Economics Archives - Page 58 of 183

Are Japan’s Negative Rates Different?

The Bank of Japan surprised investors last week by introducing negative interest rates. At the World Economic Forum in Davos a couple weeks ago, BOJ Governor Kuroda appeared to deny that such a move was under consideration. The market’s focus, like ours, was on the pace by which it was expanding its balance sheet (JPY80 trillion a year). The FAQ format may be the most effective way to explain what the BOJ did, why and the implications for investors.

What did the Bank of Japan do?

The Strategic Building of the Sino-African Relations

That Africa is becoming pro-China in terms of trade and economic ties is no longer a boardroom discussion but rather a strategically executed plan in the public domain. The growth in the Sino-African relations is evident by the rise in trade volumes between the two partners from US$10 billion in 2000 to about US$198 billion in 2012. A white paper released by the Chinese government in 2015 shows that the trade volumes between the two partners are projected to reach about US$220 billion in 2014. Today, China is the leading trade partner with Africa.

Searching for Solid Ground

Investors continue wrestling with the implications of last week’s surprise rate cut by the Bank of Japan. The yen is little changed against the dollar, near its 200-day moving average (~JPY121.50). The euro moved from the upper end of its two-cent range last Thursday to the lower end on before the week. The absence of follow through selling appears to have prompted some short-covering. The $1.0880-$1.09 area may stymie the upside.

Mostly Unchanged Market Factors Could Mean More Turbulence

On the very first trading day of the year, the Nikkei, DAX, and S&P 500 gapped lower, setting the tone to a particularly challenging month for investors. The last week and a half has been better, and this will likely carry over into the start of the new month. Before January could slip into the history books, the Bank of Japan sprung a last-minute surprise by adopting a tiered system that includes a minus 10 bp charge to new excess reserves.

Through the Noise, the Dollar Remains Strong

The US dollar turned in a mixed performance last week. Firmer oil and commodity prices more generally helped lift the Australian and Canadian dollars, and many emerging market currencies. These currencies initially extended their gains ahead of the weekend in response to the Bank of Japan’s surprise 20 bp cut on some excess reserves (to -10 bp).

Finding Taiwan-China Relationship Wiggle Room

What does the victory of the independence-leaning Democratic Progressive Party’s (DPP) Tsai Ing-wen in Taiwan’s presidential election mean for cross-Strait relations? Today’s Democratic Progressive Party (DPP) is a considerably different political animal to former president Chen Shui-bian’s DPP.

IMF: Significant Governance Reforms Give Disenfranchised Nations Greater Say

Five years ago, a number of global powers struck a deal to overhaul the way the International Monetary Fund (IMF) conducts business. This week the IMF officially approved those governance overhauls and put the agreement into action, giving emerging economies more of a say in its operations. The agreement has been dubbed the “quota reforms.”

The BOJ Goes Negative (Rates) on Excess Reserves

The Bank of Japan surprised the market. It did not expand its asset purchase plan, which was the focus of many market participants, including ourselves. Instead, following a rash of disappointing data, the BOJ introduced negative interest rates on some excess reserves and vowed to do more if necessary.

What’s Trending Economically?

The year is off to a turbulent start, both in the UK, and around the world. January saw oil prices plummeting, while Chinese growth slowed, spooking investors (but surprising none). However, amid the turmoil and confusion of global stock markets, there are a few economic trends, which look set to hold sway throughout 2016.

Here’s a wrap up of some of the key developments, which will shape our society in the months to come.

Employment for women

The FOMC Makes Us Wait Until Next Time

The Federal Reserve tweaked its economic assessment, but generally kept the underlying message the same. It sees slack in the labor market continuing to be absorbed and believes the economic conditions warrant a gradual increase in rates. The market was looking for a more dovish statement, but the message is little changed from December.