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

 

Drones: First Certificate Issued Under New UAV Rules

Transport Minister Simon Bridges and Associate Transport Minister Craig Foss say the first certified flight of an unmanned helicopter under new aviation rules is a great example of how they can enable commercial use. More>>

ALSO:

GE Swedes And Cow Deaths: Plant Analysis Backs Up Earlier Advice

The industry body is recommending that farmers do not feed Herbicide Tolerant (HT) swedes to cows in spring when the animals are in late pregnancy or early lactation. DairyNZ is also advising caution if farmers are considering other leafy varieties. More>>

ALSO:

Statistics: Dairy And Travel Still Our Largest Export Earners

New Zealand earned $2.3 billion more from exports than we spent on imports during the year ended June 2015... total exports of goods and services were $67.5 billion, while total imports were $65.1 billion. More>>

ALSO:

Approval: Air New Zealand And Air China Launch New Alliance Route

Air New Zealand and Air China have today launched joint sales for a new daily direct service between Auckland and Beijing after receiving approval from New Zealand Minister of Transport Hon Simon Bridges to form a strategic alliance. More>>

ALSO:

Money Trading: FX Trader Jin Yuan Finance Warned Over Lack Of Monitoring

Jin Yuan Finance, an Auckland-based foreign exchange trader, has been warned over its lack of anti-money laundering processes in place in the first public notification by the Department of Internal Affairs. More>>

ALSO:

Auckland Surge, Possible Peak: House Values Accelerate At Fastest Annual Pace In 8 Years

New Zealand residential property values rose at their fastest annual pace in eight years in August, pushed higher by overflowing demand in Auckland, which is showing signs speculators think it has reached its peak, according to Quotable Value. More>>

ALSO:

Cash Money: Reserve Bank Launches New $5 And $10 Banknotes

The $5 and $10 final banknotes were revealed at an event at the Bank in Wellington, and will start to be released from mid-October 2015. More>>

ALSO:

Truck Sales Booted: Commerce Commission Files Charges Against Mobile Trader

The Commerce Commission has filed charges against a mobile trader, or truck shop operator, claiming he obtained money from customers by deception and never intended to supply them with the goods they paid for. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news