US Fed will struggle to raise rates much in 2016

2016 ◽  
Keyword(s):  
Interest Rates ◽  
Investor Sentiment ◽  
Commodity Prices ◽  
Federal Funds ◽  
Federal Funds Rate ◽  
Content Type ◽  
The Us ◽  
The Face ◽  
Lift Off ◽  
China’S Economy

Subject US monetary policy outlook for 2016 and its global impact. Significance There is a large discrepancy between the US Federal Reserve (Fed)'s estimates for interest rates at end-2016 and the expectations of bond investors. The latter are anticipating less tightening than the 100-basis-point (bp) rise in the Federal Funds rate the Fed has pencilled in for this year. Despite a successful rates 'lift-off' on December 16, the Fed faces many challenges in raising rates in the face of mounting stress in credit markets, disinflationary pressures from the plunge in commodity prices and a contraction manufacturing. Impacts While the Fed will tighten policy, other central banks, including the ECB, will provide further stimulus, accentuating policy divergence. Investors will price in a more hawkish Fed if US inflation accelerates faster than expected, potentially leading to a sell-off. Concerns about China's economy and the commodity prices slump will also shape investor sentiment.

Prospects for the global economy in the fourth quarter

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Global Economy ◽  
Fourth Quarter ◽  
Content Type ◽  
Bank Of China ◽  
Policy Interventions ◽  
The Us ◽  
Global Demand ◽  
Global Growth ◽  
China’S Economy

Subject Prospects for the global economy in the fourth quarter. Significance Three threats are on the horizon. Firstly, the US Federal Reserve (Fed) might raise interest rates this year. This move, though well signalled, may have negative repercussions, especially in emerging markets (EMs). Secondly, China's economy, a key to global growth, is slowing and its financial markets are exceptionally volatile. These factors have already elicited policy interventions such as renminbi depreciation and further rate cuts by the People's Bank of China (PBoC). Finally, there is no apparent end in sight to weak global demand and the fall in commodities prices that has left commodity-exporting countries struggling with precipitous drops in revenue.

Fed move boosts tight Latin American monetary policy

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Latin American ◽  
Commodity Prices ◽  
Content Type ◽  
The Us ◽  
Capital Outflows ◽  
Government Bond Markets ◽  
The Impact ◽  
First Time

Subject The impact of US monetary policy tightening. Significance Following the US Federal Reserve's (Fed) historic decision to raise rates for the first time since 2006, the start of the Fed's monetary tightening cycle is accentuating the hawkish stance of Latin America's main central banks. This comes amid a dramatic sell-off in commodity markets, persistent concerns about China's economy and a severe deterioration in economic conditions across the region. Impacts EM asset prices have remained relatively resilient to the rise in US interest rates, in stark contrast to the 'taper tantrum' in 2013. Hitherto-resilient regional local currency government bond markets will face foreign capital outflows due to falling commodity prices. The Brazilian real is 2015's worst-performing major EM currency, but due largely to political and economic difficulties at home.

Zimbabwe's economic rebound faces multiple hurdles

2018 ◽  
Keyword(s):  
Human Rights ◽  
Investor Sentiment ◽  
Commodity Prices ◽  
Debt Relief ◽  
Fiscal Consolidation ◽  
Content Type ◽  
The Us ◽  
Run Up ◽  
Policy Targets

Subject Zimbabwe economic update. Significance Improving investor sentiment following new President Emmerson Mnangagwa’s initial reforms reflects pent-up foreign appetite for access to Zimbabwe’s vast mineral assets, amid improving global commodity prices. However, Western governments are unlikely to endorse the government’s policies until tangible progress emerges on outstanding human rights and governance concerns. Weak fiscal consolidation measures and over-optimism regarding policy targets are holdovers from former President Robert Mugabe's tenure that could weaken the credibility of longer-term reform plans, particularly when it comes to securing debt relief. Impacts The US extension of sanctions against Mnangagwa and his officials over governance issues is a blow to fledgling investor hopes. Inflationary pressures, after the long deflation, may further impinge on growth by dampening disposable incomes. Spending pressures in the run-up to elections could increase issuance of bond notes, which already exceed their 200,000-dollar limit by 45%.

ECB may spark rate rises in Central-Eastern Europe

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Eastern Europe ◽  
Emerging Market ◽  
Commodity Prices ◽  
Content Type ◽  
Market Sentiment ◽  
Central Eastern Europe ◽  
The Us ◽  
Equity Funds ◽  
Central Eastern

Significance Inflation rates are rising sharply across Central-Eastern Europe (CEE), mainly thanks to a recovery in commodity prices. A flurry of stronger-than-expected economic data is fuelling speculation in financial markets about the timing of increases in interest rates across the CEE region. Forward markets are already pricing in rate hikes in Romania and Poland within the next twelve months. Impacts Traders are now expecting the US Federal Reserve to achieve its goal of hiking interest rates three times this year. Emerging-market bond and equity funds are enjoying a surge in inflows, market sentiment having improved sharply after the US election. Mounting uncertainty regarding France’s presidential election next month is having a negligible impact on euro-area government bond markets.

Markets are downplaying PiS election risks in Poland

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Foreign Currency ◽  
Strong Support ◽  
Commodity Prices ◽  
Wide Margin ◽  
Content Type ◽  
Opinion Polls ◽  
China’S Economy

Significance Despite PiS's costly spending pledges, its nationalist and populist views and its strong support for a controversial, Hungarian-style debt-relief scheme for holders of foreign currency-denominated mortgages, the prospect is causing little anxiety in financial markets. Investors are taking the view that PiS, which is leading the ruling Civic Platform (PO) party by a wide margin in opinion polls, will be forced to renege on many of its campaign promises. Impacts Poland is less vulnerable to the VW scandal, auto manufacture accounting for a much larger share of Czech and Hungarian jobs and GDP. A hard landing for China's economy is now seen as the largest threat to financial markets, as opposed to a rise in US interest rates. Central Europe's economies are better placed to cope with deteriorating sentiment towards EMs. Downside risks to inflation from falling commodity prices and slower EM growth put the NBP under pressure to loosen monetary policy further.

scholarly journals Systemically Significant Prices

2016 ◽  
Vol 2 (1) ◽  
pp. 1-20
Author(s):  
Robert C. Hockett ◽  
Saule T. Omarova
Keyword(s):  
Interest Rates ◽  
Commodity Prices ◽  
Open Market ◽  
Federal Funds ◽  
Federal Funds Rate ◽  
Mean Values ◽  
Regulatory Strategies ◽  
Prevailing Wage ◽  
Collective Action Problems ◽  
Interbank Lending

Abstract Some prices and indices in domestic or global markets take on particular market-wide importance. This can occur either because (i) they are associated with ubiquitous inputs to production, (ii) they are associated with highly popular asset classes, (iii) by convention they tend to be used as benchmarks in determining other prices, or (iv) some combination of the above.  Examples include prevailing wage and salary rates, certain energy and commodity prices, and such indices and borrowing rates as the Standard & Poor’s 500, the Federal Funds Rate, and the Libor and Euribor interbank lending rate benchmarks. We call such prices and indices ‘systemically important’ prices and indices, or ‘SIPIs’. Over the long term, these prices and indices tend towards certain statistical mean values that reflect determinants that can plausibly be treated as ‘fundamentals’, be these demographic, technological, or global-quantity-rooted in character.  At times, however, SIPIs can move out of alignment with mean values and associated fundamentals owing to distortions stemming from missing information, recursive collective action problems (including ‘noise’ trading and ‘herd’ behaviour), or even deliberately manipulative behaviour on the part of influential or colluding market actors.  We develop a general account of systemically important prices and indices as well as of the market vulnerabilities to which they can give rise. We then develop a menu of regulatory strategies for addressing these vulnerabilities in manners that protect markets’ capacities to translate fundamental values into (more) accurate prices or indices when such prices or indices are systemically important.  Key to the effort is recognizing that what we propose is in some cases what regulators are committed to doing already in maintaining market integrity, and in other cases is what central banks do already in determining appropriate money rental (‘interest‘) rates and securing them through open market operations.

Petrobras undermines Brazil's investment efforts

2015 ◽  
Keyword(s):  
At Risk ◽  
Private Sector ◽  
Investor Sentiment ◽  
Commodity Prices ◽  
Foreign Investors ◽  
Content Type ◽  
Brics Countries ◽  
The Us ◽  
The World ◽  
The Government

Significance A lagging economy, declining global commodity prices and the crippling corruption crisis affecting state-owned oil giant Petrobras (estimated at 17 billion dollars in losses) have compelled the government to travel the world seeking investments. This combination has transformed what Brasilia had expected to be a revenue windfall into a shortfall, persuading the formerly inward-looking government to pursue external investment sources, including the US private sector and other BRICS countries. Impacts Brazil's current woes may represent an opportunity for foreign investors. However, the Petrobras scandal will continue to undermine investor sentiment. Current private forecasts point to recession both this year and next. Corruption claims could yet put the government at risk.

Russian Banking System under Conditions of Global Crisis

2009 ◽  
pp. 4-14 ◽  
Author(s):  
G. Gref ◽  
K. Yudaeva
Keyword(s):  
Banking System ◽  
Commodity Prices ◽  
Financial Sector ◽  
Banking Crises ◽  
Economic Recovery ◽  
Balance Sheets ◽  
Current Economic Crisis ◽  
Risk Appetite ◽  
The Us ◽  
The Face

Problems in the financial sector were at the core of the current economic crisis. Therefore, economic recovery will only become sustainable after taking care of the major weaknesses in the financial sector. This conclusion is relevant both for the US and UK - the two countries where crisis has started, and for other economies which financial institutions turned out to be fragile in the face of the swings in the risk appetite. Russia is one of the countries where the crisis has revealed serious deficiency in the financial sector. Our study of 11 banking crises during the last 25-30 years shows that sustainable economic recovery and decrease in the dependence on commodity prices will be virtually impossible without cleaning of balance sheets and capitalization of the financial sector.

Critical minerals demand will boost Canadian mining

2021 ◽  
Keyword(s):  
Supply Chain ◽  
Rare Earth ◽  
Electric Vehicle ◽  
Carbon Emissions ◽  
High Performance ◽  
Commodity Prices ◽  
Alternative Source ◽  
Content Type ◽  
The Us ◽  
Critical Minerals

Significance Although low commodity prices deterred investment in recent years, this is changing as the market rallies. The creation of a regional electric vehicle (EV) supply chain straddling the Canada-US border has the potential to transform the Canadian mining sector while loosening China’s grip on the minerals used in high-performance batteries. Impacts Canada is the world’s eighth-largest cobalt producer and has significant copper, graphite and rare earth deposits. Fortune Minerals, which is developing a cobalt mine in Northwest Territories, has held funding talks with the US Export/Import Bank. First Cobalt is building North America’s only cobalt refinery to give battery makers an alternative source to the DRC. Several of the country’s mines are using cutting-edge technologies to reduce their carbon emissions.

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