The Swiss National Bank surprised the market by announced a negative 25 bp rate on sight deposits and lower the 3-month Libor range to -0.75% to 0.25%. Although SNB President Jordan revealed that inflows from Russia compelled it to intervene in recent days, the fact of the matter is that the negative rate goes into effect the same day as the ECB’s next meeting, January 22.
The Federal Reserve upgraded its assessment of the labor market, and changed the future guidance from “considerable time” to “can be patient in beginning to normalize the stance of monetary policy.” The statement also draws a distinction between market-based measures of inflation expectations, which have fallen, and survey-based measures, which are stable. We expect Yellen to indicate that the change in wording is not a change of intent.
Interest rates may not rise in 2015 as the Federal Reserve indicates it will be more patient before making its first rate hike since the global financial crisis of 2008.
The Federal Open Market Committee said in a statement Wednesday that it “can be patient in beginning to normalize the stance of monetary policy,” a signal that many analysts had been expecting that falling oil costs caused inflation to become a minor concern for the policymakers.
The United States has always been known as a nation of immigrants and a top destination for scientists and other highly skilled professionals. That ability to attract the world’s most educated and innovative people to its shores has often been credited with powering the US economy.
Like the Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership, and the Free Trade Area of the Asia-Pacific, the Transatlantic Trade and Investment Partnership (TTIP) between the European Union (EU) and the United States (US) is a second-best approach to trade and investment liberalization compared to a global agreement. A global agreement is not within reach, and thus Asia, as a non-beneficiary, will incur trade losses similar to the losses that Europe would incur as a non-beneficiary of an Asia-Pacific agreement on free trade.
The Japanese media has been set alight by the debate on Japan’s use of ‘comfort women’ — a euphemism referring to the women used for sex by the Japanese Army in World War II. The furore began in August when Asahi Shimbun, Japan’s premier liberal newspaper, admitted that a source used in a number of articles it published on comfort women had fabricated his story. That source was Seiji Yoshida, a soldier who claimed to have been involved in the capture of 200 women in South Korea during the war.
The US dollar’s recovery that began yesterday continues today. The euro reached the 50% retracement objective of its slide since mid-October (~$1.2565) and now is more than a full cent lower. The dollar’s slump against the yen ended just above the JPY115.50 level, also a key technical retracement level. The dollar’s high today was JPY117.50.
Industrial production surged to its highest level since 2010 in November after three solid months of gains. Industrial production rose 5.2% year-over-year in November and manufacturing rose 4.8% year-over-year, signaling continued confidence in the economy from the industrial sector.
For quarter of a century, global climate change talks have suffered from a stalemate between major advanced nations and large emerging economies. Since Lima’s climate conference could not resolve it, it deferred the divide to Paris 2015.
Recently, world’s leading nations gathered in Lima, Peru, for the 2014 U.N. Climate talks. The procedural objective was to develop the foundation for a new climate agreement that could be signed in Paris in December 2015 and that would take effect by the 2020s.
As the 24-hour session has progressed, the US dollar and equities have stabilized and turned higher. Indeed as US traders prepare to return, stocks and the dollars are trading near session highs. Oil prices are also trading higher. Core bonds are a bit heavier, and the US 10-year yield has moved back above 2.10%. News that Libya declared force majeure at two of its oil terminals appeared to have turned the oil market around. It had continued to fall in the early hours the UAE warned it was prepared for oil prices to slump to $40 a barrel.
