Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


World Week Ahead: Ball in Yellen’s court

World Week Ahead: Ball in Yellen’s court

By Margreet Dietz

June 16 (BusinessDesk) – Federal Reserve policymakers are poised to meet this week just days after Bank of England Governor Mark Carney served an apparent ace: investors should prepare themselves for higher UK interest rates sooner than expected.

That warning came as a wake-up call to many investors and stands in stark contrast to the message from Fed officials who’ve been at pains to downplay expectations about the first increase in US rates, even as growth in the world’s biggest economy continues to accelerate.

It looks now as if Carney has taken the lead from Fed Chair Janet Yellen. Last Friday, the UK’s FTSE 100 dropped 1 percent and gilts fell, while sterling climbed, following the governor’s comments.

“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced,” Carney said in a speech in London on Thursday night. “It could happen sooner than markets currently expect.”

While most key data including from the labour market have recently show the US economy’s resilience following a harsh winter, signs of weakness remain.

The American consumer hasn’t yet regained full confidence about the future as shown by last week’s US retail sales and consumer sentiment data, which followed hot on the heels of a downgrade by the World Bank of both global and US growth in 2014.

Still, there’s a sense that pressure will start to rise more appreciably on the Fed to pave the way for at least a modest rate hike.

“You have a hawkish statement out of a central bank,” Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group, referring to the Bank of England, told Bloomberg News. “That could mean the Fed may not be too far behind.”

A two-day Federal Open Market Committee meeting begins on Tuesday, followed by quarterly projections and a press conference by Yellen on Wednesday. At the very least, the Fed will be expected to pare back again the pace of asset purchases it’s been making to bolster the economy. Any rate mention will now take on even greater import.

Last week, the Dow Jones Industrial Average fell 0.88 percent, the Standard & Poor’s 500 Index shed 0.68 percent, and the Nasdaq Composite index gave up 0.25 percent. In Europe, the Stoxx 600 gave up 0.1 percent.

Even so, Wall Street finished the last day of the week on a more positive note. On Friday, the Dow rose 0.25 percent, the S&P 500 added 0.31 percent, and the Nasdaq gained 0.30 percent. Shares of Intel soared, up 6.8 percent, after the company upgraded its revenue and gross margin forecast.

In the coming days economic data will include reports on the Empire State manufacturing survey, industrial production, housing market index, due Monday; the consumer price index and housing starts, due Tuesday; weekly jobless claims, Philadelphia Fed survey, and leading indicators, due Thursday; and Atlanta Fed business inflation expectations, due Friday.

A further escalation of violence in Iraq would also affect markets. Last week oil prices jumped more than 4 percent. The potential of an all-out civil war has everyone on tenterhooks.

“The developments in Iraq will continue to be on investors’ radars as a spike in oil prices always holds the potential to spook market participants,” Mark Andersen, co-head of global asset allocation at UBS’s wealth-management unit in Hong Kong, told Bloomberg News.

Yellen’s ability to return Carney’s serve will dominate markets the next few days.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news