Category: Economics

What Is the EU’s Game in the Caucasus Separatist Territories?


The European Union is making a push to raise its profile in two trouble spots in the South Caucasus, Abkhazia and Nagorno-Karabakh. Brussels insists its forays in the region are nothing more than routine diplomacy. But some observers believe the EU is hoping to push back against Russia’s troublemaking in Ukraine.

The opening EU diplomatic thrust was aimed at Abkhazia, a Black Sea territory that broke free from Georgia in 1993. It remains financially dependent on Russian subsidies to maintain a semblance of self-government.

Prime Minister Abe Seeks to Link Japan’s Security Policy to the Modern World


This year marks the 70th anniversary of the end of World War II. Such milestones offer an opportunity to reflect on the progress made and the steps needed to ensure that such tragic events are never repeated.

U.S. New Home Sales Fall, Weather Blamed


New home sales fell slightly in January, which economists are blaming on cold weather in the Northeast.

Approximately 481,000 new single-family home sales occurred in January on a seasonally adjusted annualized rate, according to a new report released by the Commerce Department. While the department revised upwards its previous estimate for December sales, a slowdown in January came despite falling interest rates and relative warmth in some parts of the country.

Fallout from Yellen’s Comments to the Senate Continue


The dovish take to Fed Chair Yellen’s testimony yesterday has continued to weigh on the dollar and support global bond markets.  Equities are mixed with the major markets lower while emerging markets have rallied.  The MSCI Emerging Market equity index is up about 0.8% to reach its highest level since early last December.  

Federal Reserve Signals Possible Rate Hike Delay, Bonds Stall


The Federal Reserve plans to keep interest rates at historic lows as labor participation and price inflation data remains weak.

Market Participants Overreact to Fed Chair Yellen’s Testimony


Bond yields and the dollar fell.  Emerging markets and equities performed well.  The main cause appears to be Yellen’s testimony to the Senate.  

Yet this seems to be an exaggerated response.  Going over Yellen’s prepared remarks and answers to questions from the Senators, our basis understanding has not changed:  The Federal Reserve’s monetary policy and forward guidance continues to evolve and prepare investors, including those foreign sovereigns and companies that borrowed dollars, for an eventual rate hike.  

Framing Fed Chair Yellen’s Testimony and Interpreting Fed Speak


Testimony by Federal Reserve Chair Yellen is one of this week’s few highlights.  Yellen’s testimony is not about articulating a new policy, but explaining the existing policy to US Congress, and to some extent, the American people. 

Anxiously Awaiting Yellen


Amid relatively light news, the US dollar is bid.  The euro is back to the lower end of its range, straddling the $1.1300 area.  The dollar is at an eight-day best against the yen near JPY119.50.  Falling commodity prices, a soft New Zealand inflation expectations survey, and the prospects for additional easing by the Reserve Bank of Australia (March 3) and the Bank of Canada (March 4), are weighing on the dollar-bloc. 

Falling Home Sales, Manufacturing Slowdown Signal U.S. Economic Woes


A decline in existing home sales and a slowdown in manufacturing suggest the U.S. economic recovery may be stalling.

The National Association of Realtors announced Monday that total existing home sales fell 4.9% to a seasonally adjusted annual rate of 4.82 million units in January, the lowest level since April 2014. While mortgage rates have fallen significantly from April, buyers are not coming to the market as much as many analysts had expected.

The Need for a Stronger Germany and the Undertone of a Pope’s Gift


German Chancellor Merkel visited the Vatican over the weekend.  Consistent with the diplomatic practice, they exchanged gifts.  The Chancellor gave to the Pope a Bach CD and a donation for refugee children.  Pope Francis gave Merkel a medal with a picture of St.Martin giving his coat to the poor.