It’s not the Fed taking gold down, but the vote in Scotland [OPINION]

Some of you might be wondering what happened to gold at the 4pm (MDT) open, particularly in light of the rather benign, steady-as-she-goes Fed announcement.  This looks like it might have to do with the Scotland independence vote in the UK tomorrow. [One man's opinion]  A late poll has the vote closing to 51% (No) – 49% (Yes).  In other words a complete toss-up with the Yes vote gaining momentum going into tomorrow’s proceedings.

The pound is tanking (see chart), so is the euro and Swissie. There has to be market concern about others in Europe perhaps getting ideas.  Mainstream media are focused on Catalan, Norther Italy, etc, but the real concern on the continent might be Greece, Italy, even France and the United Kingdom (the Tories appear dominant if Scotland breaks away and there is a clear movement within that party toward putting UK’s European Union attachment to a vote).

As a result the dollar’s on a crazy ride pushing gold south – with algos doing most of the damage.  In my view this is all very temporary as far as gold goes.  The monetary and financial market risks for all, including the United States look much like the dump after the 2008 meltdown.  That was temporary if you will recall (and an incredible buying opportunity).  There will be much discussion on all this starting tomorrow. . . . . . . . .Though the dollar looks to be an early beneficiary, in the long run the ensuing turmoil in financial markets is likely to cause a flurry of buying of gold buying once the smoke clears.  There is much more to the vote in Scotland than meets the eye and real dangers are within cross-global financial institutions, just as they were in 2008.  MK

sterling-gold

sterling-gold

star5If you find value in this kind of alert, we invite you to stay tuned to this page for further updates.

You might also have an interest in our regularly published newsletters (free).  Sign up here and we will alert you by e-mail the next time one is released. 

Posted in all posts |

Fed Cuts GDP Forecasts

17-Sep (USAGOLD) — The Fed cut it’s real GDP forecasts for this year, next year and the long-run.

Central tendencies for 2014 dropped to 2.0 – 2.2%, versus 2.1 – 2.3% in June. That’s down from their 2.8 – 3.0% forecast in March.

Central tendencies for 2014 dropped to 2.6 – 3.0%, versus 3.0 – 3.2% in June. The Fed forecast 3.0% – 3.2% in March as well.

[source]

Posted in Central Banks, Economy |

House passes bill to audit the Federal Reserve

17-Sep (TheHill) — The House on Wednesday passed legislation to audit the Federal Reserve System.

Passed 333-92, the bill would require the comptroller general to conduct an audit of the Federal Reserve’s board of governors and banks within one year and submit a report to Congress on the findings. A total of 106 Democrats joined all but one Republican in support of the measure.

A version of the bill sponsored by then-Rep. Ron Paul (R-Texas) passed in 2012 by a vote of 327-98. Paul’s son, Sen. Rand Paul (R-Ky.), has introduced companion legislation in the Senate.

Rep. Paul Broun (R-Ga.), who failed to advance in a Senate GOP primary earlier this year, said the measure would increase transparency at the Federal Reserve.

“This is a vital piece of legislation that will help to usher in a new era of transparency in this nation’s monetary policy,” said Broun, the bill’s sponsor. “The Federal Reserve is a creation of Congress, and it must therefore be subject to the oversight and regulation of Congress.”

[source]

PG View: Interesting that this happened on Fed policy statement / Yellen presser day.

Posted in Central Banks, Monetary Policy |

Fed Keeps ‘Considerable Time’ Pledge as Growth Is ‘Moderate’

17-Sep (Blomberg) — The Federal Reserve said the economy is expanding at a moderate pace and inflation is below its goal while maintaining a commitment to keep interest rates near zero for a “considerable time” after asset purchases are completed.

“Labor market conditions improved somewhat further” while “significant underutilization of labor resources” remains, the Federal Open Market Committee said today in a statement in Washington. “Inflation has been running below the committee’s longer-run objective.” In July, the Fed said inflation was “somewhat closer” to its goal.

[source]

PG View: Ever-so-slight nudges to optimism on jobs, but a bit of a retreat in the inflation front.

Posted in Central Banks, Monetary Policy, QE |

Fed holds steady on rates, tapers by an additional $10 bln per month, in line with expectations. Maintains “considerable time” language.

FOMC Policy Statement: http://www.federalreserve.gov/newsevents/press/monetary/20140917a.htm

FRB Policy Normalization Principles and Plans: http://www.federalreserve.gov/newsevents/press/monetary/20140917c.htm

Dallas Fed’s Fisher joins Philly Fed’s Plosser in dissent.

Posted in Central Banks, Monetary Policy |

The ‘colossal imbalance’ in global gold reserves unlikely to be addressed through West liquidations

September 11th, 2014, Bejing, China:

“It is clear that western central banks over time will be reducing their reserves and China and other Asian countries will be increasing. Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.” David Marsh, managing director at the Official Monetary and Financial Institutions Forum

As quoted in Bloomberg article:   China may boost gold reserves amid imbalances in holdings

MK note:  What this article does not mention is that Western central banks would need to be willing sellers in order for Asia to become willing buyers. I disagree with David Marsh’s assumption that “gold will become more traded among central banks.”  In fact, I would counter that gold is likely to become less traded among central banks in the years to come and for good reason — the global dollar-based monetary system is in the process of breaking down, or at least in the process of becoming fundamentally altered.

As a result central banks and nation states, not just in Asia but all over the world, have decided to use gold in their reserve holdings in much the same way that the individual investors use it in their investment portfolios.  The good news is that over time the reinstatement of gold among central banks and nation states will have a positive effect on the price.  The bad news is that the private sector finds itself in competition with the official sector for the available bullion.

At the moment, the trend among Western nation states is to repatriate foreign-held gold reserves and limit or halt sales and leases entirely as a matter of economic self defense. The only way Asian nation states can address the “colossal imbalance” Marsh mentions is through stepped up domestic gold production.   That is why China, Russia and others are channelling domestic production to national or central bank reserves and keeping it off international markets.  There is no other practical or effective way to build reserves.

To me, this is the elephant in the gold market’s room and its single most important dynamic with respect to long term pricing.  No one is going to dampen Asia’s interest in gold — either among the nation states or the citizenry itself — and no one is going to alter the fact that chronic gold bullion shortages (imbalances between supply and demand) are a long term fact of life.

Marsh is right when he suggests it will take many years to correct the imbalance, but in the process market-ready bullion is likely to become more and more scarce with each passing year.  For these reasons, we counsel our clientele to set a goal for accumulation and then move as quickly as possible to achieve it.   There is no way to know when this process is going to manifest itself in outright shortages, higher prices and limited acquisition options.

Posted in all posts |

Germany Secures Record Low Funding Cost at Bond Auction

17-Sep (The Wall Street Journal) — Investors paid a hefty price tag for the privilege of buying German government debt on Wednesday, in a fresh sign of how the European Central Bank’s monetary easing policies are upending the region’s bond markets.

The German Finance Agency sold €3.341 billion ($4.33 billion) of a September 2016-dated treasury note at a record low average yield of -0.07%, the Bundesbank said. That effectively means investors have paid to buy the debt for the first time since December 2012. At its previous similar sale in August, Germany sold debt for a 0% yield.

“Negative auction yields even in the two-to-three-year part of the German curve are a good illustration of the current depressed interest rate environment,” said Jan von Gerich, chief strategist at Nordea. The decline in yields is likely to continue as the full range of ECB easing measures emerges over time, he added. Bond yields drop when prices rise.

[source]

Posted in Debt |

Fitch Warns That Europe Could Be Facing A ‘Doom Loop’

17-Sep (BusinessInsider) — If you weren’t already convinced about what a nightmare deflation would be for the Eurozone, credit ratings agency Fitch has a grim report out, showing the sort of issues the struggling bloc could be hit by.

“A classic debt deflation feedback loop could ensue,” according to the authors. Among economists, that’s better known as the “doom loop.”

A total lack of growth and inflation could put huge pressure on national budgets, and cripple the ability of governments to assist struggling banks, with credit ratings slashed all round.

[source]

Posted in Economy |

The Daily Market Report: Gold Better as Tame CPI Hints at Steady Fed


17-Sep (USAGOLD) — Gold is modestly better ahead of the FOMC policy statement, economic projections and Janet Yellen’s presser. That all begins at 2:00ET today.

August CPI missed expectations, coming in at -0.2%. That dropped the annual pace of inflation to 1.7%, from 2.0% in July. Core CPI was unchanged, on expectations of +0.2%.

Stocks and Treasuries firmed on the tepid inflation print amid hopes that it will provide the doves on the FOMC the necessary cover to not temper the guidance at all today. The boost to gold has been limited thus far.

As you know from yesterday’s DMR, I think the Fed already had the necessary cover to not move toward a more hawkish bias. As the WSJ’s Jon Hilsenrath also noted yesterday that nothing has changed since the July FOMC meeting, so he also thinks the Fed will hold steady and not significantly change the language in the statement.

If that is indeed the case, we could see further unwinding of the positioning in recent weeks that was premised on expectations of a more hawkish Fed. This could spark a rebound in gold. On the other hand, if the statement and Yellen come off as more optimistic, there is really good support just below the market.

Posted in Daily Market Report, Gold News, Gold Views |

Gold Little Changed Near 8-Month Low as Fed Ends Meeting

17-Sep (Bloomberg) — Gold was little changed near an eight-month low in New York as investors waited for the outcome of the Federal Reserve’s policy meeting to gauge the outlook for borrowing costs.

The Fed concludes the meeting today as officials consider the timing of interest-rate increases and whether to revamp their public guidance on the path of borrowing costs. Bullion rose the previous two days, partly as the metal’s 14-day relative-strength index held below 30, signaling to some traders who study charts that prices may be poised to rebound. The gauge was at 30.3 today.

[source]

Posted in Gold News, Gold Views |

US CPI -0.2% in Aug, below expectations of unch, vs +0.1% in Jul; +1.7% y/y, down from +2.0% in Jul. Core unch on expectations of +0.2%.

Posted in Economic Data |

Gold steady at 1235.77 (+0.74). Silver 18.64 (-0.076). Dollar and euro consolidate. Stocks called mixed. US 10yr 2.58% (-2 bps).

Posted in all posts |

China Launches CNY500 Billion In “Stealth QE”

16-Sep (ZeroHedge) — It has been a while since the PBOC engaged in some “targeted” QE. So clearly following the biggest drop in the Shanghai Composite in 6 months after some abysmal Chinese economic and flow data in the past several days, it’s time for some more. From Bloomberg:

• CHINA’S PBOC STARTS 500B YUAN SLF TODAY, SINA.COM SAYS
• PBOC PROVIDES 500B YUAN LIQUIDITY TO CHINA’S TOP 5 BANKS: SINA
• PBOC PROVIDES 100B YUAN TO EACH BANK TODAY, TOMORROW WITH DURATION OF 3 MONTHS: SINA

[source]

Posted in Central Banks, Monetary Policy, QE |

Scottish independence odds: bookmakers ignore close polls

16-Sep (The Week UK) — As the Scottish independence referendum draws near, polls suggest the gap between the two campaigns has been narrowing, with Yes and No voters now neck and neck. Why, then, have bookmakers hardly shifted their odds at all?

As recently as April, polling suggested that the yes vote was averaging just 37 per cent; today it is closer to 50. But the odds being offered by most bookmakers for a no vote have remained steady at approximately 1/4 or 2/5, with yes hovering somewhere between 11/4 and 12/5.

Odds of 1/4 imply that the bookmakers believe that there is a 75 per cent chance that Scotland will remain a part of the union. And 11/5 for yes suggests that they think there is just a 27.5 per cent chance that Scotland will go independent.

[source]

Posted in all posts |

China May Boost Gold Reserves Amid Imbalances in Holdings

15-Sep (Bloomberg) — China may join other emerging countries in boosting gold reserves as the precious metal makes up a smaller share of its foreign-exchange holdings compared with developed economies, said a London-based researcher.

The country hasn’t announced any changes to state gold reserves since authorities in 2009 said holdings totaled 1,054.1 metric tons. While China holds the world’s biggest foreign-exchange reserves, bullion accounts for 1.1 percent of the total, compared with about 70 percent for the U.S. and Germany, the biggest gold holders, World Gold Council data show.

“It is clear that western central banks over time will be reducing their reserves and China and other Asian countries will be increasing,” David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said in a Sept. 11 interview in Beijing. “Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.”

[source]

Posted in Gold News, Gold Views |

OECD lowers Japan’s growth forecast

16-Sep (Jiji Press, via The Japan News) — The country’s real gross domestic product is forecast to increase 0.9 percent in 2014, down from the previous projection of 1.2 percent, the Organization for Economic Cooperation and Development said Monday.

The Japanese GDP growth forecast for 2015 was also revised down to 1.1 percent from 1.3 percent in the previous projection announced in May, the OECD said in an interim economic assessment report.

In Japan, the consumption tax increase in April “resulted in volatile demand in the first half of 2014,” the report said. But from the second half, “the underlying recovery is expected to reassert itself, reflecting improved confidence, growing employment and a reversal of the decline in real wages,” it said.

“Japan still needs more quantitative easing to secure a lasting break with deflation,” OECD Deputy Secretary General and Acting Chief Economist Rintaro Tamaki said in his presentation of the OECD report.

Japan also “must make more progress on fiscal consolidation than other countries,” said Tamaki, former Japanese vice finance minister for international affairs.

[source]

Posted in Central Banks, Economy, Monetary Policy, QE |

The Return of the Currency Wars

by David Wessel
15-Sep (The Wall Street Journal) — When a country’s economy grows too slowly, the standard short-term remedies are to increase government spending, cut taxes or reduce interest rates. When none of those options is available, governments often resort to pushing down their currencies to make their exports more attractive to foreigners (and, these days, to push up import prices and thus bring inflation back up to desired levels).

When the world economy is sputtering, and every big country increases spending, cuts taxes and reduces interest rates, the global economy benefits from the increase in demand. That’s the story of 2009.

But when individual countries lean heavily on pushing their currencies down, that tends to shift demand from one place to another rather than increasing the total. That is a “currency war.” And we may be on the verge of one. Last time, the emerging markets were doing the complaining; this time, it may be the U.S.

[source]

Posted in Central Banks, Economy, Monetary Policy |

The Daily Market Report: Gold Firms as FOMC Meets


16-Sep (USAGOLD) — Gold is higher again today as the FOMC commences their two-day meeting. The market began the week quite short and rather oversold, so it’s not surprising to see some position squaring going into the policy statement.

While the Fed is widely expected to hold steady on policy, there remains some uncertainty as to the likely tenor of the statement. Some analysts are expecting hints from the Fed that ‘lift-off’ will come sooner rather than later: Will they or won’t they remove the assurance that rates will be kept near 0% for a “considerable time”?

I think there is enough uncertainty about the true health of the U.S. economy that the dovish-leaning FOMC will remain cautious with respect to any overt shift in guidance. I’d look instead for some tweaking of the language to suggest slightly more optimism.

As I alluded to yesterday, I doubt the Fed is too keen on offering additional support to the dollar. The greenback is up nearly 7% over the last four-moths. After all, if goosing inflation and taking slack out of the labor market are your objectives, a strong currency is not the solution.

In fact, to a monetarist, those goals can best be achieved by doing the exact opposite; weakening the currency. Unfortunately, the monetarists at the ECB and BoJ are just doing that better right now than those at the Fed.

This gives the appearance of dollar strength, but in reality the recent gains in the greenback are more a function of euro and yen weakness. When you wield the hammer of monetary policy, every problem looks like a nail. Bang it down.

In The Wall Street Journal yesterday, David Wessel suggests we may be on the verge of a currency war. I would suggest the currency war is an ongoing reality, albeit with lulls and escalations of varying degrees. We may have been in a lull recently with the U.S. inclined to sit on the sidelines while Europe and Japan try to reinvigorate their ailing economies.

[W]hen individual countries lean heavily on pushing their currencies down, that tends to shift demand from one place to another rather than increasing the total. That is a “currency war.” — David Wessel

It won’t be good for the U.S. if Europe and Japan fall back into recession, but I suspect the Fed is loathe to shift too much of the hard-earned demand overseas. After all, the Fed paid a heavy price to win that demand as evidenced by its massive $4 trillion balance sheet.

It may in fact be time for the Fed to signal that there are indeed some risks associated with a one-way bet on diverging monetary policy. Shaking the confidence of dollar bulls and Treasury bears may be in order. That in turn would likely rattle the gold bears as well.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

QE: New York Fed purchases $2.140 billion in Treasury coupons.

Posted in Central Banks, Monetary Policy, QE |

Will The Swiss Vote to Get Their Gold Back?


by Ron Paul
16-Sep (24hGold) — On November 30th, voters in Switzerland will head to the polls to vote in a referendum on gold. On the ballot is a measure to prohibit the Swiss National Bank (SNB) from further gold sales, to repatriate Swiss-owned gold to Switzerland, and to mandate that gold make up at least 20 percent of the SNB’s assets. Arising from popular sentiment similar to movements in the United States, Germany, and the Netherlands, this referendum is an attempt to bring more oversight and accountability to the SNB, Switzerland’s central bank.

The Swiss referendum is driven by an undercurrent of dissatisfaction with the conduct not only of Swiss monetary policy, but also of Swiss banking policy. Switzerland may be a small nation, but it is a nation proud of its independence and its history of standing up to tyranny. The famous legend of William Tell embodies the essence of the Swiss national character. But no tyrannical regime in history has bullied Switzerland as much as the United States government has in recent years.

The Swiss tradition of bank secrecy is legendary. The reality, however, is that Swiss bank secrecy is dead. Countries such as the United States have been unwilling to keep government spending in check, but they are running out of ways to fund that spending. Further taxation of their populations is politically difficult, massive issuance of government debt has saturated bond markets, and so the easy target is smaller countries such as Switzerland which have gained the reputation of being “tax havens.” Remember that tax haven is just a term for a country that allows people to keep more of their own money than the US or EU does, and doesn’t attempt to plunder either its citizens or its foreign account-holders. But the past several years have seen a concerted attempt by the US and EU to crack down on these smaller countries, using their enormous financial clout to compel them to hand over account details so that they can extract more tax revenue.

[source]

Posted in Gold News, Gold Views |

Gold trading hubs vie for Asian demand

16-Sep (Mineweb) – Even as China has decided to push ahead its launch date by 11 days of its international gold exchange, competition has come from the Singapore Exchange, which is planning to launch a physically deliverable gold contract for wholesalers in the next few months to meet demand in Asia, the top consumer of the precious metal.

It is not just Singapore and Hong Kong who are racing ahead with plans to catch growing Asian demand. In a bid to create a transparent form of pricing, the Dubai Gold and Commodities Exchange is also set to launch a spot contract this year, while Thailand is also considering setting up a spot gold exchange.

While Singapore is to have a new 1 kilogram physically deliverable gold contract, CME has also announced a new 1 kilogramme gold contract in Hong Kong on its exchange, which has been pushed ahead by 11 days to be the first off the mark.

[source]

Posted in Gold News, Gold Views |

Hong Kong Gold Bourse Approved to Build Vault in China

15-Sep (Bloomberg) — Hong Kong’s Chinese Gold & Silver Exchange Society was given permission to set up a precious metals vault in Shenzhen, China, becoming the first non-mainland bourse granted onshore commodity warehousing access.

Local government authorities and the People’s Bank of China Shenzhen branch approved the exchange’s plan to build the 1,500-ton facility to store gold and silver in Qianhai, a special economic zone on the west of Shenzhen, according to Haywood Cheung, president of the CGSE. Construction will begin next year and take about 18 months, he said.

China, which overtook India as the biggest gold user last year, is starting gold trade in the Shanghai free-trade zone this month as the country seeks to exert its influence over prices while expanding the yuan’s role in global trade. Bullion rose 2.8 percent this year after slumping 28 percent in 2013.

[source]

Posted in Gold News, Gold Views |

Indian Trade Deficit Widens as Gold Imports Surge 176%

15-Sep (Bloomberg) — India’s trade deficit widened in August from a year earlier as imports of gold surged 176 percent after policy makers eased shipment curbs.

The shortfall was $10.8 billion last month, wider than $10.7 billion a year earlier, with exports rising 2.4 percent and imports growing 2.1 percent. Gold shipments surged to $2 billion from $739 million in August last year after the government allowed more banks and traders to buy bullion overseas.

India is easing emergency measures taken when the current-account deficit widened to an all-time high, as faster growth boosts inflows. While the shortfall will widen this year through March 2015 after shrinking in the previous 12 months, it will stay sustainable, according to a Reserve Bank of India report last month.

“We can manage with monthly gold imports of about $2 billion and the jump in the August number is largely due to last year’s low base after a sudden clamp down,” Shubhada Rao, an economist at Yes Bank Ltd. in Mumbai, said yesterday. “The jump may look alarming, but there is no reason for panic.”

[source]

Posted in Gold News, Gold Views |

Gold edges up before Fed meeting, U.S. rate outlook eyed

16-Sep (Reuters) – Gold rose on Tuesday ahead of a Federal Reserve policy meeting, but remained near an eight-month low, with investors unwilling to place big bets as they awaited clues on the timing of the first U.S. rate hike in eight years.

The Fed will begin its two-day policy meeting later in the day, with an announcement scheduled for Wednesday. Some analysts believe the Fed could signal it may begin raising rates sooner than mid-2015, the current consensus target.

[source]

Posted in Gold News, Gold Views |

US PPI unch in Aug, below expectations of +0.1%, vs +0.1% in Jul; +1.8% y/y. Core +0.1%, in line with expectations; +1.8% y/y.

Posted in Economic Data |

The Daily Market Report: Gold Rebounds Modestly Ahead of FOMC


15-Sep (USAGOLD) — Gold is a little better to start the week, but the tone remains defensive after the yellow metal fell to 7½-month lows last week. Position squaring ahead of the two-day FOMC meeting, which begins tomorrow, is offering some support.

Recent gains in U.S. yields and the dollar suggest the market is thinking the Fed will raise rates sooner, rather than later. Wall Street Journal FedWatcher Jon Hilsenrath thinks the internal debate at the Fed centers on two options: “Should the Fed start raising rates early and proceed gradually, or wait longer and be ready to move rapidly? Before they decide when, officials need to weigh the costs and the benefits of these two approaches.”

Ultimately, Hilsenrath believes it comes down to a “judgment call made by Fed Chairwoman Janet Yellen and her colleagues on the Fed’s policy committee.” With the Fed dominated by doves, I think they wait; although there could be some tweaks to the language suggesting a more optimistic outlook.

Today’s industrial production disappointment, as well as the recent August nonfarm payrolls miss, are likely to give those doves pause. If the Fed holds steady and fails to adopt more hawkish language, we could see some of the long dollar positions start to unwind. That would likely benefit gold.

The dollar index is up nearly 7% since early-May. These gains have negative implications for U.S. exports. Additionally, as QE winds down, the rise in short-term rates may impede capital investment and job creation. Two-year yields reached 0.57% last week; a level not seen in more than three-years.

The yield on the ten-year note probed back above 2.60% and mortgage rates rose as well. If the Fed does indeed come across as more hawkish, it may well be a dagger in the heart of the already sputtering housing market. That could in turn take some wind out of the sails of the broader — albeit tepid — recovery.

Posted in Daily Market Report, Gold News, Gold Views |

Wall Street still dancing. . . .like 2007

1929-sepiaPete, seeing that post on the BIS warning about liquidity reminded me of a quote from Citigroup’s Chuck Prince just before the 2007 meltdown:

“When the music stops in terms of liquidity, things will get complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

__________

Back in August, 2007 we published a piece here at USAGOLD that got considerable play on the world wide web headlined USAGOLD’s Top 25 Quotes on the Credit Crisis of 2007.  It is interesting to go back and read those quotes in light of what’s happening in the financial markets these days.  The more things change, the more they stay the same. Aldous Huxley said it best:  ”That men do not learn very much from the lessons of history is the most important of all the lessons of history.”  When the next crisis hits, it will come like the last one — like a thief in the night.

We should not forget too that Ben Bernanke, now retired and long after the fact, said of the 2007-2009 meltdown:  ”September and October of 2008 was the worst financial crisis in global history, including the Great Depression.  [Of the 13] most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.” (August, 2014)

It is doubtful that this week’s Fed minutes will contain any warning of a similar event anytime soon.  More likely we will hear something down the road like “We didn’t see it coming. . . . ” even though an enterprising staffer has probably already clipped the Business Insider article quoting Claudio Borio and put it on Janet Yellen’s desk.

- MK

Posted in all posts |

QE: New York Fed purchases $0.998 billion in Treasury coupons.

Posted in Central Banks, Monetary Policy, QE |

Bank For International Settlements Warns Against ‘Illusion Of Permanent Liquidity’

15-Sep (BusinessInsider) — Loose monetary policies have created an “illusion of permanent liquidity” that is spurring investors to make risky bets and push up asset prices, the Bank for International Settlements said Sunday.

“The longer the music plays and the louder it gets, the more deafening is the silence that follows,” Claudio Borio, who heads the BIS’s monetary and economic unit, told reporters.

“Markets will not be liquid when that liquidity is needed most,” he warned, urging “sound prudential policies (and) extra prudence on the part of market participants themselves”.

[source]

Posted in Central Banks, Economy, Monetary Policy |

OECD slashes growth forecasts, urges aggressive ECB action

15-Sep (Reuters) – The OECD slashed its growth forecasts for major developed economies on Monday, urging much more aggressive ECB stimulus to ward off the risk of deflation in a subdued euro zone.

The call adds to growing pressure on the euro zone, and the European Central Bank in particular, to boost growth ahead of a meeting of finance ministers and central bankers from the Group of 20 economic powers later this week in Australia.

Updating its growth forecasts for major developed economies, the Organisation for Economic Cooperation and Development projected growth in the euro zone at only 0.8 percent this year and rising only slightly next year to 1.1 percent.

That marked a sizeable downgrade from its May Economic Outlook for the euro zone, when the Paris-based organization forecast growth of 1.2 percent in 2014 and 1.7 percent in 2015.

In comparison, the OECD saw the United States’ economy growing 2.1 percent this year before accelerating to 3.1 percent in 2015. In May the OECD forecast U.S. growth of 2.6 percent this year and 3.5 percent next year.

[source]

Posted in Economy |