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

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news