Following a unanimous decision by the Federal Open Market Committee on December 14, the Federal Reserve announced an increase of 0.25 percent in the US federal funds’ interest rate – rising to 0.75 percent. The rate increase was broadly anticipated by commentators and reflects positive momentum in the US economy – with rising inflation and an improving job market. Janet Yellen, Chair of the Federal Reserve, said the increase was in recognition of “the considerable progress the economy has made toward [the federal reserve’s] dual objectives of maximum employment and price stability”. Yellen added that it marked a “vote of confi...
On December 12, Christine Lagarde put her responsibilities as president of the International Monetary Fund (IMF) to one side as she faced trial on official charges of ‘negligence by a person in position of public authority’. The charges relate to an arbitrage payment she approved during her time as the finance minister of France – a role she held between 2007 and 2011 under then-French President, Nicolas Sarkozy. Lagarde denies any wrongdoing, but faces up to a year in prison and a €15,000 ($16,000) fine if convicted. Concerns were raised regarding the political connection between Tapie and Sarkozy… [with] many feel[ing] this relati...
In a world first, Indian citizens have been offered a 10 percent discount on insurance policies, highway tolls and train tickets purchased online. India’s Finance Minister, Arun Jaitley, said the government also plans to waive the service tax for online transactions below 2,000 rupees ($29.70) and introduce a 0.75 percent discount on cashless petrol station purchases. The move has come in reaction to Prime Minister Narendra Modi’s recent decommissioning of the country’s two highest denomination bank notes – a move which attempted to curb the primarily cash-fuelled black market. The sudden currency recall resulted in frustration and u...
On December 6, The US Department of Commerce released figures showing a hike in the size of the US trade deficit – its biggest monthly rise for more than one-and-a-half years. Looking forward, there appears to be little hope that the deficit will see a substantial improvement. Growth in consumer spending looks set to maintain its momentum, which could have a negative effect on the trade balance in coming years The figures show the trade gap for October reached a four-month high at $42.6bn, up 17.5 percent from September. The trade balance was hit by a 1.8 percent decrease in exports, driven by disappointing sales of food, consumer goods and...
Global stocks extended the longest winning streak since September, with Asia up 0.8% and Europe rising 0.7% while bonds and credit markets strengthened amid hopes that the European Central Bank will prolong quantitative easing, while optimism an Italian bailout of Monte Paschi will prevent European bank contagion, has pushed European financial stocks higher. US equity futures were little changed. A note from Goldman’s David Kostin overnight perhaps summarized it best: “Large-cap fund managers embrace Hope over Fear.” For now hope is certainly in the driver’s seat, leading European equities higher for a third day, with ...
It is money time for the European Central Bank: more QE or less QE? That is the question. A 6-month extension is on the cards and is already priced in, but the ECB could also opt for a longer extension that would hurt the euro or tapering bond-buys down, pushing the common currency higher. Apart from the fate of the scheme, the fresh forecasts as well as the tone matter quite a lot. The recovery of EUR/USD has waned down ahead of the big event. Video preview of the December ECB meeting: Video length: 00:09:09 ...
The Euro was under some pressure as markets look to this week’s policy meeting at the European Central Bank. Analysts recently polled expect that the ECB will announce that it will extend the QE scheme, however, the uncertainty arises around the amount of monthly asset purchases. There is a difference of opinion as to whether the ECB will scale back the program or hold it steady, or even if it will formally signal a future date for the program’s conclusion. If the ECB does decide to taper the program, the Euro could recover from its recent lows versus the US Dollar. As reported at 10:27 am (GMT) in London, the EUR/USD was trading at $1.07...
If you factor in co-investments, separate accounts and direct investments – three channels investors are increasingly using to pump money into the private equity sector – 2017 is shaping up to be a record year for the asset class. The industry is on pace to raise a wallet-busting $691 billion in commitments this year, about 10 percent more than the previous high mark. That’s on top of an estimated $1 trillion in dry powder already waiting to be deployed. All this capital raising is good news, right? Maybe, because at the same time that cash is flooding into the sector private equity deals are getting smaller. Deals under the $25 milli...
The origin of the Greek financial crisis can be traced back to creative bookkeeping activities which the government used to fudge the convergence criteria for joining the Euro from its inception. At the height of the Global Financial Crisis, the underlying frailties of the Greek economy could no longer be concealed, the truth emerged and the cost of Greek debt went through the roof necessitating the first of three EU/IMF bailout packages in 2010. In total, the IMF/EU lent €325 billion to Greece in a series of deals which required economic reforms and austerity cuts to be imposed, aimed at restoring the Greek economy to health (eventually). ...
The US dollar is little changed against most of the major currencies. Sterling is the notable exception, losing about 0.75% to trade at three-day lows. It was on the defensive in early European turnover but got the run pulled from beneath by the unexpectedly poor data. UK industrial output fell by 1.3% in October. The median forecast was for a small increase. While oil and gas took a toll, as one of the large North Sea fields was closed for maintenance, manufacturing output slumped by 0.9%. A small gain was expected.The decline was sufficient to push the year-over-year rate into contraction (-0.4%) for the first time since March. ...