The Fed’s prestige is constantly being eroded

Why does the Fed continue to be a glutton for punishment, repeatedly announcing for over a year that it is going to raise interest rates, then having to put the decision on hold? Yet again it has announced it will have to hike rates before end-year, possibly twice, and perhaps, once more, it will have to back down.

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Why are the markets not reflecting Spain’s political risk?

Alarm bells are sounding across Europe over the possibility of Spain being a year without a government. Even the international press is calling for an end to the political deadlock in its editorials. But the concern has yet to reach the markets: the day before the start of a new investiture process in Spain, which could end in failure, the country’s risk premium remained below 100 basis points and the Ibex 35 blue-chip index lost hardly any ground, in line with the performance of its European peers.


Madrid, España 
El Presidente del Gobierno, Mariano Rajoy,  recibe en La Moncloa al presidente de Ciudadanos, Albert Rivera
Fotografía: Diego Crespo / Moncloa
Presidencia del Gobierno

Spain’s New Deal

The Spanish right and centre parties have brokered an agreement for breaking the current political deadlock. The caretaker Cabinet has held office for nine agonizing months as two general elections failed to produce an outright winner. Even if the settlement reached between the caretaker Popular Party government and Ciudadanos marks a sizeable step forward, it will still fail to deliver enough parliamentary support for securing a stable government. The Socialist Party continue to firmly hold the key to power.


Yellen’s speech: are there reasons to support a September rate hike?

Stock market analysts have turned the annual central bankers’ meeting in Jackson Hole into a boiling pot of speculation regarding what message Fed Chair Janet Yellen will transmit. The markets are not expecting a rate hike in September, but are hoping for some guidance from Yellen’s speech today about how she sees the US economy, the key factor which will determine whether there will be a rate move before year-end.


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China Report Highlights Need for Pension Reform to Rescue Poor Provinces

Shi Rui, Wang Luyi, Li Rongde via Caixin | The number of provinces with pension spending deficits doubled over the last year, according to a new report, underscoring the urgency for creating a national system that would let wealthier coastal regions subsidize poorer interior ones. Pension funds in six provinces paid out more money than they collected in 2015, up from three regions a year earlier, according to the 2015 China Social Security Development Report compiled by the Ministry of Human Resources and Social Security.



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