central bank

Don’t Worry, Corporate Leverage Only Just Back To Level Of 2007

AXA IM | Companies have re-leveraged their balance sheets since the global financial crisis (GFC), driven by low borrowing costs. Although heightened, corporate leverage is not currently excessive in developed markets, although we see signs of concern in emerging markets. In this note we assess whether we should be concerned about corporate leverage at current levels.

No Picture

Bond purchase: A signal of coming collapse

VIENNA | By Keith Weiner via Truman | I proposed seven drivers of financial implosion in my dissertation. My recent writing has focused on two of them. One is the falling rate of interest on the 10-year government bond. As interest falls, the burden of debt rises. Since the falling rate incentivized more and more people to borrow, the number of indebted people, businesses, corporations, and of course governments is large. When the rate gets to zero, the burden of debt becomes theoretically infinite.

No Picture

The BoE might be the first big Western Central Bank to raise its interest rates

MADRID | By J. J. Figares (LINK) | On Wednesday, the minutes of the last meeting of the Monetary Policy Committee of the Bank of England (BoE) were published. Although 9 of its members voted to retain unchanged its program of asset purchases in secondary markets, 2 of them, Ian McCafferty and Martin Weal, they voted against the proposal to keep interest rates reference at the current level of 0.5% and advocated to increase them by a quarter percentage point.

No Picture

In some cases the central bank cannot control inflation…

SAO PAULO | By Marcus Nunes via Historinhas | …while in others it cannot promote it! Japan falls in the latter category. According to this article in the WSJ “Japan´s price target looks difficult.” The nationwide core consumer price index rose 1.3% from a year earlier in June, after adjustment for a recent sales-tax hike, below a 1.4% increase the previous month, according to government data released Friday. Inflation moderated in May and June due to falling energy prices and a stable yen, which has put the break on growth in import costs.

No Picture

Draghi asserts his authority

MADRID | By JP Marin Arrese | A couple of years ago, Draghi rescued the Euro from its plight. Yesterday, he saved Europe from a protracted economic performance. By delivering more than expected by markets, he changed the rules of the game in monetary policy. His bold rate cut bringing funds hoarded by banking institutions into negative territory seems close to unconventional manoeuvring. His targeted 4-year massive 400 billion liquidity injection will prop up credit to enterprises and individuals, providing a robust boost to growth.

ECB Mr Coeure does not have a heart

ECB: Mr. Coeure doesn´t have a “heart”

SAO PAOLO | By Marcus Nunes | ECB Executive Board member Benoit Coeuret told a journalist club on Monday night that the European Central Bank was ready to act, but that the euro zone was not edging towards a dangerous fall in prices.