen said Tuesday the Fed wouldn’t rule out using negative interest rates to boost the economy but she cautioned such a move would have to be carefully studied.
“While I would not completely rule out the use of negative interest rates in some future very adverse scenario, policymakers would need to consider a wide range of issues before employing this tool in the United States, including the potential for unintended consequences,” she wrote in a letter to Rep. Brad Sherman (D., Calif.) and released by his office.
Yellen also wrote she expected the economy would strengthen and inflation would return to the Fed’s 2% target “over time.”
“If the economic outlook evolves in an unexpected way, the Federal Reserve will adjust the stance of policy appropriately to foster progress toward its long-run goals of maximum employment and stable prices,” she wrote.

NEW YORK kontan. Bursa AS ditutup bullish. Tadi malam (17/3), indeks S&P 500 ditutup pada posisi tertingginya di sepanjang tahun ini.
Mengutip data Bloomberg, pada pukul 16.00 waktu New York, indeks S&P 500 naik 0,6% menjadi 2.027,22. Kondisi serupa terjadi pada indeks Dow Jones Industrial Average yang naik 0,4% menjadi 17.325,76. Level ini juga merupakan level tertinggi di 2016.
Adapun indeks Nasdaq Composite naik 0,8% ke posisi terbaik sejak 6 Januari lalu. Transaksi tadi malam melibatkan sekitar 7,6 miliar saham, atau 14% di bawah volume transaksi rata-rata tahun ini.
Adapun sejumlah saham yang pergerakannya turut mempengaruhi bursa AS antara lain: Freeport-McMoRan Inc yang melaju 10%, Chevron Corp naik 1,2%, dan Oracle Corp yang reli ke posisi tertinggi empat bulan. Di sisi lain, Bank of America mencatatkan penurunan sebesar 1,9%.
Saham-saham berbasis komoditas menjadi saham pengerek kinerja indeks. Penyebabnya tak lain kenaikan harga minyak dunia pasca keputusan The Federal Reserve yang menahan suku bunga acuannya di kisaran 0,25% hingga 0,5%.
Keputusan bank sentral AS memicu kejatuhan dollar AS versus sejumlah mata uang utama dunia.
Selain itu, the Fed juga memberikan sinyal tidak terburu-buru dalam menaikkan suku bunga acuan di tengah melemahnya pertumbuhan ekonomi global serta guncangan di pasar finansial.
"Saat ini, sinyal di market mengalami perubahan menjadi dovish. Investor dalam jangka pendek akan melihat hal tersebut. Kebijakan the Fed akan lebih akomodatif dan hal itu akan memperlemah posisi dollar AS," papar Chad Morganlander, money manager Stifel, Nicolaus & Co di Florham Park, New Jersey.


U.S. interest rates remain extremely low and that can only mean one thing: The economy isn’t growing fast enough to justify making it more expensive to borrow.
The Federal Reserve is expected to stand still and leave interest rates unchanged after bank VIPs meet this week. Nor are any of the economic reports on a busy calendar likely to give them any reason to act differently.
Retail sales in February, for example, are forecast to turn negative. A pair of surveys of American manufacturers are likely to remain under water. And inflation shows little sign it’s about to soar — what would be a sure sign of an economy catching fire.
Instead the economy has caught a bit of a chill. Growth softened to 1% in the final three months of 2015 and the new year has gotten off to a plodding start. The U.S. probably will grow faster in the first quarter, but economists are forecasting a mild 2.3% advance in gross domestic product.
Chief economist Robert Dye of Comerica Bank calls the current era “The Great OK.”
Yes, the economy is growing at a 2% pace. And yes, the economy is producing a healthy 200,000-plus jobs a month, which has knocked the unemployment rate down to an eight-year low of at 4.9%.
Yet the U.S., seven years into a recovery, is also experiencing the weakest rebound since World War II. The economy has expanded historically at a 3.3% pace, but the U.S. hasn’t topped 3% since 2005. Missing from the current expansion has been the explosive 4%-plus gains in GDP that typically happen early on.
“Even though things are unquestionably better today than they were five years ago, the economy is not great,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Part of what’s holding the economy back is slow wage growth and stagnant household incomes.
The falling unemployment rate has forced some companies to raise wages to attract workers, but the gains are not widespread. A study by Deutsche Bank found that only about one-third of industries have been forced to raise wages by at least 3%.
Most workers are only getting a bump in pay of 2% or less — far less than the typical wage gain in a strong economy. And millions of Americans are still stuck in part-time jobs or can’t find full time work. Many have even dropped out of the labor force entirely.
Businesses, for their part, find it hard to raise prices and a recent survey of small businesses show that most are swallowing higher labor costs. Lower profits in turn leave them little incentive to boost investment, the key to stronger economy.
The difficulty faced by most companies in raising prices also helps explain why inflation is still well below the 2% level the Fed believes would be healthier for the economy. It’s not just tumbling prices of oil and other imported goods that are keeping inflation low.
Fed officials insist inflation will rise gradually from current low levels and to some extend that’s already happening. Rising costs of housing and medical care are main culprits.
If that keeps up, the central bank is expected to raise interest rates at least once this year, perhaps as early as summer. But just three months ago the Fed was signaling as many four interest-rate hikes in 2016.
Call it, as Dye does, The Great OK. The U.S. is creating enough jobs and growth to warrant the occasional increase in interest rates. But 2% or so growth is perhaps the best the economy can do.

The U.S. Federal Reserve is expressing confidence in America's economy.

The Fed's No. 2, Stanley Fischer, spoke optimistically about a key yardstick for the economy. He noted that a recent pick up in inflation could currently be moving up towards the Fed's 2% target.
"We may well at present be seeing the first stirring of an increase in the inflation rate -- something that we would like to happen," Fed vice chairman Fischer said in Washington Monday.
It's key timing for such optimism: Fischer's comment are the last look at the Fed's thinking before its committee meets next week. They're not expected to raise interest rates at this meeting but what will be key is the Fed's new forecast for rate hikes in 2016.
Fischer's comments push back against concerns that the Fed would drastically change its plans.
In December, the Fed committee's forecast called for about four rate hikes in 2016. However, extreme volatility in stock markets has spooked investors and Fed members alike. At one point, some investors even pushed aside the likelihood of rate hikes for the entire year.
Comments like Fischer's suggest the Fed is gaining confidence about its two key measures -- inflation near 2% and a strong job market. Many Fed officials have said the job market is at or near "full employment." The unemployment rate is 4.9%.
Inflation has been virtually non-existent in recent years, which has held back the Fed from raising rates. The Fed increased its key interest rate in December for the first time since 2006.
But recently, inflation is moving in the right direction. The Fed's measure of inflation has increased for three straight months. It's still only at 1.3% -- well below the central bank's 2% target. However, Fed officials aren't waiting for inflation to hit the target, they just want to see it move towards it. If inflation continues moving up, it would warrant more Fed rate hikes this year.

YF: Everywhere Jim Cramer goes, people ask him if the U.S. is headed into a recession. And then he hears other whispers, saying that the Fed feels the need to raise rates and maybe it will happen in March.

In fact, Cramer thinks the two separate conversations should be combined together to say, "We are going to have a recession and the Fed is going to raise rates right into it.""When you look beyond the market's tight linkage to the price of oil, the idea that we could be headed into a recession has become a powerful theme, a whispered undercurrent in this environment that surfaces whenever oil takes a dive," the "Mad Money" host said.
Or maybe a more cynical approach would be to say that the U.S. is going to have a recession because of the Fed, Cramer said.
Cramer is hearing the chatter of recession everywhere. Recently, he spoke with Ford (NYSE:F)CEO Mark Fields, who basically said his biggest fear is that investors could talk themselves into a recession. Given that his stock sells at just five times earnings and has a 6 percent yield when the special dividend is included, it was obvious to Cramer that he is not the only one fearing a recession.
And if autos are peaking and starting to slide down, that could also be a slowing driver of the economy and a real reason behind a recession.
In the housing group, Cramer was encouraged when he heard positive news on household formation from Home Depot. But then the new home purchases for January came in far below expectations.

Then there is oil, which has been in a bear market for a long time. "I know there aren't that many people in the oil business and it really only impacts nine states negatively, but recessions are about confidence and when you read the stories about the woes of the oil companies and those that lend them, you really don't feel much confidence being inspired," Cramer said.
As for the political landscape, it seems to Cramer that the Republicans are all trying to outdo one another about how poorly the U.S. is doing as a nation. After all, they have to since they are running against Democrats, who currently run the White House.



Cramer also saw recession signals in the decline of interest rates, with the 10-year Treasury down to 1.7 percent.
Even with all of these sign, it seemed to Cramer that the chatter from Fed governors remain oblivious.
"I almost wonder if they live in a vacuum. Who are they talking to? Don't they at least have some buddies who are concerned about a recession? Don't they know some people are pulling back from investing?" Cramer said.
As long as the Fed governors remain upbeat, Cramer expects more days on the market ahead that will be down, not up.
Ultimately, Cramer thinks the Fed is making a mistake, and maybe those bullish officials of the Fed that think the economy is ready for a rate hike should get outside more because they aren't in touch with what's on everyone else's mind.

NEW YORK kontan. Penerapan suku bunga negatif di AS sepertinya merupakan ide yang tak pernah terpikirkan sebelumnya oleh pelaku pasar. Namun, kini, The Federal Reserve mengimbau pihak perbankan untuk melakukan persiapan menghadapi suku bunga negatif, hanya untuk berjaga-jaga.
Untuk pertama kalinya dalam sejarah, badan pemerintah dan bank sentral mensyaratkan perbankan untuk mempersiapkan kemungkinan terjadinya yield surat utang AS di level negatif. Menurut rilis yang keluarkan The Fed tertanggal 28 Januari, skenario ini murni hipotesis dan bukan prediksi.
Meski demikian, perkembangan itu merupakan bagian dari skenario besar dunia di mana suku bunga nol berubah menjadi suku bunga negatif.
Sejumlah pengamat menilai, perubahan arah kebijakan suku bunga ini merupakan efek domino dari kebijakan suatu negara. Ilustrasinya begini.
Sebuah negara yang mengalami perlambatan ekonomi memutuskan bahwa salah satu cara terbaik untuk mengangkat kembali ekonomi mereka adalah dengan mendevaluasi nilai mata uang, mempermurah nilai ekspor, dan kebijakan itu membuat negara mereka lebih menarik ketimbang negara yang memiliki yield mata uang yang lebih tinggi dan memiliki daya beli yang kuat.
Kesuksesan yang didulang negara tersebut mulai dicontoh oleh negara lain. Lalu, menjalar ke negara lain. Dan negara lainnya. Bahkan, untuk bertahan di permainan tersebut, bank sentral dunia terus melakukan devaluasi hingga tidak ada lagi yang tersisa. Akhirnya, untuk mendevaluasi, dipilihlah strategi suku bunga negatif.
Dalam jangka pendek ke depan, sepertiga dari surat utang sebuah negara akan memiliki yield negatif. Pada gilirannya, kebijakan yang dinilai ampuh untuk menstimulasi kredit dan pertumbuhan negara berbasis ekspor akan menjadi kebijakan tak berarti yang terus dilakukan bank sentral.
Seperti yang baru saja dilakukan Bank of Japan baru-baru ini. Tiba-tiba, kebijakan suku bunga nol (zero interest rate policy/ZIP) berubah menjadi kebijakan suku bunga negatif (negative interest rate policy/NIRP).
Kebijakan NIRP ini sudah diterapkan Jepang pada pekan lalu. Hasilnya, tingkat yield surat utang pemerintah Jepang berjangkawaktu 10 tahun menjadi negatif pada Senin (8/2) lalu untuk pertama kalinya dalam sejarah. Tak pelak, muncul kecemasan baru bahwa the Federal Reserve juga akan segera memberlakukan NIRP.
"Sepertinya, NIRP menjadi alat kebijakan kunci bagi sejumlah bank sentral utama dunia seiring langkah mereka memerangi inflasi, penguatan mata uang, dan perlambatan ekonomi," jelas Jeffrey Kleintop, chief global investmeny strategist Charles Schwab.
Dia menambahkan, efektivitas dari kebijakan suku bunga negatif masih diragukan. "Dan dengan meningkatkan suku bunga negatif tidak hanya akan semakin menambah beban berat pasar modal, tapi juga bagi faktor-faktor pendorong pertumbuhan ekonomi," urainya.
Memang, kebijakan ZIRP bisa mendorong pasar saham lebih tinggi. Namun, meluasnya kebijakan NIRP secara kebetulan terjadi bersamaan dengan anjloknya pasar saham global, khususnya saham-saham finansial.
Menebak langkah The Fed
Analis menilai, kemungkinan The Fed untuk memberlakukan NIRP (setidaknya saat ini) masih sangat kecil. Ini mengingat, the Federal Open Market Committee, baru saja menaikkan target suku bunga acuannya pada Desember untuk kali pertama dalam sembilan tahun terakhir. Sehingga, mengubah kebijakan itu merupakan kemunduran yang mengejutkan.
Meski demikian, sejumlah petinggi Te Fed sempat melontarkan ide tersebut.
Dalam pidatonya pada pekan lalu, Wakil Pimpinan The Fed Stanley Fischer bilang, "Percobaan Eropa terkait suku bunga negatif bekerja lebih baik dari yang saya harapkan." Pernyataan itu menimbulkan spekulasi bahwa bank sentral AS juga tengah mempertimbangkan untuk menerapkan kebijakan yang sama.
Suku bunga negatif di Amerika akan dimulai dengan pembayaran bunga atas kelebihan cadangan yang perbankan simpan di The Fed. Nilainya saat ini mencapai US$ 2,15 triliun dengan bunga 0,5%. Dengan suku bunga negatif, maka perbankan akan dikenakan biaya saat menyimpan dana mereka di bank sentral.
Hal itu akan mendorong perbankan enggan menyimpan dananya. Sehingga, pilihannya adalah menyalurkan dana tersebut ke sistem perekonomian melalui pinjaman. Tentunya hal itu akan menstimulasi pertumbuhan ekonomi.
Hanya saja, analis menilai, ide tersebut hanya sebatas teori saja. Ada beberapa masalah yang akan muncul dari pemberlakuan kebijakan ini.
Pertama, perbankan akan berupaya mengganti kerugian pendapatan mereka dengan meningkatkan bunga pinjaman yang disalurkan. Kedua, semakin banyak negara yang memberlakukan suku bunga negatif, maka kebijakan tersebut akan semakin tidak efektif.
Terakhir, masalah akut yang biasanya timbul di Amerika, kebijakan suku bunga negatif dapat menyebabkan kejutan ke pasar uang AS yang bernilai US$ 2,75 triliun. Ada kecemasan, skenario ini dapat memicu krisis finansial lain di mana dana besar di pasar uang tidak dapat mengembalikan return investasi sesuai harapan.
"Segala sesuatu akan kacau jika suku bunga negatif. Pasar uang AS merupakan yang terbesar di dunia dan banyak komitmen yang terikat di sana. Demikian juga likuiditas bagi ekonomi AS. Merusak tatanan pasar uang akan terlalu dramatis bagi the Fed untuk mempertimbangkan kebijakan ke arah sana," papar Kim Rupert, managing director global fixed income Action Economics.
Kendati demikian, kondisi market mengindikasikan, jika The Fed tidak mengambil kebijakan NIRP, maka kemungkinan untuk menerapkan kebijakan kenaikan suku bunga agresif ke depannya akan nihil.
Sementara itu, Michael Darda, chief economist and market strategist MLM Partners menilai, the Fed akan bijak membaca sinyal dari market dan tidak terlalu memperhatikan tren kebijakan yang ada.
Menurut Darda, langkah the Fed untuk mengakhiri ZIRP dan quantitative easing, telah berubah menjadi pengetatan kebijakan moneter dunia, sama dengan apa yang terjadi pada 1930-an silam.
Darda juga mengatakan, dengan menerapkan kebijakan NIRP saat ini, maka hal itu dapat dinilai sebagai reaksi kepanikan bahwa segala sesuatu akan semakin memburuk.
Analis lainnya, Mark Cabana yang merupakan rates strategist Bank of America Merrill Lynch mengatakan, meski tidak menjadi skenario utama, jika ekonomi AS melemah secara signifikan, dia percaya the Fed akan mempertimbangkan suku bunga negatif sebagai langkah pelonggaran kebijakan.




20 Feb 2016: THE GUARDIAN: Larry Elliott

Turn the clock back a month. It is the week before Christmas and the Federal Reserve has just raised interest rates for the first time in almost a decade.
The mood in the markets is upbeat. A so-called Santa rally is in full swing. Dealers say the US central bank has played a blinder by keeping Wall Street sweet. If there were Oscars for central bankers, Janet Yellen would be picking up the golden statuette.
Four weeks and one market meltdown later, the Fed’s decision no longer looks quite so clever. Indeed, if things continue as they have since the turn of 2016, the increase in US interest rates will go down in the annals as one of the great economic blunders.
The rationale for higher borrowing costs always looked questionable. Interest rates were pushed up not because inflation was a problem but because the Fed expected inflation to be a problem some time in the future. Sure, unemployment was coming down, but wage growth was not going up.































































Yellen and her colleagues had a choice. They could act pre-emptively and raise rates while inflation was low, or they could wait until they could see the whites of inflation’s eyes. They chose the former and they chose wrong.
Almost all the data since the Fed raised rates has been weak. Plunging oil prices were supposed to encourage consumers to spend, but they are saving rather than spending the windfall. Retail sales fell in December and for 2015 as a whole were at their weakest since 2009.
Corporate profitability has been falling and up until now share prices have been artificially inflated by companies buying back their own stock. Industrial production also fell in December, partly as a consequence of the strong dollar, which is making US exports dearer and imported goods cheaper. The month-on-month fall was the steepest since 2008, but perhaps even more worryingly every other time industrial production has been this low the US has been in recession.
Other central banks have been here before. The European Central Bank raised rates in 2011 only to later reverse the decision as the eurozone economy tanked. The Swedish central bank did the same. Wall Street currently estimates that there is a 10% chance that the Fed will reverse the December rate increase later this month. The Fed has got a great dollop of egg all over its face.

12 Feb 2016: 
NEW YORK kontan. Penerapan suku bunga negatif di AS sepertinya merupakan ide yang tak pernah terpikirkan sebelumnya oleh pelaku pasar. Namun, kini, The Federal Reserve mengimbau pihak perbankan untuk melakukan persiapan menghadapi suku bunga negatif, hanya untuk berjaga-jaga.
Untuk pertama kalinya dalam sejarah, badan pemerintah dan bank sentral mensyaratkan perbankan untuk mempersiapkan kemungkinan terjadinya yield surat utang AS di level negatif. Menurut rilis yang keluarkan The Fed tertanggal 28 Januari, skenario ini murni hipotesis dan bukan prediksi.
Meski demikian, perkembangan itu merupakan bagian dari skenario besar dunia di mana suku bunga nol berubah menjadi suku bunga negatif.
Sejumlah pengamat menilai, perubahan arah kebijakan suku bunga ini merupakan efek domino dari kebijakan suatu negara. Ilustrasinya begini.
Sebuah negara yang mengalami perlambatan ekonomi memutuskan bahwa salah satu cara terbaik untuk mengangkat kembali ekonomi mereka adalah dengan mendevaluasi nilai mata uang, mempermurah nilai ekspor, dan kebijakan itu membuat negara mereka lebih menarik ketimbang negara yang memiliki yield mata uang yang lebih tinggi dan memiliki daya beli yang kuat.
Kesuksesan yang didulang negara tersebut mulai dicontoh oleh negara lain. Lalu, menjalar ke negara lain. Dan negara lainnya. Bahkan, untuk bertahan di permainan tersebut, bank sentral dunia terus melakukan devaluasi hingga tidak ada lagi yang tersisa. Akhirnya, untuk mendevaluasi, dipilihlah strategi suku bunga negatif.
Dalam jangka pendek ke depan, sepertiga dari surat utang sebuah negara akan memiliki yield negatif. Pada gilirannya, kebijakan yang dinilai ampuh untuk menstimulasi kredit dan pertumbuhan negara berbasis ekspor akan menjadi kebijakan tak berarti yang terus dilakukan bank sentral.
Seperti yang baru saja dilakukan Bank of Japan baru-baru ini. Tiba-tiba, kebijakan suku bunga nol (zero interest rate policy/ZIP) berubah menjadi kebijakan suku bunga negatif (negative interest rate policy/NIRP).
Kebijakan NIRP ini sudah diterapkan Jepang pada pekan lalu. Hasilnya, tingkat yield surat utang pemerintah Jepang berjangkawaktu 10 tahun menjadi negatif pada Senin (8/2) lalu untuk pertama kalinya dalam sejarah. Tak pelak, muncul kecemasan baru bahwa the Federal Reserve juga akan segera memberlakukan NIRP.
"Sepertinya, NIRP menjadi alat kebijakan kunci bagi sejumlah bank sentral utama dunia seiring langkah mereka memerangi inflasi, penguatan mata uang, dan perlambatan ekonomi," jelas Jeffrey Kleintop, chief global investmeny strategist Charles Schwab.
Dia menambahkan, efektivitas dari kebijakan suku bunga negatif masih diragukan. "Dan dengan meningkatkan suku bunga negatif tidak hanya akan semakin menambah beban berat pasar modal, tapi juga bagi faktor-faktor pendorong pertumbuhan ekonomi," urainya.
Memang, kebijakan ZIRP bisa mendorong pasar saham lebih tinggi. Namun, meluasnya kebijakan NIRP secara kebetulan terjadi bersamaan dengan anjloknya pasar saham global, khususnya saham-saham finansial.
Menebak langkah The Fed
Analis menilai, kemungkinan The Fed untuk memberlakukan NIRP (setidaknya saat ini) masih sangat kecil. Ini mengingat, the Federal Open Market Committee, baru saja menaikkan target suku bunga acuannya pada Desember untuk kali pertama dalam sembilan tahun terakhir. Sehingga, mengubah kebijakan itu merupakan kemunduran yang mengejutkan.
Meski demikian, sejumlah petinggi The Fed sempat melontarkan ide tersebut.
Dalam pidatonya pada pekan lalu, Wakil Pimpinan The Fed Stanley Fischer bilang, "Percobaan Eropa terkait suku bunga negatif bekerja lebih baik dari yang saya harapkan." Pernyataan itu menimbulkan spekulasi bahwa bank sentral AS juga tengah mempertimbangkan untuk menerapkan kebijakan yang sama.
Suku bunga negatif di Amerika akan dimulai dengan pembayaran bunga atas kelebihan cadangan yang perbankan simpan di The Fed. Nilainya saat ini mencapai US$ 2,15 triliun dengan bunga 0,5%. Dengan suku bunga negatif, maka perbankan akan dikenakan biaya saat menyimpan dana mereka di bank sentral.
Hal itu akan mendorong perbankan enggan menyimpan dananya. Sehingga, pilihannya adalah menyalurkan dana tersebut ke sistem perekonomian melalui pinjaman. Tentunya hal itu akan menstimulasi pertumbuhan ekonomi.
Hanya saja, analis menilai, ide tersebut hanya sebatas teori saja. Ada beberapa masalah yang akan muncul dari pemberlakuan kebijakan ini.
Pertama, perbankan akan berupaya mengganti kerugian pendapatan mereka dengan meningkatkan bunga pinjaman yang disalurkan. Kedua, semakin banyak negara yang memberlakukan suku bunga negatif, maka kebijakan tersebut akan semakin tidak efektif.
Terakhir, masalah akut yang biasanya timbul di Amerika, kebijakan suku bunga negatif dapat menyebabkan kejutan ke pasar uang AS yang bernilai US$ 2,75 triliun. Ada kecemasan, skenario ini dapat memicu krisis finansial lain di mana dana besar di pasar uang tidak dapat mengembalikan return investasi sesuai harapan.
"Segala sesuatu akan kacau jika suku bunga negatif. Pasar uang AS merupakan yang terbesar di dunia dan banyak komitmen yang terikat di sana. Demikian juga likuiditas bagi ekonomi AS. Merusak tatanan pasar uang akan terlalu dramatis bagi the Fed untuk mempertimbangkan kebijakan ke arah sana," papar Kim Rupert, managing director global fixed income Action Economics.
Kendati demikian, kondisi market mengindikasikan, jika The Fed tidak mengambil kebijakan NIRP, maka kemungkinan untuk menerapkan kebijakan kenaikan suku bunga agresif ke depannya akan nihil.
Sementara itu, Michael Darda, chief economist and market strategist MLM Partners menilai, the Fed akan bijak membaca sinyal dari market dan tidak terlalu memperhatikan tren kebijakan yang ada.
Menurut Darda, langkah the Fed untuk mengakhiri ZIRP dan quantitative easing, telah berubah menjadi pengetatan kebijakan moneter dunia, sama dengan apa yang terjadi pada 1930-an silam.
Darda juga mengatakan, dengan menerapkan kebijakan NIRP saat ini, maka hal itu dapat dinilai sebagai reaksi kepanikan bahwa segala sesuatu akan semakin memburuk.

Analis lainnya, Mark Cabana yang merupakan rates strategist Bank of America Merrill Lynch mengatakan, meski tidak menjadi skenario utama, jika ekonomi AS melemah secara signifikan, dia percaya the Fed akan mempertimbangkan suku bunga negatif sebagai langkah pelonggaran kebijakan.

New York - Gelombang aksi jual saham melanda pasar ekuitas dunia setelah peringatan muncul dari Gubernur Federal Reserve Janet Yellen mengenai perekonomian global. Sedangkan harga minyak jatuh ke posisi terendah 13 tahun terakhir.

Peringatan Yellen mengenai gejolak pasar global dan kondisi keuangan yang lebih ketat membuat perekonomian AS berisiko. Sedangkan tekanannya terhadap ketidakmenentuan pada kebijakan yuan China sebagai sebab utama dari gejolak ekonomi telah memicu aksi jual saham di Asia yang menyebar ke pasar Eropa dan Amerika Utara. Demikian mengutip antaranews.com.

Untuk keamanan, investor memburu yen hingga nilai tukar mata uang Jepang ini naik ke level tertinggi dalam 15 bulan terakhir pada 112,39 yen terhadap dolar AS. Tidak hanya itu, harga emas juga naik 4,4 persen menjadi US$1.247 per ons atau tertinggi dalam setahun terakhir.

Hari ini bursa Tokyo tutup karena liburan, namun bursa Hong Kong anjlok 3,9 persen setelah tiga hari libur Imlek. Aksi jual saham yang intensif ini meluber ke Eropa di mana indeks bursa saham London jatuh 2,4 persen, Frankfurt 2,9 persen, Paris 4,1 persen dan Milan 5,6 persen. Menyeberang Atlantik, indeks saham di bursa New York terpangkasa 1.6 persen, sedangkan indeks S&P 500 anjlok 1,2 persen.

http://pasarmodal.inilah.com/read/detail/2273586/pasar-saham-dunia-berjatuhan




Sumber : INILAH.COM

New York, Feb 11, 2016 (AFP) 
 A fierce sell-off gripped world markets Thursday after a warning by US Federal Reserve boss Janet Yellen over the global economy, while oil fell close to 13-year lows.

Yellen's warning that global market turmoil and tighter financial conditions posed risks to the US economy, and her pointing to "uncertainty" on China's yuan policy as a key cause of that turmoil, sparked a renewed sell-off that started in Asia and blasted through Europe to North American markets.

Heading for safety, investors pushed the yen up to a 15-month high at 112.39 yen to the dollar.

Also surging was gold, which gained 4.4 percent to $1,247.00 per ounce, its highest level in a year.

The Tokyo market was closed for a holiday, but Hong Kong stocks tumbled 3.9 percent as investors played catch-up after a three-day break for the Chinese New Year.

The intense selling spilled over into Europe, with London falling 2.4 percent, Frankfurt 2.9 percent, Paris 4.1 percent and Milan 5.6 percent.

In New York, the Dow finished off 1.6 percent and the S&amp;P 500 1.2 percent.

"Overall the mood remains very negative," said David Levy of Republic Wealth Advisors.

"It's hard to find many signs of positivity or bullishness."

- Oil at 13-year low -

Another drop in oil prices also added to the gloom.

In New York, the benchmark WTI crude contract lost 4.5 percent to $26.21 a barrel. 

In London, Brent North Sea crude lost 2.6 percent to $30.06 a barrel.

Miners remained under heavy pressure as the commodity price rout continues unabated.

Australian giant Rio Tinto fell 3.4 percent after posting an annual net loss of US$866 million and cancelling its progressive dividend policy, in which shareholders are given gradually higher payouts.

Swiss-based miner Glencore crashed 6.2 percent in London after posting a 6.0-percent drop in fourth-quarter copper output.

- Banking jitters -

Banking stocks also had another bad day, as investors increasingly worry both that credit quality is deteriorating and that low or even negative interest rate policies from central banks will damage lenders.

Sweden's Riksbank decided to cut interest rates to -0.5 percent to fight off deflation.

"Negative interest rates have become a real sore point because of the way they impair banks' ability to do business," said CMC Markets UK analyst Jasper Lawler.

Shares in Deutsche Bank, which jumped more than 16 percent at one point on Wednesday on rumors it may launch a bond buyback to assuage concerns about its financial strength, fell 6.1 percent.

Societe Generale, France's second-largest bank, warned it would fall short of its earnings targets this year, sending its shares nearly 13 percent lower on the Paris exchange.

Banks were also among the top losers in London, with Barclays plunging 7.0 percent, Standard Chartered 5.1 percent and HSBC 4.8 percent.

In New York, Bank of America lost 6.8 percent, Citigroup 6.5 percent, JPMorgan Chase 4.4 percent and Goldman Sachs 4.4 percent.

Eurogroup head Jeroen Dijsselbloem felt the need to play down concerns, saying that the EU's single currency area and its banks were stronger than a few years ago.

And in Washington, Yellen also assured that US lenders remain strong due to post-crisis efforts to force them to strengthen capital.

"So I do think we have a strong banking system and we've seen marked improvement," she said.

- Key figures at 2200 GMT -

New York - Dow: DOWN 1.6 percent at 15,660.18 (close)

New York - S&amp;P 500: DOWN 1.2 percent at 1,829.08 (close)

New York - Nasdaq: DOWN 0.4 percent at 4,266.84 (close)

London - FTSE 100: DOWN 2.4 percent at 5,536.97 points (close)

Frankfurt - DAX 30: DOWN 2.9 percent at 8,752.87 (close)

Paris - CAC 40: DOWN 4.1 percent at 3,896.71 (close)

Milan - FTSE MIB: DOWN 5.6 percent at 15,773 (close)

EURO STOXX 50: DOWN 3.9 percent at 2,680.35

Hong Kong - Hang Seng: DOWN 3.9 percent at 18,545.80 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Euro/dollar: UP at $1.1323 from $1.1286 on Wednesday

Dollar/yen: DOWN at 112.39 yen from 113.40 yen

burs-pmh/vlk



New York, Feb 10, 2016 (AFP) 
 The Japanese yen pushed strongly higher Wednesday after a surprising warning by Federal Reserve Chair Janet Yellen over rising risks in the global economy.

The yen -- seen as a safe haven in turmoil even as the Bank of Japan has adopted a negative interest rate policy -- shot up 1.5 percent against the dollar to its highest level in 15 months, at 113.40 yen.

And it surged to 127.99 yen against the euro, up 1.6 percent.

While Yellen made no explicit comments on Fed rate hike plans, her description of clouds looming over the US economy was taken as no rate increase in the immediate future.

"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar," she told Congress.

"These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market."

Initially the dollar pushed up on her comments, but by late in the day, the greenback dropped back and was a net loser against the euro.

Kathy Lien of BK Asset Management said the first reaction was because Yellen, by making no explicit comment on it, effectively left a March rate hike on the table.

"Investors initially bought dollars after Yellen's testimony because she hadn't cooed loud enough. But by the end of the New York session they realized that chances are the Fed won't be pulling the trigger next month," she explained.
<pre>   2200 GMT Wednesday   Tuesday
</pre>
EUR/USD 1.1286 1.1293

EUR/JPY 127.99 130.04

EUR/CHF 1.0992 1.0982

EUR/GBP 0.7770 0.7805

USD/JPY 113.40 115.14

USD/CHF 0.9736 0.9725

GBP/USD 1.4525 1.4470


WASHINGTON (MarketWatch) — Pushing interest rates into negative territory has been surprisingly successful in helping ailing economies, the No. 2 official at the Federal Reserve said Monday.
Negative interest rates are “working more than I can say I expected in 2012,” Fed Vice Chairman Stanley Fischer said during a question-and-answer session followinga speech at the Council on Foreign Relations.
In his speech, Fischer said the U.S. central bank was worried the global market selloff could dampen U.S. growth and keep inflation low.
The Bank of Japan last week became the latest central bank to enact negative rates in an attempt to reinflate the country’s economy.
Analysts are concerned a negative side effect of these unconventional policies is that central banks are losing their ability to steer markets.
Central banks use their deposit rates to influence how banks handle their reserves. Negative rates are designed to dissuade lenders from parking cash with them, thus spurring lending.
Several central banks in Europe have been using negative rates, including the European Central bank, the Swiss National Bank and the Danish central bank. Interest rates are also negative in Sweden.
In an interview with MarketWatch, former Fed chief Ben Bernanke said negative rates are a tool the U.S. central bank could consider in the event of a serious downturn.
marketwatch: Investors didn’t have a lot to celebrate on New Year’s Eve, but that doesn’t mean Wall Street’s start to 2016 won’t suffer a hangover thanks to the upcoming earnings season.
U.S. stocks finished last year on a somber note with both the Dow Jones Industrial Average DJIA, -1.02%  and the S&P 500 Index SPX, -0.94%  snapping multiyear winning streaks. Only the Nasdaq Composite Index COMP, -1.15%  escaped the year unscathed, turning in a 5.7% gain on the year.
After a dreary 2015 for stocks, it appears the upcoming earnings season is only going to prolong that misery. Once again weighed down by the energy and materials sectors, the S&P 500 is expected to see a decline in earnings of 4.7% from the year-ago period, according to John Butters, senior earnings analyst at FactSet. The only sectors expected to see any gain in fourth-quarter earnings are telecom, financials, consumer discretionary and health care.



































































Only 4 sectors expect gains from a year ago.

That expected decline in S&P 500 earnings looks to eat into gains made in the previous year’s fourth quarter.
In 2014, fourth-quarter earnings rose just less than 4% from the year-ago period, according to FactSet. Quarterly earnings per share for the S&P 500 peaked at $30.33 in the fourth quarter of 2014. Now, that’s expected to drop to $29.38 a share for the fourth quarter of 2015.




































































Additionally, of the 25 consumer discretionary companies that have issued earnings outlooks for the fourth quarter, none of them met or exceeded the Wall Street consensus at the time.

NEW HAVEN, Conn. (Project Syndicate) – By now, it’s an all-too-familiar drill. After an extended period of extraordinary monetary accommodation, the Federal Reserve has begun the long march back to normalization. It has now taken the first step toward returning its benchmark policy interest rate — the federal funds rate — to a level that imparts neither stimulus nor restraint to the U.S. economy.
A majority of financial market participants applaud this strategy. In fact, it is a dangerous mistake.
The Fed is borrowing a page from the script of its last normalization campaign — the incremental rate hikes of 2004-2006 that followed the extraordinary accommodation of 2001-2003. Just as that earlier gradualism set the stage for a devastating financial crisis and a horrific recession in 2008-2009, there is mounting risk of yet another accident on what promises to be an even longer road to normalization.
The problem arises because the Fed, like other major central banks, has now become a creature of financial markets rather than a steward of the real economy. This transformation has been under way since the late 1980s, when monetary discipline broke the back of inflation and the Fed was faced with new challenges.

In 2016, Don't Let Volatile Markets Cloud Your Financial Plans


How can households best manage and prepare their finances going into 2016 in the face of volatile markets? HighTower managing director Jordan Waxman joins Lunch Break to explain. Photo: Getty
The challenges of the post-inflation era came to a head during Alan Greenspan’s 18-and-a-half-year tenure as Fed chair. The stock-market crash of Oct.19, 1987 — occurring only 69 days after Greenspan had been sworn in — provided a hint of what was to come. In response to a one-day 23% plunge in U.S. equity prices, the Fed moved aggressively to support the brokerage system and purchase government securities.
In retrospect, this was the template for what became known as the “Greenspan put”— massive Fed liquidity injections aimed at stemming financial-market disruptions in the aftermath of a crisis. As the markets were battered repeatedly in the years to follow — from the savings-and-loan crisis (late 1980s) and the Gulf War (1990-1991) to the Asian Financial Crisis (1997-1998) and terrorist attacks (Sept. 11, 2001) — the Greenspan put became an essential element of the Fed’s market-driven tactics.
This approach took on added significance in the late 1990s, when Greenspan became enamored of the so-called wealth effects that could be extracted from surging equity markets. In an era of weak income generation and seemingly chronic current-account deficits, there was pressure to uncover new sources of economic growth. But when the sharp run-up in equity prices turned into a bubble that subsequently burst with a vengeance in 2000, the Fed moved aggressively to avoid a Japan-like outcome — a prolonged period of asset deflation that might trigger a lasting balance-sheet recession.
At that point, the die was cast. No longer was the Fed responding just to idiosyncratic crises and the market disruptions they spawned. It had also given asset markets a role as an important source of economic growth. The asset-dependent economy quickly assumed a position of commensurate prominence in framing the monetary-policy debate.
The Fed had, in effect, become beholden to the monster it had created. The corollary was that it had also become steadfast in protecting the financial-market-based underpinnings of the U.S. economy.
Largely for that reason, and fearful of “Japan Syndrome” in the aftermath of the collapse of the U.S. equity bubble, the Fed remained overly accommodative during the 2003-2006 period. The federal funds rate was held at a 46-year low of 1% through June 2004, before being raised 17 times in small increments of 25 basis points per move over the two-year period from mid-2004 to mid-2006. Yet it was precisely during this period of gradual normalization and prolonged accommodation that unbridled risk-taking sowed the seeds of the Great Crisis that was soon to come.
Over time, the Fed’s dilemma has become increasingly intractable. The crisis and recession of 2008-2009 was far worse than its predecessors, and the aftershocks were far more wrenching. Yet, because the U.S. central bank had repeatedly upped the ante in providing support to the Asset Economy, taking its policy rate to zero, it had run out of traditional ammunition.
And so the Fed, under Ben Bernanke’s leadership, turned to the liquidity injections of quantitative easing, making it even more of a creature of financial markets. With the interest-rate transmission mechanism of monetary policy no longer operative at the zero bound, asset markets became more essential than ever in supporting the economy. Exceptionally low inflation was the icing on the cake — providing the inflation-targeting Fed with plenty of leeway to experiment with unconventional policies while avoiding adverse interest-rate consequences in the inflation-sensitive bond market.
Today’s Fed inherits the deeply entrenched moral hazard of the Asset Economy. In carefully crafted, highly conditional language, it is signaling much greater gradualism relative to its normalization strategy of a decade ago. The debate in the markets is whether there will be two or three rate hikes of 25 basis points per year — suggesting that it could take as long as four years to return the federal funds rate to a 3% norm.
But, as the experience of 2004-2007 revealed, the excess liquidity spawned by gradual normalization leaves financial markets predisposed to excesses and accidents. With prospects for a much longer normalization, those risks are all the more worrisome. Early warning signs of troubles in high-yield markets, emerging-market debt, and eurozone interest-rate derivatives markets are particularly worrisome in this regard.
The longer the Fed remains trapped in this mindset, the tougher its dilemma becomes — and the greater the systemic risks in financial markets and the asset-dependent U.S. economy. It will take a fiercely independent central bank to wean the real economy from the markets. A Fed caught up in the political economy of the growth debate is incapable of performing that function.
Only by shortening the normalization timeline can the Fed hope to reduce the build-up of systemic risks. The sooner the Fed takes on the markets, the less likely the markets will be to take on the economy. Yes, a steeper normalization path would produce an outcry. But that would be far preferable to another devastating crisis.
This article has been published with the permission of Project Syndicate — The Perils of Fed Gradualism.

time.com: Real wages have fallen 8% since 2006.











































































A lot of theories exist as to why pay hasn’t increased alongside our economic recovery. One popular theory is that
 the unemployment rate hasn’t fallen as much as it seems. And, there is likely something to be said for the idea that many workers have decided to stop looking for employment in recent years, so the reported rate is a bit misleading. But, that doesn’t fully explain the problem of wage stagnation.There have been a lot of positive signs lately regarding the state of the economy. Perhaps the two strongest indicators are that the unemployment rate is down, and the GDP is up. (This quarter, it rose beyond what was predicted.) Despite this growth, many workers haven’t noticed much change to their paychecks. This fact has left a lot of folks wondering: if the economy is improving, why aren’t our paychecks doing the same?
Other explanations abound as well. Is it because of inflation? Outsourcing? Offshoring? Maybe there isn’t a wage increase problem to begin with, as some conservative groups have suggested. That’s not likely though, as according PayScale’s Real Wage Index, “real wages” have fallen 8% since 2006, with inflation factored in.
Actually, the real reason wages have stagnated even though the economy has improved is likely due to a decline in workers’ bargaining power. Let’s take a closer look at this issue.
Labor unions have long been the fundamental force that fights for workers’ rights, including compensation. In recent decades, probably since the 1950s, the percentage of the private sector workforce that is organizedhas fallen to about 6.5% At one time, it was as high as 35%.
Union workers weren’t the only ones who saw better pay in times and places where the labor movement was stronger.
“In research by Harvard University’s Bruce Western and myself, we compared nonunion workers in highly organized locales and industries to nonunion workers in segments of the labor market with little union presence,” writes Jake Rosenfeld, Associate Professor of Sociology at the University of Washington, at The Conversation. “After adjusting for core determinants of wages, such as education levels, we found that nonunion workers in strongly unionized industries and areas enjoyed substantially higher pay. Thus the economic benefits of a powerful labor movement redounded to unorganized workers as well as union members.”
A rise in pay-for-performance policies is likely also to blame in the decline of workers’ bargaining power, which in turn stagnates wages. Peter Cappelli, a Wharton School of Business professor, has noted that managers are granted bonuses based on whether or not they can keep their labor budgets below a certain mark:
“They’re punished to the extent they go over those budgets,” Capelli said. “If you’re a local manager and you’re thinking, ‘Should I bump up wages’ it could really hit your bonus. Companies have done this in order to increase the incentive to hang tough on budgets, and it works.”
Rather than investing in the people that work for the company, as some brilliant business leaders have suggested, more and more corporations are holding to strict budget lines which encourages higher-ups to limit pay increases.
“There’s this pervasive norm,” says Jared Bernstein, former chief economist for Vice President Joe Biden, “that labor costs must be held down at all costs because maximizing profits is the be-all and end-all.”
In order for workers to benefit from the economic improvements that we’ve seen in recent years, they’ll have to find the bargaining chips they need to make a difference with their employers. Labor unions might just be their best bet, as history has shown us. Better yet, employers should also consider loosening the restrictions they’ve instituted. Companies benefit when workers are fairly compensated.
marketwatch: As the Federal Reserve readies its first interest-rate hike cycle in nearly a decade, there may not be too much need to hold your breath. Stocks and other key assets have performed just fine over previous rate hike cycles.
One unfortunate correlation, however — the last two Fed rate hike cycles preceded stock-market crashes. (Most pin the blame on the dot-com and housing bubbles bursting.)
Cycle through to see how various assets have responded to previous rate-hike cycles.
According to data compiled by Allianz Global Investors, the S&P 500 has averaged a return of 9.9% during the Fed rate hike cycles since 1983. Commodities in fact have done the best, with an average gain of more than 25%.
The one common element all these cycles had was good if not great growth in the jobs market ahead of the hikes. That’s again the case here — this year, jobs growth has averaged 210,000 per month.
Global markets are braced for the most pivotal moment since the financial crisis, as the Federal Reserve prepares to raise interest rates for the first time in nearly a decade.
Despite the change in policy being “priced in”, traders will nonetheless be on edge as Janet Yellen, the Fed’s chairman, outlines plans for future rate hikes.
Larry Summers, the former US Treasury secretary, warned that a move to raise rates would be premature. “There are still substantial questions about the growth prospect, about the prospect of achieving the 2pc inflation target, about uncertainties in financial markets,” he told Bloomberg.
Fed policymakers have been hesitant to tighten policy, preferring to wait for signs that inflation was on a path back to the central bank’s 2pc target.
The dollar climbed by more than 0.6pc against the pound on Tuesday, after inflation data seemed to secure the case for interest rates to rise.

The latest figures showed that one measure of inflation rose by a greater than expected 0.5pc in the year to November.
So-called “core inflation”, which strips out more volatile components, climbed to an 18-month high of 2pc, from 1.9pc in the previous month.
While economic conditions might present a “Goldilocks moment” for the Fed to take its first steps towards higher rates, analysts warned that it may soon have to retrace its steps. Jim Reid, a strategist at Deutsche Bank, said that officials will probably not “get that far… before the cycle eventually turns over”.
“If the next recession comes in the next couple of years, it's hard to imagine rates being high enough that the Fed will be able to avoid returning to zero again with risks that a fourth round of quantitative easing will be needed,” Mr Reid said.
Bricklin Dwyer, a BNP Paribas economist, said there was a “high chance” that things would not go according to plan. “The risk that things go wrong is greater than things going well,” he said, as policymakers may find that the US economy is already slowing, and that a string of rate rises turn out to be too “aggressive”.
Anticipation of the shift by the Fed has prompted sharp adjustments in financial markets since the summer, as investors adjust after seven years of close to zero rates. An exit from very stimulatory policy signals the end of a lengthy period of financial repair in the US, as the wounds inflicted by the 2008 crash have taken an unprecedented length of time to heal.
The Fed has repeatedly found its attempts to raise rates thwarted by external factors; firstly by severe falls in commodity prices, which have weighed down on inflation; and latterly by concerns this summer that global growth had faltered in emerging markets.

The interest rate rise is unlikely to be a “one and done” move, but the first in a series of increases that could cause turmoil in emerging markets.
Ms Yellen will be keen to repeat the Fed’s mantra that rises will be limited and “gradual”, stressing that subsequent rate hikes will come at a slower pace than in previous cycles.
Steven Hess, an analyst at ratings agency Moody’s, said there was a risk of a “disorderly reaction” if officials were unable to assure investors that it would tread carefully over the coming months.
“The large emerging markets that will likely be most affected are those, such as Brazil, Russia, Turkey and to some extent South Africa, where severe domestic challenges have contributed to exchange rate and financial market instability,” he said.

marketwatch: The reckoning is upon Wall Street: This is the week that could make or break financial markets as investors head into 2016.
Yeah, the Federal Reserve is set to possibly raise interest rates for the first time in nearly a decade, putting an end to ultraloose policy that has given rise to a yearslong bull-market run.

But the stock market’s long climb on the back of the Fed’s easy-money policies could come to a screeching halt. The decision will come after a week that saw the S&P 500 post a nearly 4% weekly decline—its worst since the market unraveled in August on hand-wringing over sluggish growth in China, the world’s second-largest economy.
Here’s what to look out for this week:

1). Junk-bond market

Setting aside the Fed for a moment, the crucial story this week, and perhaps in weeks to come, is weakness in the junk-bond , or high-yield bond , market. Worries about junk bonds are coming to a head after distressed-focused mutual fund Third Avenue Focused Credit Fund barred investors from withdrawing their money as the value of risky junk debt has plunged, driving yields higher. Stone Lion Capital also has suspended redemptions in a fund.
The mix of a growing aversion to riskier assets ahead of the Fed’s decision and the slump in commodity prices has fueled the implosion of the sector that prominent activist investor Carl Icahn has referred to as in a state of “meltdown.” Icahn has been warning about an impending collapse in high-yield bonds for months. He created a video titled “Danger Ahead” to describe his concerns, and mentioned it in the following tweet.

2). Fed decision

Fed chief Janet Yellen and the rest of the Federal Open Market Committee are set to start a two-day policy meeting on Tuesday that could see the Fed lift interest rates in an effort to normalize monetary policy. The meeting may be the most important policy decision for the FOMC of the past decade. Some critics believe the Fed may be too late if it opts to raise rates, citing problems like the aforementioned troubles in high-yield. Others argue the Fed should hold off on lifting rates due to factors such as a lack of healthy inflation.
The current turbulence in the stock market and the worries about junk bonds has other market watchers saying the Fed should hold off on a rate hike. 

3). Crude oil

The bottom is falling out from under crude oil. Crude-oil prices on Monday sank below $35 a barrel, with West Texas Intermediate oil trading on the New York Mercantile Exchange trading down 92 cents, or 2.6%, at $34.69 a barrel. Cheaper oil is generally a good thing for consumers, but the unabated descent in the key commodity may indicate broader problems with the global market. Plunging crude oil has helped propel other commodity prices lower and slammed a host of energy companies that make their money from exploring and producing oil and oil-related products. Lower-priced oil can make the businesses of these companies uneconomical.

4). Quadruple witching

This Friday marks what’s known on Wall Street as quadruple witching. So-called quadruple witching, which is the simultaneous expiration of stock-index futures, stock-index options, single-stock options and single-stock futures, are typically volatile days. Given what lies ahead of this triple witching period, this could be a particularly bumpy ride for stock investors.

marketwatch: DoubleLine Capital founder Jeffrey Gundlach warned Friday that an interest-rate increase by the Federal Reserve could lead to more market turmoil after this week’s massive selloff in high-yield debt.
In an interview with Reuters, Gundlach likened the selloff in high-yield debt to the 2007 financial meltdown, adding that if the Federal Reserve met Friday, it wouldn’t raise interest rates.
the economic collapses: The 7th largest economy on the entire planet, Brazil, has been gripped by a horrifying recession, as has much of the rest of South America.  But it isn’t just South America that is experiencing a very serious economic downturn.  We have just learned that Japan (the third largest economy in the world) has lapsed into recession.  So has Canada.  So has Russia.  The dominoes are starting to fall, and it looks like the global economic crisis that has already started is going to accelerate as we head into the end of the year.  At this point, global trade is already down about 8.4 percent for the year, and last week the Baltic Dry Shipping Index plummeted to a brand new all-time record low.  Unfortunately for all of us, the Federal Reserve is about to do something that will make this global economic slowdown even worse.

Throughout 2015, the U.S. dollar has been getting stronger.  That sounds like good news, but the truth is that it is not.  When the last financial crisis ended, emerging markets went on a debt binge unlike anything we have ever seen before.  But much of that debt was denominated in U.S. dollars, and now this is creating a massive problem.  As the U.S. dollar has risen, the prices that many of these emerging markets are getting for the commodities that they export have been declining.  Meanwhile, it is taking much more of their own local currencies to pay back and service all of the debts that they have accumulated.  Similar conditions contributed to the Latin American debt crisis of the 1980s, the Asian currency crisis of the 1990s and the global financial crisis of 2008 and 2009.
Many Americans may be wondering when “the next economic crisis” will arrive, but nobody in Brazil is asking that question.  Thanks to the rising U.S. dollar, Brazil has already plunged into a very deep recession
As Brazilian president Dilma Rousseff combats a slumping economy and corruption accusations, the country’s inflation surged above 10 percent while unemployment jumped to 7.9 percent, according to the latest official data. The dour state of affairs has Barclays forecasting a 4 percent economic contraction this year, followed by 3.3 percent shrinkage next year, the investment bank said in a research note last week.
The political and economic turmoil has recently driven the real, Brazil’s currency, to multiyear lows, a factor helping to stoke price pressures.
And as I mentioned above, Brazil is far from alone.  This is something that is happening all over the planet, and the process appears to be accelerating.  One of the places where this often first shows up is in the trade numbers.  The following comes from an article that was just posted by Zero Hedge
“This market is looking like a disaster and the rates are a reflection of that,” warns one of the world’s largest shipbrokers, but while The Baltic Dry Freight Index gets all the headlines –having collapsed to all-time record lows this week – it is the spefics below that headline that are truly terrifying. At a time of typical seasonal strength for freight and thus global trade around the world, Reuters reports that spot rates for transporting containers from Asia to Northern Europe have crashed a stunning 70% in the last 3 weeks alone. This almost unprecedented divergence from seasonality has only occurred at this scale once before… 2008! “It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”
Many “experts” seem mystified by all of this, but the explanation is very simple.
For years, global economic growth was fueled by cheap U.S. dollars.  But since the end of QE, the U.S. dollar has been surging, and according to Bloomberg it just hit a 12 year high…
The dollar traded near a seven-month high against the euro before the release of minutes of the Federal Reserve’s October meeting, when policy makers signaled the potential for an interest-rate increase this year.
A trade-weighted gauge of the greenback is at the highest in 12 years as Fed Chair Janet Yellen and other policy makers have made numerous pronouncements in the past month that it may be appropriate to boost rates from near zero at its Dec. 15-16 gathering. The probability the central bank will act next month has risen to 66 percent from 50 percent odds at the end of October.
But even though the wonks at the Federal Reserve supposedly know the damage that a strong dollar is already doing to the global economy, they seem poised to make things even worse by raising interest rates in December
Most Federal Reserve policymakers agreed last month that the economy “could well” be strong enough in December to withstand the Fed’s first Interest rate hike in nearly a decade, according to minutes of its meeting Oct. 27-28.
The officials said global troubles had eased and a delay could increase market uncertainty and undermine confidence in the economy.
The meeting summary provides the clearest evidence yet that a majority of Fed policymakers are leaning toward raising the central bank’s benchmark rate next month, assuming the economy continues to progress.
Considering the tremendous amount of damage that has already been done to the global economy, this is one of the stupidest things that they could possibly do.
But it looks like they are going to do it anyway.
It has been said that those that refuse to learn from history are doomed to repeat it.
And right now so many of the exact same patterns that we saw just before the great financial crisis of 2008 are playing out once again right in front of our eyes.
A lot of people out there seem to assume that once we got past the September/October time frame that we were officially out of “the danger zone”.
But that is not true at all.
The truth is that we have already entered a new global economic downturn that is rapidly accelerating, and the financial shaking that we witnessed in August was just a foreshock of what is coming next.
Let us hope that common sense prevails and the Fed chooses not to raise interest rates at their next meeting.
Because if they do, it will just make the global crisis that is now emerging much, much worse.
“People are too long credit and the credit is melting down and the stock market is whistling through the graveyard. It is so similar to 2007, it’s scary,” said Gundlach, who oversees $80 billion at the Los Angeles-based DoubleLine Capital.
Market strategists widely expect the Fed to raise interest rates for the first time in nearly a decade when it meets next week.
“I’d have to believe that if they met today that they wouldn’t raise rates… I mean, Wow. Look at the chart of [The SPDR Barclays High Yield Bond ETF] . It’s accelerating to the downside,” he said.
The rock-star fund manager said in early November that the S&P 500 wouldn’t be able to handle an interest-rate hike in December.

Investors are often willing to countenance to higher risk associated with junk bonds in return for the higher return.
The junk-bond market made headlines Friday after a mutual fund operated by Third Avenue Management blocked investors from withdrawing their money in a highly unusual move that many investors found troubling.
The high-yield market has been battered by falling oil prices, which have led to a series of downgrades of energy companies, a large component of the market.

Many individual retail investors are exposed to these bonds via exchange-traded funds and mutual funds.
Gundlach said the best investment trade at the moment is to sell the S&P 500  and buy closed-end credit funds “because closed-end credit funds are down massively and the S&P 500 was at its high,” adding that there is ample downside protection in beaten-up close-end credit funds.
marketwatch: High-yield corporate bonds may present the next financial crisis for markets, says the man known as one of the barons of the bond world.
“The worry is that interest rates could start rising a few years from now and when rates start to rise, the quest for yield will cool down, because that’s what’s driving a lot of investment activity,” Jeffrey Gundlach, chief investment officer and founder of investment firm DoubleLine Capital, told Wall Street Week on Sunday.
“The risk is there could be a run on the bond funds, causing further downward price movement. A lot of investors don’t like Treasurys. They’ve been searching for yield and throwing caution to the wind.”

















































































Jeffrey Gundlach, CEO at DoubleLine Capital
Gundlach said the problem with the rollover calendar for many parts of the junk bond, corporate bond, market and bank-loan markets, is that maturation dates will hit in 2018 and 2019. And many individual retail investors are exposed to these bonds via exchange-traded funds and mutual funds.
“The risk is there could be a run on the bond funds, causing further downward price movement. A lot of investors don’t like Treasurys. They’ve been searching for yield and throwing caution to the wind,” said Gundlach. With higher rates, the scramble for yield diminishes because investors can garner relatively richer returns with less risk, and that may lead to widening spreads on high-yield bonds.
He added that investors may think that what happened in 2013, when the Treasury market fell during the taper tantrum and junk bonds held up and delivered decent returns, is normal and repeatable.
Fed’s Fischer: We’re seeing signs of rising wages

Federal Reserve Vice Chairman Stanley Fischer said he expects inflation to rise over time as the demand for labor rises, and notes recent signs of wage increases.
“They wouldn’t just go up like Treasury rates, they’d go up even more than Treasury rates, causing price losses that aren’t expected and means high yields could suddenly be hundreds of basis points higher in yields,” said Gundlach.
If free cash flow for companies rolling over those maturities isn't improving in line with those higher interest payments, investors could see default rates “out of the context of the 4% market average over the last three decades.” Free cash flow refers to cash investors have generated for shareholders after paying expenses and investing in growth.
How much should investors worry about this potentially looming crisis? Gundlach said as this may not be an issue for 18 months to two years, they don’t need to “go out and make radical changes today.
“I think it’s OK for investors to stay with what’s called a carry trade, to own high-yield bonds, with the dollar stabilizing, having rallied massively and now kind of stable at a higher level, I think you’re OK in stabilizing. You’re OK in emerging market debt as long as the dollar stays away from strengthening too much,” he said.
Liz Ann Sonders, chief investment strategist at Charles Schwab, said in the same Wall Street Week segment that she’s never seen anything like the “desperate search for yield,” largely outside the equity market, among her clients right now..
“I’m amazing at how often I find investors who don’t really even understand the basics of how yields and prices move in the opposite direction. I’m not so sure in that desperate hunt for yield they quite understand the risks they’re taking in order to get that,” said Sonders.
Not everyone was sharing Gundlach’s concern over high-yield corporate debt. Jonathan Beinner, chief investment officer of Goldman Sachs Asset Management, also appearing on the talk show, said that a few years ago, a wall of maturities came due in 2013, 2014 and 2015, and rolled over without incident.
The market has “benefited [from] wide open capital markets and a big search for yield, but those markets are open...if the economy is doing OK, even with higher interest rates from the Fed, our view is that it’s not going to be a disaster,” said Beinner.
No Fed hike until 2016? Gundlach believes the Federal Reserve may delay interest rates until possibly 2016, with chances at a move this year down to 50% mainly because gauges of U.S. economic health have “kind of sputtered out.” And a move closer to the holiday shopping season would be less likely as well, he said.
But the effects of what the Fed has done so far is still unfolding, he warned.
“ If you rate the Fed very highly, it’s sort of like a man that jumps out of a 20-story building and he says so far so good,” quipped Gundlach.

ny post: It’s going to be a wild ride.
The Federal Reserve is expected to hop aboard a roller coaster next week by raising interest rates for the first time in seven years. But what happens next?
As I mentioned in my last column, the US economy — not to mention the world economy — isn’t ablaze. Ours is growing at a miserable 2 percent a year, while others are doing a lot worse.
And if the commodities market is the soothsayer it has always been, economic growth has a better chance of declining than improving. Oil isn’t in a free fall for nothing: Investors believe that demand will decline because of weak business conditions around the world.
But forget all that. None of that’s any fun.
People get their jollies on roller coasters because of the steep dips and high climbs. And that’s what US economic statistics are likely to provide from now until spring.
So I’m going to offer some guesses. If I’m right, make sure to congratulate me in a few months. If I’m wrong, well, nobody is perfect.
The figures for December job growth, which will come out on Jan. 8, will likely show enough weakness that people will second-guess the Fed’s expected rate hike.
December is one of those months when the Labor Department doesn’t make generous assumptions about the number of jobs being created by newly formed — or “born,” as it calls them — companies. In fact, in December the Labor Department subtracts jobs because it thinks there are more companies dying than being born.
But December brings another problem. Hiring in the retail business has been running 5 percent below last year and is at a four-year low, according to the research firm Challenger, Gray & Christmas.
That in itself should hurt the December employment number. And it will also throw off the seasonal adjustments that hinge upon stronger growth.
But January’s employment statistics, which will come out on Feb. 5, are the ones to really watch. Over the past six years, the Labor Department has reported four absolutely terrible figures for the first month of the year — a gain of only 113,000 jobs in 2014, a puny increase of 36,000 in 2011, a loss of 20,000 in 2010, and a drop of 598,000 during the recession in 2009.
January 2015 saw a good increase of 257,000 jobs, and there was a sizable gain of 243,000 in January 2012.
But the odds are still against January being a good month. There’s a reason. The Labor Department subtracts a huge number of jobs in January on the assumption that lots of companies go kaput after the holidays.
So January has a good chance of being shockingly bad. And that will put the Fed back on its heels and will make a second rate hike, which is already being forecast by many for spring, impossible.
But there’s something else that will come out on Feb. 5 along with the January job figures. The Labor Department calls it a “benchmark revision” — a correction of all the numbers.
Wall Street ignores this figure, but it gives the most honest portrayal of the job market. A couple months ago, the Labor Department said it overstated job growth by 208,000 from March 2014 to March 2015.
That 208,000 figure was preliminary; the final revision comes on Feb. 5. If that revision is big enough, it could cause people to pay attention — and that will also get them nervous.
But then things statistically change for the better.
The Labor Department will start making very generous assumptions about new job growth starting in April. The job market will look better because of this, and the “experts” will start calling for another rate hike depending on their inclination. By June, the rate-hike advocates should be in full voice.
There are lots other data that will come out during this period. But the ones that get the most attention are the gross domestic product figures compiled by the Commerce Department.
The GDP in the first quarter could be a real shocker. To understand why, you need to know a little about seasonal adjustments, the other little statistical trick that makes data go up and down magically.
The seasonal adjustments used by the government look backward five years to see what is normal for a particular period of a year. So the adjustment used for the GDP will consider that last year’s first quarter growth was only an annualized 0.6 percent and the first quarter in 2010 fell by 0.9 percent.
Both first quarters, you might remember, were affected by unusually cold and snowy weather. You have to go back to the first quarter of 2013 to see what was probably normal annual growth of 1.9 percent.
So those in the government’s seasonal adjustment program will be tricked into thinking that 0.6 percent growth and a 0.9 percent decline are normal for the January through March season.
If the weather happens to be better in early 2016, a more normal period of growth could end up looking much better in the government statistics than it is in reality. If this happens, there will be howling for another rate hike even if the employment figures are crappy.
So those are my predictions. If there is a stock market crash or a major terrorism attack or if Donald Trump actually looks like he might win, I take it all back.
Then we aren’t on a roller coaster — we are on a plane in a nose dive.

bbc: When skiing, it is always advisable to keep your skis approximately parallel.
If they start travelling in different directions, at first it might be manageable. Then it gets painful. And then catastrophic.
Investors fear we are at stage two. The collapse in the share prices of the mining companies over the last year could be a warning of market pain ahead.
Particularly as it comes just ahead of what is widely predicted to be the first rise in interest rates by the Federal Reserve since 2006.
One - mining woes - is signalling a global economy under stress.
The other - rising interest rates - is signalling a recovering American economy.
Divergent streams often lead to market volatility.

'Material correction'

Michael Spencer, the chief executive of the City broking firm ICAP and former treasurer of the Conservative Party, certainly believes that pain for the miners could soon be reflected elsewhere in the markets.
He predicts there could be a "material correction" - downwards - in the value of the markets.
That means a fall of at least 10%, wiping billions of pounds of value off share prices.
And affecting returns for investors, which of course include our pension funds.
"I think equity markets are vulnerable to a material correction," he told me on his way to ICAP's annual charity day where all the company's revenues and commissions for the day will be donated to good causes.
"I think equity markets are very fully priced at the moment.
"Price earnings multiples [a comparison of a company's share price and its profits] are high by historic standards.
"The markets are being supported by quantitative easing, which has provided, I think, a very false comfort factor to investors.
"I think we could see a bit of a shake-up in equity markets, particularly as we're going to see soon the first rise in US interest rates for eight years.
"And I think that will portend a series of rises next year. Not big ones, but nevertheless, the direction of rates will finally have changed.
"I think it will be a pretty interesting and rocky start to the New Year in the financial markets and we'll have some volatility."

Volatility risk

The Bank of England appears to agree. In the latest Financial Policy Committee minutes released today, the FPC says there is a risk of further market turmoil.
"Capital flows had been sensitive to diverging prospects for monetary policy around the world and there was a risk of further volatility in capital flows as that policy divergence progressed," the minutes say, referring to the fact that as the US looks to increase rates, the UK and Europe more generally do not appear keen to follow the same path.
"Though the likelihood of a tightening in policy by US policymakers was widely expected, the market reaction to any decision by the [Fed] to increase interest rates remained difficult to predict."
Many argue that, in America at least, the remarkable era of cheap money is coming to an end.
Much of that money has gone into buying up shares in companies, creating frothy prices that may not be underpinned by what are described as "the fundamentals".
Or, put another way, some companies are not as valuable as their share price suggests.
And that tends to mean one thing. Collapsing share prices.

FT.COM BLOG: Two weeks ago, I argued that a Federal Reserve decision to raise rates in September would be a serious mistake. As I wrote my column, the market was assigning a 50 per cent chance to a rate hike. The current chance is 34 per cent. Having followed the debate among economists and Fed governors and bank presidents I believe the case against a rate increase has become somewhat more compelling even than it looked two weeks ago.
Five points are salient.
First, markets have already done the work of tightening. The US stock market is worth $700bn less than it was two weeks ago and credit spreads have widened noticeably. Financial conditions as measured by Goldman Sachs or the Chicago Fed index have tightened in the last two weeks by the impact equivalent of more than a 25 basis point tightening. So even if resisting inflation required a 25bp tightening as of two weeks ago, this is no longer the case.
The figure below makes a crucial point. It shows that even though the federal funds rate is very low (negative 1.5 per cent after adjusting for inflation), financial conditions are helping the economy less than in previous years when interest rates were much higher.
ConditionsSecond, the data flow suggests a slowing in the US and global economies and reduced inflationary pressures. Employment growth appears to have slowed, commodity prices have fallen further, and the general data flow has been on the soft side. Comprehensive measures of data surprises, such as the Bloomberg Economic Surprise Index, bear out this impression and the Atlanta Fed’s GDP Now model is currently predicting only 1.5 per cent growth in Q3.
Third, the case for concern about inflation breaking out is very weak. Market-based expectations suggest that inflation over the next decade on the Fed’s preferred core PCE basis is near record lows and well below 2 per cent. The observation that five-year inflation, five years from now is expected to be below target calls into question arguments that current low inflation is somehow transitory.
The analysis presented by Fed vice-chairman Stanley Fischer asserting to the contrary relies on assumptions about exchange rates and inflation. When actual empirical estimates are used his conclusions are substantially weakened. Indeed, as the figure below shows, there is no correlation of late between deceleration in inflation and import share looking across PCE components.
InflationAndImportSharePCEAlso, as regards inflation, it bears emphasis that (i) we have some room for inflation acceleration; (ii) prices are now fully 2 per cent below a 2 per cent inflation path taking off from 2010; (iii) the Phillips curve is so unstable that it provides little basis for predicting inflation acceleration. To take just two examples — first, unemployment among college graduates is 2.5 per cent yet there is no evidence that their wages are accelerating. And unemployment in Nebraska has been below 4 per cent for the last three years and growth in average hourly earnings has been basically constant at the national average level.
Fourth, arguments of the “one and done” variety or arguments that the Fed can safely raise rates by 25bp as long as it’s clear that there is no commitment to a series of hikes are specious. If, as some suggest, a 25bp increase won’t affect the economy much at all, what is the case for an increase? And when the same people argue that 25bp will have little impact and that it is vital to get off the zero rate floor, my head spins a bit.
In a highly uncertain world, the Fed cannot be both data dependent and predictable with respect to its future actions. Much better that it stick with data dependence than that it put its credibility at risk by seeking to mitigate a current rash action by trying to reassure with respect to future steps.
I understand the argument that zero rates are a sign of pathology and the economy is no longer diseased so policymakers have to increase rates. The problem is that the case for hitting the brakes in an economy with sub-target inflation, employment and output is not there; regardless of whether the brakes are to going to be pressed hard or softly, singly or multiple times.
From the Vietnam war to the euro crisis, from the Iraq war to the lessons of the Depression we surely should learn that policymakers who elevate credibility over responding to clear realities make grave errors. The best way the Fed can maintain and enhance its credibility is to support a fully employed American economy achieving its inflation target with stable financial conditions. The greatest damage it could do to its credibility would be to embrace central banking shibboleth disconnected from current economic reality.
Fifth, I believe that conventional wisdom substantially underestimates the risks in the current moment. It bears emphasis that not a single post-war recession was predicted a year in advance by the Fed, the Federal government, the IMF or a consensus of forecasters. Most were not recognised until long after they started. And if history teaches anything it is that financial interconnections are pervasive and not apparent until it’s too late. Russia’s 1998 default, problems in subprime lending and the Asian financial crisis were all moments when financial dislocations had far more pervasive effects than was generally expected.
We know that the world’s largest economy, China, is in its most uncertain state since it began economic reform in 1979 and may well be experiencing a larger volume of capital flight than any economy in history. We know that the central banks of Japan and Europe are likely to have to double down in the months ahead on already extraordinary quantitative easing. We know that American households, companies and markets are processing what appears to a kind of “reverse 1990s” moment of sharply decelerating productivity growth. We know that liquidity conditions in markets have worsened and there is at least some reason to believe that “positive feedback” trading strategies where investors sell when prices go down may well have become increasingly important. We know the current US recovery is in its seventh year and that confidence in public institutions is at a low ebb.
More likely than not, these fears are overblown and 2015 and 2016 will not go down in financial history. If so, and the Fed does not act, inflation will start to accelerate, volatility will subside and policy can step in. Regret may come in the form of inflation a few tens of basis points too high or a bit of euphoric relief in markets. If on the other hand, some portion of these fears are warranted and the Fed tips towards tightening, it risks catastrophic error.
Now is the time for the Fed to do what is often hardest for policymakers. Stand still.


marketwatch : What do Larry Summers, market monetarists, gold bugs and other hard-money types have in common?

No, it’s not a trick question, but it yields a surprising answer. Three different economic philosophies are aligned in challenging the wisdom of the Federal Reserve’s stated intention to raise interest rates next week.

What brought this meeting of unlikely minds to my attention was an article on realclearmarkets.com on Monday by Louis Woodhill, a Forbes contributor. Woodhill believes the Fed should target “the real value of the dollar,” but given the bank’s preferred policy tool of a short-term interest rate, “raising it right now is obviously the wrong thing to do,” he writes.

As evidence, Woodhill cites the decline in long-term Treasury yields, inflation expectations and commodity prices, including gold, even as the Fed’s monetary base has stabilized. Woodhill sounds like a politer version of Paul Krugman when he challenges conservatives to “open their eyes and stop predicting the imminent arrival of rampant inflation.”


Market monetarists view the world through a different prism — nominal gross domestic product — but come to a similar conclusion as hard-money advocates. Year-over-year NGDP has slowed from a 4.75% pace in the third quarter of 2014 to 3.1% in the third quarter of this year, hardly a sign of accelerating growth or runaway inflation. (NGDP incorporates real GDP plus inflation.)

Harvard economics professor Larry Summers, a Keynesian by trade, weighed in (again) this week with cautionary words for the Fed.

While not all his warnings warrant repeating, the essence of Summers’ argument is that the neutral funds rate, or the unobservable rate required to keep the economy growing at its potential, has been falling over the past few decades. If all the Fed has to show for seven years of near-zero interest rates and a $4.5 trillion balance sheet is real GDP growth averaging 2.1% since the end of the recession in June 2009, the neutral rate is obviously quite low.

For that very reason, this is not going to be your father’s tightening cycle, with the funds rate rising 300 or 400 basis points as it did in the previous two cycles or 1,500 basis points in the late 1970s, early 1980s. The behavior of long-term interest rates in response to the Fed’s rate increase(s) will be key in determining the scope for tightening.
If long-term rates fail to rise with encouragement from the Fed and the yield curve inverts at a low level, it should limit the Fed’s tightening because an inverted curve is the most reliable harbinger of recession. (I say “should” because policy makers always find a way to dismiss the message of the yield curve, especially if interest rates are low, and find some reason to explain why this time is different. It never is.)

Financial markets are transmitting additional warning signs. High-yield spreads have widened as troubled loans and default rates mount. Emerging market economies are taking a hit on their dollar-denominated debt. The trade-weighted dollar index is near a 12 1/2-year high; the inflation-adjusted dollar index is at a 10-year high. Industrial commodity prices, which are sensitive to changes in global demand, are plumbing their 2009 lows.

So why is the Fed so determined to tighten? I’ve argued that policy makers would like to put some distance between the funds rate and zero because they are more comfortable using an interest-rate tool to affect aggregate demand than unconventional policy measures, such as large-scale asset purchases.

The better question is why the Fed is determined to raise rates now. The world’s major economies are diverging, with Europe, Japan and China requiring additional stimulus from their central banks. The dollar is likely to strength further, crimping U.S. exports and restraining import prices. A renewed decline in oil prices is going to prevent inflation from moving up to the Fed’s 2% target, a premise for any Fed action.

The 5% unemployment rate remains the only reason for starting to normalize rates, and that’s based on the Fed’s flawed Phillips-Curve thinking. A sustained increase in wages is more hope than reality at this point. And since wages lag prices, not the other way around, forecasts of higher compensation may have to wait.

Fed Chairwoman Janet Yellen sounded confident about the economic outlook last week when she addressed the Economics Club of Washington and testified before the Joint Economic Committee of Congress. It almost sounded as if she were trying to convince herself to do something when the opportunity to do it had already passed.

Janet L. Yellen stepped into the top job at the Federal Reserve last year with more experience than anybody who has led the central bank in its 100-year history. But she is finding that success demands not just economic expertise, but a political prowess she is still learning to master.
As the Fed prepares to tackle the controversial task of unwinding years of support for the economy, Yellen has grappled with fractious colleagues and dissent within one of the world’s most influential financial institutions. Outside the Fed, liberal lawmakers and some of the world’s top economists are urging her not to move too fast, for fear that the economy is weaker than it seems. She has also clashed, sometimes acrimoniously, with conservatives trying to rein in her power, while several Republican presidential candidates have slammed her record on the campaign trail.
The Fed will meet in less than two weeks to decide whether to finally raise interest rates. Many analysts say the vote has been clinched by Friday’s strong jobs report, which showed that the economy last month added 211,000 jobs and that the unemployment rate stayed at 5 percent.
The decision will be Yellen’s biggest test. She declined to comment for this article, but documents and interviews with more than 20 associates reveal how Yellen is trying to navigate this challenging moment. Her goal is to forge consensus within the Fed while being responsive to Capitol Hill’s critiques —all without hampering the policies that she says has helped keep the U.S. economy on course.
“I don’t think we know the kind of stress that she feels,” said Laurence Meyer, founder of Macroeconomic Advisers and one of Yellen’s former Fed colleagues.
A deliberate approach
The leader of the Federal Reserve is often described as among the most powerful people in the world. But in late summer, as the Fed weighed whether to raise interest rates for the first time in nearly a decade, Yellen found herself outnumbered.
Yellen wanted to wait. The wild swings in global financial markets over the summer were potentially bad omens for China’s economy — which in turn could drag down America, she feared. But her colleagues were not as worried. A slim majority of the 17 people who make up the central bank’s top brass was willing to start pulling back the Fed’s support for the recovery in September. In a close call, Yellen’s job was to tip the scales.
She cleared her calendar for two days in the week before the Fed’s vote. In back-to-back calls and one-on-one meetings in Washington, she argued her case and listened to her colleagues’ concerns. The central bank ultimately voted to wait, and a majority of officials publicly supported her position.
“We want to take a little bit more time to evaluate the likely impacts on the United States,” Yellen said after the meeting.
The Fed steers the nation’s economy by setting a target for interest rates, which influences everything, including the cost of a mortgage, corporate debt and the value of the dollar. When the Fed wants to jump-start the economy, it lowers the target rate to encourage consumers and businesses to spend. Raising the rate helps slow down an overheating economy.
For the past seven years, the Fed essentially has been flooring the gas. It slashed rates to zero in 2008 and has kept them there ever since. And when that wasn’t enough, it began pumping money into the recovery, to the tune of about $3.5 trillion.

“This is a huge call because no one can ever be certain,” said Adam Posen, president of the Peterson Institute for International Economics.
But the country is no longer in crisis. Yellen took the helm at the central bank early last year with a mission to return the economy — and Fed policy — back to normal.
Snowy-haired and petite, Yellen, 69, is an academic at heart, chronically early and frequently armed with stacks of notes at public appearances. She spent two decades teaching at the University of California at Berkeley and now is professor emeritus there. Yellen was also on the Fed’s Washington-based board of governors in the 1990s and head of the San Francisco Fed in the 2000s before being appointed the second-in-command at the central bank in 2010. President Obama once joked that her idea of a fun family vacation was a trip to the beach lugging a suitcase full of economic textbooks.
“She’s a very wonderful, elegant woman, who has a great sense of humor,” her husband, Nobel Prize-winning economist George Akerlof, told The Washington Post. “We attempt to get together for dinner at night, and we both have a laugh about whatever has happened to us from the previous day.”
The two met in the Fed cafeteria when they both worked there in the 1970s and now live in Georgetown. Yellen maintains such a low profile that during her first G-20 summit as Fed chair, security personnel asked her for identification. While former chairman Ben S. Bernanke famously went to the office seven days a week, Yellen prefers occasionally to work from home, sitting alone at her desk and drinking coffee.
Presenting a united front is essential to the central bank, especially as it has veered into uncharted territory. Former central bank chairman Alan Greenspan employed a top-down approach to the Fed’s decisions, making his opinions known before asking for input from his colleagues. Bernanke spearheaded a shift toward more open internal debate and a transparent culture.
Most Fed officials now say the economy will be ready to start standing on its own by the end of the year. After September’s delay, Yellen said in public remarks this week that she will “look forward” to raising interest rates as a sign of the recovery’s strength. Yet three of the Fed’s top officials have explicitly advocated waiting until at least 2016 to move. Joining them are prestigious institutions such as the International Monetary Fund and the World Bank.
Yellen has been systematic about building internal consensus. Before every meeting of the Fed’s top ranks, she surveys each official individually through phone calls and meetings, sometimes more than once. Privately, one colleague joked that he angles for a later appointment to allow more time to prepare. Former Philadelphia Fed President Charles Plosser, who often disagreed with Yellen, said her approach was “full bore.”
“There was a fair amount of give and take, and I think they were healthy and good discussions,” Plosser said. “Sometimes at the end of the day, you agree to disagree, but that’s okay.”
‘Accountability is a necessity’
Rep. Jeb Hensarling (R-Tex.) minced no words as he made the case from the House floor recently for a controversial bill that would tighten lawmakers’ oversight of the Fed. “Greater accountability is a necessity,” he said. “Otherwise, we may soon awake to discover our central bankers have morphed into our central planners.”
The proposal overwhelmingly passed the Republican-led House last month in a largely party-line vote, the latest salvo in the often testy relationship between the central bank and a Congress that has watched warily as the Fed expanded its powers after the financial crisis.
Yellen has adopted an aggressive tone in fending off efforts to rein in the central bank. In a letter issued just days before the House vote, she criticized a provision that would require the Fed to follow prescribed rules in setting interest rates as “misguided.” The Fed won the backing of the White House, which threatened to veto the bill. And she dismissed a similar proposal that was under consideration in the Senate over the summer. “I suppose I would ask, what exactly is the problem?” Yellen said at the time.
Yellen initially struggled to navigate the often-thorny relationship between Congress and the Fed, miffing Hensarling when she did not immediately reach out to him after being appointed to lead the Fed, according to a person with direct knowledge.
The Texas lawmaker is head of the House Financial Services committee and is now leading an investigation into an alleged leak of information at the central bank in 2012, alongside a separate inquiry by the Fed’s inspector general and the Justice Department.
Yellen has since stepped up her outreach to Republican lawmakers and has spoken directly with Hensarling over the phone about the investigation into the alleged leak. But the political climate for the Fed could become more toxic if a Republican moves into the Oval Office.
“Janet Yellen, for political reasons, is keeping interest rates so low that the next guy or person who takes over as president could have a real problem,” GOP front-runner Donald Trump recently told Bloomberg Television.
Rooted in academia
The long wait may finally be over.
In a speech at the University of Massachusetts at Amherst, Yellen explained why she still has faith in the Fed’s models of the economy — and why the time to raise rates is sooner, rather than later. The address was delivered in her trademark style: 22 pages long with 34 footnotes, nine graphs, four pages of references and an appendix.
She argued that she didn’t need to see evidence that skeptics wanted — higher wages and rising inflation — to start raising interest rates. And she pushed back against the idea that the economy was permanently wounded and needed constant support. But she also admitted the limitations of the Fed’s economic models. The central bank has made mistakes before, and Yellen pledged that the Fed would move slowly to wean the recovery off its stimulus.
“Her speech there is the kind of thing she would talk about in class,” said Tom Pugel, an economics professor at New York University who took Yellen’s course in macroeconomics when he was a young doctoral student at Harvard University. “You’re still seeing someone who comes at this from a professorial point of view.”
Yellen’s mentors included Nobel Prize-winning economist James Tobin, who was among the advocates for aggressively lowering the unemployment rate during the 1960s, even if it meant tolerating higher prices. Academics hotly debate the influence that period had in stoking the runaway inflation that gripped the country in the 1970s.
Yellen’s critics fear that the Fed is making the same mistake once more by waiting too long and risks moving too slowly down the road — and the consequences may not be apparent for years to come.
“The play’s not over,” said Richard Fisher, the former head of the Dallas Fed who frequently sparred with Yellen. “You only determine how successful it was if you can unwind it.”
Financial markets say the likelihood that the Fed will finally increase interest rates in December is close to 80 percent. But investors are much more skeptical about the central bank’s ability to keep hiking rates. Within the Fed, new divisions are emerging over how fast and how high interest rates should rise. The decision in December is just the first step.
Yellen described her own recipe for success in a speech last year at the graduation ceremonies for New York University at Yankee Stadium. Unsurprisingly, the theme of her remarks was the importance of hard work — or what she called “grit.”
“One aspect of grit that I think is particularly important is the willingness to take a stand when circumstances demand it,” Yellen told the crowd. “Such circumstances may not be all that frequent, but in every life, there will be crucial moments when having the courage to stand up for what you believe will be immensely important.”

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
WASHINGTON (Project Syndicate) — Over the next few weeks, the U.S. Federal Reserve and the European Central Bank are likely to put in place notably different policies. The Fed is set to raise interest rates for the first time in almost 10 years. Meanwhile, the ECB is expected to introduce additional unconventional measures to drive rates in the opposite direction, even if that means putting further downward pressure on some government bonds that are already trading at negative nominal yields.
In implementing these policies, both central banks are pursuing domestic objectives mandated by their governing legislation. The problem is that there may be few, if any, orderly mechanisms to manage the international repercussions of this growing divergence.
The Fed is responding to continued indications of robust job creation in the United States and other signs that the country’s economy is recovering, albeit moderately so. Also conscious of the risk to financial stability if interest rates remain at artificially low levels, the Fed is expected to increase them when its policy-setting Federal Open Market Committee meets on Dec.15-16.
The move marks a turning point in the Fed’s approach to the economy. In deciding to raise interest rates, it will be doing more than simply lifting its foot from the financial-stimulus accelerator; it will also be taking a notable step toward the multiyear normalization of its overall policy stance.
In the meantime, the ECB is facing a very different set of economic conditions, including generally sluggish growth, the risk of deflation, and worries about the impact of the terrorist attacks in Paris on business and consumer confidence. As a result, the bank’s decision-makers are giving serious consideration to pushing the discount rate further into negative territory and extending its large-scale asset-purchase program (otherwise known as quantitative easing).
In other words, the ECB is likely to expand and extend experimental measures that will press even harder on the financial-stimulus accelerator.
In a perfect world, policy makers would have assessed the potential for international spillovers from these divergent policies (including possible spillbacks on both sides of the Atlantic) and put in place a range of instruments to ensure a better alignment of domestic and global objectives. Unfortunately, political polarization and general policy dysfunction in both the U.S. and the European Union continue to inhibit such an effort.
As a result, lacking a more comprehensive policy response, the harmonization of their central banks’ divergent policies will be left to the markets — in particular, those for fixed-income assets and currencies.
Already, the interest-rate differential between “risk-free” bonds on both sides of the Atlantic — say, U.S. Treasuries TMUBMUSD10Y, +2.16%  and German BundsTMBMKDE-10Y, +1.46%   — has widened notably. And, at the same time, the dollar has strengthened not only against the euro EURUSD, -0.6113%  , but also against most other currencies DXY, +0.46%  . Left unchecked, these trends are likely to persist.
If history is any guide, there are three major issues that warrant careful monitoring in the coming months. First, the U.S. is unlikely to stand by for long if its currency appreciates significantly and its international competitiveness deteriorates substantially. Companies are already reporting earnings pressures due to the rising dollar, and some are even asking their governments to play a more forceful role in countering a stealth “currency war.”
Second, because the dollar is used as a reserve currency, a rapid rise in its value could put pressure on those who have used it imprudently. At particular risk are emerging-country companies that, having borrowed overwhelmingly in dollars but generating only limited dollar earnings, might have large currency mismatches in their assets and liabilities or their incomes and expenditures.
And, finally, sharp movements in interest rates and exchange rates can cause volatility in other markets, most notably for equities. Because regulatory controls and market constraints have made brokers less able to play a countercyclical role by accumulating inventory on their balance sheets, the resulting price instability is likely to be large. There is a risk that some portfolios will be forced into disordered unwinding. Furthermore, the central banks’ policy of curtailing so-called “volatile volatility” is likely to be challenged.
Of course, none of these outcomes is preordained. Politicians on both sides of the Atlantic have the ability to lower the risk of instability by implementing structural reforms, ensuring more balanced aggregate demand, removing pockets of excessive indebtedness, and smoothing out the mechanisms of multilateral and regional governance.
The three possible outcomes of all this include a relatively stable multispeed world, notable disruptions that undermine the U.S.’s economic recovery, and a European revival that benefits from U.S. growth. The good news is that the impact of the divergence will depend on how policy makers manage its pressures. The bad news is that they have yet to find the political will to act decisively to minimize the risks.
As the Fed normalizes its monetary policy and the ECB doubles down on extraordinary measures, we certainly should hope for the best. But we should also be planning for a substantial rise in financial and economic uncertainty.
This article has been published with the permission of Project Syndicate — The Great Policy Divergence

WASHINGTON (MarketWatch) — The probability that the Federal Reserve will hike rates in two weeks is just under 80% right now and that suits Fed Chairwoman Janet Yellen just fine.
So Fed watchers don’t think Yellen will rock the boat in two appearances this week: a speech on Wednesday afternoon and in testimony to a Congressional panel on the following morning.
“They’ve got everybody in the position of expecting the rate hike unless something startling happens. There is no need to shift anybody’s thinking one way or the other from where it is now,” said Nigel Gault, co-chief economist of the Parthenon Group.
Yellen won’t feel any need to tell investors that a rate hike is a done deal, said Chris Low, chief economist at FTN Financial.
Instead, Yellen will continue to make the case that an interest rate hike “is coming soon and could come as soon in December,” Low said.
“I don’t see her getting any more explicit,” he added.
Fed officials have stressed for months they don’t want the first rate hike in nine years to come as a surprise to investors.
And after October’s strong job report which validated strong hints from the U.S. central bankers, the financial markets have come to expect a move.
The Fed disclosed late last month that nine of the 12 district banks were in favor of an increase in the discount rate. This is taken as a signal of where the banks want short-term rates to go.
In September, 13 out of 17 Fed officials said they expected increasing rates by the end of the year. Officials held off a move as financial markets suddenly seemed to signal unease about the global economic outlook in late August and September.
Those concerns have eased, Low said.
Millan Mulraine, deputy chief economist at TD Securities, said Yellen will focus most of her energy on how policy will proceed after December.
“Her emphasis will be on the path, which is expected to be gradual,” Mulraine said.
This has been a common refrain of U.S. central bankers.
Fed officials have variously described the subsequent pace of rate hikes as “gradual,” “shallow,” “slow,” “halting” and even “crawling,” noted economists at Goldman Sachs.
Charles Evans, the dovish president of the Chicago Fed, said it would be a major mistake by the U.S. central bank not to convince markets that rates will rise slowly over the next year. He wants rates to stay below 1% next year.
The Fed’s summary of economic projections in September forecasts rates would end 2016 at 1.4%. Futures contracts are pricing in a slower pace of rate hikes, to about 1%.
Gault noted that the markets will have an important say in the pace of future rate hikes, especially what happens to the dollar.
“What the market does to the dollar impacts where manufacturing goes and that’s important for future moves,” he noted.
Hong Kong, Dec 2, 2015 (AFP) 
 Asian markets saw fresh volatility Wednesday, with Shanghai seeing sharp swings, as weak factory activity data highlighted weakness in the global economy but fuelled hopes central banks will stick to a loose monetary policy.

The euro also held its own after rallying in New York as a surprisingly positive set of eurozone figures raised the possibility the European Central Bank will delay an expected stimulus boost.

Official figures showing a gauge of Chinese manufacturing activity hit a three-year low in November was followed later in the day by news that US factory work contracted at the fastest pace since June 2009.

While the US economy, the world's biggest, has shown strong signs it is well on track to recovery, traders remain nervous about the future, with commodity prices at multi-year lows and the dollar soaring, hitting exports.

"Traditionally, the manufacturing sector has been the canary in the coal mine when it comes to slowing growth. To what extent does this bleed over into other sectors of the economy -- that's yet to be seen," Brett Ryan, a US economist at Deutsche Bank Securities in New York, told Bloomberg News.

All three main indexes on Wall Street ended higher as investors bet that an expected increase in interest rates will be slow and gradual.

In Asia, markets shifted in and out of positive territory. Shanghai was 0.1 percent lower after surging more than one percent at one point.

- Eurozone boost -

The benchmark index rose Monday and Tuesday, having plunged 5.5 percent at the end of last week on news that several top brokerages were being investigated as part of a crackdown after the summer's market rout.

However, the International Monetary Fund's decision to include the yuan in its special drawing rights basket of elite currencies has provided some buying support.

On currency markets talk of a slow rise in US rates weighed on the dollar, which retreated in New York to $1.0634 from $1.0566 and to 122.86 yen from 123.09 yen.

The euro was also given support by data showing factory growth in the eurozone picked up the pace last month while unemployment tumbled, fuelling hopes the bloc is slowly recovering.

The EU's Eurostat agency said unemployment in the 19-country region fell to 10.7 percent in October, the best reading since January 2012. In Germany the rate sank to its lowest level since the country's reunification in 1990.

Dealers are awaiting a European Central Bank policy meeting this week to see if it ramps up its stimulus programme or, in light of the latest report, stands pat until the new year.

Sydney stocks slipped despite a slight pick-up in the Australian economy in the July-September quarter, which Treasurer Scott Morrison said showed progress in shifting from a resources-fuelled boom to broader-based growth.

- Key figures around 0300 GMT -

Tokyo - Nikkei 225: down 0.1 percent at 20,002.12 (break)

Shanghai - composite: DOWN 0.1 percent 3,452.12

Hong Kong - Hang Seng: UP 0.2 percent at 22,427.61

Euro/dollar: DOWN to $1.0620 from $1.0634 late Tuesday

Dollar/yen: UP to 122.95 yen from 122.86 yen

New York - Dow: UP 1.0 percent at 17,888.35 (close)

London - FTSE 100: UP 0.6 percent at 6,395.65 (close)


JAKARTA.  Indeks dolar Amerika Serikat melemah dan meninggalkan level 100 atau puncak perdagangan dalam lima tahun terakhir.

Indeks dolar AS yang menjadi acuan kekuatan terhadap 10 mata uang utama. Pada penutupan perdagangan Selasa (1/12/2015) atau Rabu pagi WIB melemah 0,34% ke 99,827.

Dolar melemah setelah pejabat bank sentral AS Federal Reserve menekankan ingin melihat lebih banyak data yang menunjukkan kenaikan pertumbuhan ekonomi dan inflasi di AS, dan menegaskan kembali sinyal kenaikan suku bunga akan dilakukan secara bertahap.

Presiden Fed Chicago Charles Evans menegaskan pada Selasa waktu setempat, bahwa dia mengharapkan suku bunga tetap di bawah 1% pada akhir tahun depan, dibandingkan dengan angka hampir nol seperti yang berlaku sekarang.

Rilis data manufaktur AS secara tak terduga mengalami kontraksi pada bulan November.

"Jika suku bunga akan tetap rendah untuk lebih lama dibandingkan konsensus pasar, kami berharap bisa (mengatasi laju) dolar pada tahun 2016," kata Ed Keon, Managing Director Prudential Financial Inc.&rsquo;s Quantitative Management Associates seperti dikutip Bloomberg, Rabu (2/12/2015).

"Saya mengakui sejumlah kegelisahan tentang keputusan (Fed)," kata Evans.

Gubernur Fed Janet Yellen dijadwalkan untuk berbicara pekan ini, sebelum rilis laporan kerja 4 Desember.

Ekonom memprediksi pasar tenaga kerja AS menunjukkan perbaikan.





Posisi indeks dolar AS





1 Desember

99,827

(-0,34%)

30 November

100,170

(+0,11%)

27 November

100,020

(+0,23%)



















Sumber: US Dollar Index Spot Rate, 2015



http://market.bisnis.com/read/20151202/93/497665/dolar-as-pejabat-fed-bicara-indeks-tinggalkan-level-100




Sumber : BISNIS.COM
investing.com: In the U.S., the picture was as grim as national factory activity contracted at its fastest pace in more than six years. In a monthly report, the Institute for Supply Management (ISM) said national factory activity fell to 48.6 in November, dropping below 50 for the first time since November, 2012. New orders fell sharply by four points from 52.9 to 48.9, its lowest level in more than three years.
The Federal Open Market Committee is keeping a close eye on global economic data over the next few weeks before its critical monetary policy meeting on Dec. 15-16.
Two members, Federal Reserve Bank of Chicago president Charles Evans and governor Lael Brainard are scheduled to speak on Tuesday before Yellen makes two appearances in Washington on Wednesday.
The comments from the FOMC members will come ahead of the European Central Bank's meeting on Thursday when its Governing Council is expected to approve a wide range of easing measures, including increasing the scope of its comprehensive bond buying program.
The expectation for diverging monetary policies from the Fed and the ECB sent the dollar soaring above 100.35 on Monday, mere percentage points from a 12-month high. While the U.S. Dollar Index slipped back into double digits on Tuesday morning, the index still remained near its highest level since mid-April. The index measures the strength of the greenback versus a basket of six other major currencies.


Jakarta infobank–Guna mendorong sektor riil, Wakil Presiden Jusuf Kalla (JK) meminta agar Bank Indonesia (BI) dapat menurunkan suku bunganya (BI Rate) dari level 7,5%. Namun, Gubernur BI, Agus D.W. Martowardojo masih kekeuh menahan BI Rate di level 7,5%.
Agus beralasan, masih ditahannya BI Rate di level tersebut, lantaran kondisi perekonomian global khususnya Amerika Serikat (AS) yang menunjukan perbaikan, sehingga adanya kemungkinan bank sentral AS untuk menaikkan bunganya (Fed Fund rate) pada Desember 2015.
“Fed Fund rate itu sudah tujuh tahun mendekati 0%, sekarang 0,25% dan kemungkinan akan dinaikkan,” ujar Agus di JCC, Senayan, Jakarta, Kamis, 26 November 2015.
Agus juga melihat persoalan ekonomi global bukan hanya berasal dari AS saja, namun perekonomian Tiongkok yang saat ini tengah melemah juga ‎turut menjadi ancaman bagi ekonomi Indonesia. “10 tahun terakhir hingga 2011, ekonomi Tiongkok itu di atas 10,4%, tetapi dua tahun terakhir terus menurun, dan kita mendengar pertumbuhan ekonominya hanya 6,5%,” tukasnya.
Lebih lanjut dia menilai, hubungan ekonomi Indonesia dan Tiongkok cukup tinggi, namun jika Tiongkok mengalami perlambatan maka Indonesia juga akan ikut mengalami pelemahan dalam pertumbuhan ekonomi.
Di tempat yang sama Pengamat Ekonomi dari UGM, Tony Prasetiantono menambahkan, jika BI Rate diturunkan, maka akan membuat keluarnya dana asing di dalam negeri (capital outflow) semakin deras dan ‎nilai tukar Rupiah terhadap Dolar AS juga akan melemah.‎
“Kami para ekonom membuat poling dan mayoritas percaya bahwa The Fed menaikan suku bunganya,” tutup Tony. (*) Rezkiana Nisaputra
KELESUAN ekonomi masih menahan nafsu belanja masyarakat Amerika Serikat (AS). Dus, musim belanja Thanksgiving dan Black Friday akhir pekan lalu tak sehitam biasanya alias mengalami penurunan.
Data lembaga riset RetailNext menunjukkan, trafik pengunjung ke pusat perbelanjaan selama hari Thanksgiving dan Black Friday menurun 1,5% ketimbang periode sama tahun lalu (year on year/yoy). Sedangkan pengeluaran konsumen selama musim diskon dua hari berturut-turut itu susut 1,4%.
Hitung cepat ShopperTrak menunjukkan, penjualan di pertokoan turun tipis menjadi US$ 12,1 miliar. Sebagai perbandingan, peritel membukukan penjualan hingga US$ 12,29 miliar pada tahun lalu.
Lebih rinci, penjualan selama hari Thanksgiving yang pada Kamis (26/11), mencapai US$ 1,8 miliar. Puncak belanja terjadi di hari diskon jumbo Black Friday yang mencatatkan penjualan US$ 10,4 miliar.
Meski melesu, peritel sudah memprediksi penurunan tersebut. Tahun lalu, peritel lebih mengeluh lantaran harus rela memberikan potongan harga besar-besaran untuk merayu konsumen berbelanja.
"Hasil tahun ini cukup baik karena penjualan online naik tinggi," ujar pendiri ShopperTrak Bill Martin seperti dikutip Reuters, Sabtu (28/11).
Tahun ini, peritel tertolong oleh melonjaknya aktivitas belanja konsumen di dunia maya. Adobe Digital Index melaporkan, penjualan online saat Thanksgiving dan Black Friday mencetak rekor penjualan US$ 4,47 miliar. Angka ini melesat 18% ketimbang tahun lalu.
Hitungan Adobe, 80% transaksi belanja online didominasi 100 peritel tersohor di AS. Yang pasti, nafsu belanja online tahun ini pun lebih tinggi ketimbang prediksi.
Hitungan Adobe, penjualan online berkisar US$ 4,35 miliar. Salah satu pemicunya,  tawaran diskon yang lebih besar ketimbang diskon di toko konvensional.
Rata-rata potongan harga di situs online berkisar 24%-26%. "Tapi penjualan online peritel yang memiliki toko fisik dan online tetap lebih tinggi dibandingkan peritel yang hanya memiliki toko online," jelas analis Adobe Digital Index, Tamara Gaffney.
Euforia belanja online saat Black Friday di benua Eropa lebih tinggi ketimbang kampung halamannya di AS. Situs online Amazon di Inggris menjual 7,4 juta barang dalam sehari. Penjualan online Amazon Inggris di Black Friday menyentuh rekor £ 1 miliar.
Lembaga IMRG meramal, nafsu belanja di Inggris bakal berlanjut hingga Cyber Monday yang berlangsung pada Senin (30/11). Transaksi online di Negeri Ratu Elizabeth itu diprediksi mencapai £ 3 miliar. 
Beijing, Dec 1, 2015 (AFP) 
 A key measure of China's manufacturing activity dropped to its weakest level in more than three years in November, data showed Tuesday, underlining weaknesses in the world's second largest economy.

The official Purchasing Managers' Index (PMI), which tracks activity in factories and workshops, fell to 49.6, figures from the National Bureau of Statistics showed.

That was the lowest figure since 49.2 in August 2012, and was below a medium forecast of 49.8 in a Bloomberg survey of economists.

A PMI figure above 50 signals expanding activity while anything below indicates shrinkage.

Asian markets opened lower on Monday, as investors remain cautious following a mixed finish from Wall Street and a big sell-off in the Chinese equity market last Friday.
U.S. stocks closed mixed on Friday due to a 3 percent decline in oil prices. Oil tumbled $1.33, or 3.09 percent, to $41.71 a barrel as the dollar index, which hit a fresh eight-month high, added additional pressure to an oversupplied market. 
The Dow Jones Industrial Average closed 15 points, or 0.08 percent, lower at 17,798.5 while the S&P 500 was up by 1.24 points, or 0.06 percent, to 2,090. The Nasdaq was up 11.4 points, or 0.22 percent, at 5,128.

Nikkei opens 60 points lower
Japan's Nikkei 225 opened 60 points, or 0.29 percent, lower at 19,827 despite official data released this morning showing an uptick in industrial production and retail sales for October.
Japanese blue chip companies opened mixed, with most of them trading flat or in the red. Shares of SonyCanon, and Mitsubishi Electricwere down while Toyota was flat. Toshiba shares were up 2.29 percent as the struggling company said last week it would consider selling stake in its semiconductor business to raise funds as it recovers from its accounting scandal earlier this year. 
Kospi dips 0.8 percent
The Seoul Kospi was down 0.8 percent on Monday morning, as investors remain cautious over Asian equities.
Blue chip and tech companies were mostly down on the back of a surprise decline in industrial output for October. Industrial output fell 1.4 percent from the previous month as manufacturing lagged. 
Shares of consumer electronics giant SamsungLG ElectronicsLG Display, steel manufacturer Posco, and KB Financial Group seeing between 0.7 and 3 percent declines. Shares of SK Hynix and Hyundai Motor bucked the trend and were up 1.25 and 0.33 percent.
Elsewhere, shares of Kakao Corp and KT Corp rallied after a consortium led by the two companies won a preliminary license from the Financial Services Commission (FSC) to launch South Korea's first internet-only bank, according to reports. 
Tokyo, Nov 26, 2015 (AFP) 
 Japanese consumer prices fell 0.1 percent in October year-on-year, official data showed Friday, as the government mulls ways to safeguard its fragile economy.

The fall in core inflation, which excludes volatile fresh food prices, marked the third straight monthly decline, according to the internal affairs ministry.

The decline was in line with analysts' expectations, according to a Bloomberg survey.

Falling gasoline prices pulled the index down, the ministry said.

Meanwhile, the nation's unemployment rate improved to 3.1 percent in October, showing a slight improvement from 3.4 percent seen in September, the ministry also said.

But household spending for the month fell 2.4 percent, compared with the same month a year ago, the ministry said.


Kuartal Ketiga, Pertumbuhan Ekonomi Amerika Melambat Jadi 2,1 Persen


Ipotnews - Pertumbuhan ekonomi Amerika Serikat pada kuartal ketiga melampaui perkiraan, namun kecepatannya tetap jauh di bawah laju kuartal kedua.

Menurut Departemen Perdagangan, Selasa, sepanjang kuartal Juli-September, produk domestik bruto--ukuran luas keluaran perekonomian barang dan jasa--naik pada tingkat tahunan yang direvisi 2,1 persen, lebih kuat dari kecepatan 1,5 persen pada perkiraan awal.

Meski pertumbuhan PDB sedikit lebih kuat dari tingkat 2,0 persen yang diperkirakan para analis, namun masih menandai perlambatan dari ekspansi yang kuat 3,9 persen pada kuartal kedua, demikian laporan AFP, di Washington, Rabu (25/11) dini hari WIB.

Data baru yang bervariasi dinilai kurang positif. Revisi itu sebagian besar karena penurunan yang lebih kecil di investasi persediaan swasta dari estimasi sebelumnya, yang diimbangi revisi turun, terutama untuk belanja konsumen.

Belanja konsumen, yang mendorong sekitar dua-pertiga dari kegiatan ekonomi AS, naik 3,0 persen pada kuartal ketiga, bukan 3,2 persen seperti yang diperkirakan sebelumnya. (AFP/Ant/ef)


yahoo finance: The U.S. economy grew at a slightly stronger pace in the third quarter than previous estimates showed, up 2.1% versus the initial estimate of 1.5%, according to the latest estimates from the Commerce Department. The report also showed that corporate profits slowed in the third quarter.
Despite an unemployment rate at its lowest level since 2008, the U.S. economy still faces “major headwinds,” according to EY Chairman and CEO Mark Weinberger, who says there’s an “uncertainty tax” slowing down business investment and hiring.
The causes of that uncertainty are far-reaching, from geopolitical concerns like the current power struggle between Russia and the United States over Syria to the uncertainty surrounding U.S. monetary policy and the Federal Reserve’s long-awaited decision whether and when to raise interest rates.
“All these issues really do affect [capital expenditures],” says Weinberg, who served in both the Clinton and George W. Bush administrations. “We’ve seen that go down quarter after quarter after quarter. And while the unemployment rate’s come down, the overall employment rate is still near a 30-year low, and so we still have major headwinds.”
The strongest headwind Weinberger sees is the rise of nationalism. “This is [the] biggest Achilles heel to the global economy,” he says. “After eight years of really slow growth around the world, there’s frustration. The people in different countries are looking at their elected leaders and saying, ‘We’re not getting it done.’”


Those feelings are leading to the rise of the anti-establishment. Weinberger points to what he calls the Trump and Carson phenomena in the United States but is clear to point out that this is not a uniquely American trend. Weinberger says the same thing is happening all across Europe. “You’re seeing either very conservative or very liberal parties come out and look for really protectionist policies to try and protect the companies and grow the local economies—and that is to the detriment of global free trade, which is really important to business growth and then overall growth in the global economy.”


WASHINGTON (MarketWatch) - U.S. central bankers "have done everything we can to avoid surprising the markets and governments" about the first hike in interest rates in nine years, said Federal Reserve Vice Chairman Stanley Fischer, on Thursday. The Fed has taken such pains that many several emerging market and other central bankers for some time have been telling the Fed to "just do it," Fischer said in a speech about the outlook for Asia's economy at a conference sponsored by the San Francisco Fed. Many economists think a December move is a done deal, but Fischer said no final decisions have been made and officials continue to scrutinize the data. Fischer said it remains to be seen whether the emerging market countries in Asia and the world are sufficiently prepared for the potential capital flows and market adjustments so that there are no major macroeconomic consequences.


Friday, November 13, 2015, 09:39

Cloudy outlook

By KARL WILSON in Sydney
A cold wind is starting to blow through the Asian bond market as economic growth in the region starts to slow and the United States Federal Reserve prepares to raise interest rates.
Since the Fed began its massive money printing exercise nine years ago to keep the US economy from collapsing, US interest rates have fallen to historic lows.
The natural reaction from investors was to shift their funds to emerging markets seeking higher returns.
Asia was a natural beneficiary, but now the future is not so clear.
“There is growing uncertainty in the market,” said Thiam Hee Ng, a senior economist with the Manila-based Asian Development Bank (ADB).
“Volatility is always a big risk to markets. We have known since the start of the year the Fed will raise interest rates this year,” he told China Daily Asia Weekly. “It was supposed to happen in September but the Fed pulled back.”
Whether it will happen this month or in December, no one knows, he said. And while markets have factored in a rate rise, “there will be a reaction”, Ng said. “The question is: Just how big will that reaction be?”
The lack of liquidity in the region’s bond markets could magnify the volatility effect. “If a large number of investors were to exit the market suddenly, it could be disruptive if there is not enough liquidity in the bond market,” Ng said.
“Tighter regulations after the 2008-09 global financial crisis have led to banks reducing the size of their trading books, making them less active participants in the bond markets.”
Despite the turmoil earlier this year following the collapse of the Shanghai stock market, the Asian bond market has been relatively calm. But as China’s economy starts to slow down, impacting regional growth, the strongly appreciating US dollar-denominated regional bonds are starting to feel the heat.
“Credit market sentiment is very fragile right now in Asia,” Owen Gallimore, a senior Asia credit analyst at ANZ in Singapore, told Bloomberg recently.
“We are seeing selling across the board. It is too early to search for the floor and very few investors are looking to buy at the bottom.”
Analysts say higher US interest rates will make US bonds more attractive to investors, which could lead them to pull their money out of emerging markets, including Asia.
Malaysian and Indonesian bonds, in particular, have not had a smooth ride, said Vivek Rajpal, Asia interest rates strategist at Nomura, a Japanese financial holding company.
“Slower economic growth in Indonesia and weakness in the rupiah have both weighed on Indonesia’s debt market,” he told China Daily Asia Weekly.
“The vulnerability of Malaysian rates to the weakness in the ringgit, plus the uncertainty around when the Fed will raise interest rates, has impacted Malaysian debt,” he added.
“Of all the bond markets in Asia, these two benefited the most when the US Federal Reserve began its bond-buying program.”
The massive bond buyback, otherwise known as quantitative easing, began to stabilize the US economy in 2009.
Analysts also say that while the region’s bond markets can handle a gradual adjustment, there is a possibility of a sharp rise in bond yields similar to what happened during the “taper tantrum” in 2013 when the Fed announced it would start to wind down its massive bond-buying program.
Higher US interest rates would likely further strengthen the US dollar, putting additional pressure on businesses and governments that have raised money in dollar-denominated bonds.
While the pace of foreign currency issuance has slowed since last year, the emerging Asian economies have accumulated $858 billion in dollar-denominated debt. Of this total, corporates — or non-government-issued debt — account for $712 billion, according to the ADB.
Companies that have issued dollar-denominated debt will find their debt-servicing costs in local currency terms increasing with the stronger dollar, especially if they are unhedged.
Michael Taylor, chief credit officer for Asia Pacific at Moody’s Investors Service, said there has been some “modest easing” of deals coming through, citing Chinese property developers as an example.
“We are seeing less offshore issuance coming from them, but I think that has more to do with regulatory change, which has allowed Chinese developers to do more onshore,” he said.
“Some of the Chinese issuers coming offshore are now finding cheaper terms onshore. So as far as Chinese issuances are concerned, we are now seeing some shift back onshore.
“As for the rest of Asia, the deal pipeline appears to be holding up reasonably well and we are seeing a number of first-time issuers from China.”
Although most corporate bonds issued in Asia are still denominated in US dollars, Taylor said that may soon begin to change.
While Asian economies have grown over the last 10 years, thanks mainly to China’s growth, this has not been reflected in the local currency bond market.
“When corporate issuers are looking to issue, they tend to think less in terms of domestic currency than US dollars,” he said. “But research carried out by Moody’s in New York shows that may soon change if they follow the lead set by their governments.”
He said the report by Moody’s Investors Service, The Evolution of Emerging Market Sovereign Debt, shows that a “much different” picture is starting to emerge.
“One interesting finding was a decrease in what some economists call ‘original sin’ — a term coined back in the 1990s which referred to the inability of emerging market sovereigns to issue in their own currency and therefore the need to issue in hard currency,” Taylor said.
He said Moody’s research, which was published in September, showed an increased volume of sovereign debt issued in domestic currency and Asia stands out, because a lot more debt is being issued in domestic currencies.
“From an issuer perspective, that reduces your risk,” Taylor said. “If you issue in US dollars and your cash flow is in domestic currency, you have exchange rate risk.
“By issuing in domestic currency, and if overseas investors are willing to hold the debt, you reduce the currency risk for the investor.”
The report further showed that the vast majority of new issuance by emerging market governments or central banks has been debt denominated in local currency.
While emerging market foreign currency-denominated debt grew from $900 billion in 2000 to $1.2 trillion in 2014, emerging market local currency debt grew more than sixfold from $1.4 trillion in 2000 to $8.7 trillion in 2014.
The report said that in 2000, local currency debt accounted for 61 percent of outstanding emerging market sovereign debt. By 2014, 88 percent of emerging market debt was in local currency.
“From a regional perspective, the fastest growth in emerging market sovereign debt has been in Asia,” the report noted. “Asian sovereign debt has expanded sixfold since 2000 to $5.7 trillion, with an average annual growth rate of 14.5 percent.”
China holds roughly 61 percent of all Asian sovereign debt.
Taylor said money has already been pulled out of emerging markets in anticipation of a US rate rise, which should reduce the risk of a sharp shock. “Problem, though, is you can’t predict how things will pan out even when the Fed pulls the trigger,” he said.
“In some ways they (the Fed) have themselves in a bit of a bind. The Fed has been saying for some time now it will raise rates. But when the time comes, it pulls back.”
Taylor added that some of the mixed messages coming out of the Fed have not helped either. “Communication is key to the process. You have to be clear about a timetable and how they are going to approach further interest rate rises after the first one,” he said.
“That will be key. If they pull the trigger at the end of the year, they are going to have to give a clear message to markets how they will proceed from the first rate increase.
“If it (the Fed) had raised rates in September when they said they would, it would have eliminated some of the uncertainty in markets.


“Markets need to know the timing and pace of future rate rises for a smooth transition,” Taylor said.
financial post: U.S. stocks will continue to outperform Treasuries in the coming year, but the outlook for both assets is looking grim, says Capital Economics.
The S&P 500 has been posting better returns than its bond counterparts recently as markets are increasingly expecting the U.S. Federal Reserve to hike its benchmark interest rate at its December meeting.
Once the Fed hikes, Capital Economics expects the trend to continue.
“As the Fed begins to tighten monetary policy, we suspect that this will remain the case for a while,” said John Higgins, economist at Capital Economics. “Nonetheless, we think the longer-term prospects for both asset classes are quite poor.”
Higgins forecasts that the 10-year Treasury yield will rise from its current level of around 2.25 per cent to three per cent by the end of 2016 and 3.5 per cent by the end of 2017. When bond yields rise, prices for those bonds drop.
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In contrast, Higgins is expecting the S&P 500 to generate returns averaging about five per cent annually during that time, when factoring in both dividends and inflation. He predicts the S&P 500 will finish next year at 2,200 and 2017 at 2,300.
Longer-term, however, Higgins says the outlook doesn’t look great for both assets.
“If the 10-year Treasury yield were to stabilize at around 3.5 per cent, the average annual return in the future from holding such bonds would only be around 1.5% if the Fed continued to meet its inflation objective,” he said. “Meanwhile, the long-run real return from the stock market could be paltry, or even negative, if either its price/earnings ratio or profit margin reverted to their long-run averages.”
Higgins said with price-to-earnings ratios and profit margins appearing stretched, U.S. stocks will likely see an average annual real return that is below the long-run average of six per cent.

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