INTEREST RATES

Markets wait to hear Yellen

The Corner | March 18, 2015 | Attention will focus on Janet Yellen’s remarks later today, as  markets await indication about the Fed’s plans on the issue of a rise in interest rates. Yellen will be speaking after the FOMC meeting, with speculation mounting that US economic projections may be strong enough to warrant a change in monetary policy. Analysts are speculating that a rates hike could happen as early as June, although the current strength of the dollar may delay any rise.


Morning briefing: China cuts rates

The Corner | March 2, 2015 | The weekend decision of the Chinese Central Bank to cut benchmark lending and deposit rates by 0.25% is geared towards staving off deflation in the country´s slowing economy.



ECB action beginning to pay off

MADRID | February 27, 2015 | J.J Fernandez-Figares| Link Securities | Efforts by the ECB to inject money into the euro zone are already showing signs of impact as positive M3 figures offer encouragement ahead of March purchases of sovereign bonds.


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EU markets opening

MADRID | The Corner | February 25, 2015 | Spanish telecom giant Telefonica reported a drop of 34.7% in net profit, although investors celebrated revenue picture  brightening up. Elsewhere, the Spanish Producer Price Index falls again, registering a drop of 2.8% for January.


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Deflation: Economists sink into dementia

Guest post by Benjamin Cole via Historinhas | What to make of the recent dust-up around Rogoff World, in which the U.S. would pursue a cashless, deflationary federal police state characterized by negative interest rates? Harvard don Ken Rogoff has suggested this is the best macroeconomic option going forward. My take-away? The economics profession is deep into dementia.



Testing the rate-hike scenario

By Sreekala Kochugovindan, Anando Maitra (Barclays) | History highlights the importance of the business cycle in determining the effect of rising rates on asset returns, a topic we discussed in depth in Scenarios for a shifting bond landscape. We examined US data since 1925 and selected episodes where US Treasuries sold off by more than 5% in one year. The results were pretty mixed, with equity returns ranging between plus and minus 50% and providing no consistent pattern. 


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US corporate results boosted by “ultra-low” interest rates

MADRID | The Corner | US corporate results from the third quarter might be around +4%/5% (earnings per share), but it is highly probable that European results will be weak. Also, there should not be great expectations on central banks to save the situation this time, except, possibly, a more “dovish” refocusing by the American Fed (the US central bank delayed an interest rate increase or even tapering, which would give support to markets).


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EBC’s first TLTRO misses expectations

MADRID | By Julia Pastor | As expected, ECB’s September TLTRO will not make big headlines. 255 European banks borrowed €82.6bn of liquidity below consensus estimate of €100-150bn. Although the Frankfurt-based institution doesn’t provide a geographical breakdown, banks in Italy and Spain were among the leading borrowers (40% of the total) to trim funding costs. Spanish entities are thought to have asked half of those €30bn at their disposal, although some entities “are not willing to disclose how much they asked for,” an ECB source confirmed to The Corner.