Variant Perception’s editor Simon White spoke to BNN this morning about the future course of Fed policy and the US labour market. Highlights included the likelihood that the Fed will stay looser for longer as well as how the market may have overestimated the actual pace of tapering.
A nice series of articles from Bloomberg news alerts us to the fact that the Fed is anything but united when it comes to QE. There is consequently ongoing confusion, disagreement and general apprehension surrounding whether and how the Fed is supposed to end QE . Quite simply; the powers that be do not see eye to eye on this one and this is slightly worrying (if completely understandable).
Last week’s BoJ meeting did not meet expectations of trying to soothe the Japanese bond market. Yields have shot up, with 10y yields 50% higher in May as of this morning, largely a consequence of the BoJ succeeding in raising…
The Japanese economy continues to weaken and a recession is now the main consensus. The country’s trade balance, which was long in surplus, is now moving deeper and deeper into deficit and the third quarter numbers almost certainly will show contraction, and these are more than likely to be followed by another set of negative readings for Q4
Since early September the ECB’s balance sheet has expanded by 589 billion euros (about 750 billion USD) and the Fed USD swap lines are currently sitting at around 100 billion USD. The second LTRO to be conducted towards the end of February is then very likely to take this number well past 1 trillion USD of liquidity to the European banking system.