Institutional Investor (May 6)
Unconventional monetary policy, demographic change, economic challenge and technological disruption are impacting debt markets. “Remarkably, the pool of positively yielding debt in the global fixed-income universe has shrunk by more than $5 trillion in less than two years, which clearly presents a tremendous challenge for investors seeking income and attempting to match assets to liabilities.”
Tags: ALM, Challenge, Debt markets, Demographic change, Economic challenge, Fixed income, Monetary policy, Technological disruption, Unconventional, Yields
Institutional Investor (March 10)
“As had been widely anticipated, the European Central Bank today announced a cut for all three key benchmark rates and an expansion of the quantitative-easing program.” What remains to be seen is “what further monetary policy course the bank may take if negative rates fail to jump start spending and growth within the common currency zone.”
Tags: Anticipated, Benchmark rates, ECB, Growth, Monetary policy, Negative rates, Quantitative easing
Financial Times (October 5)
Amidst continuing outflows, emerging markets are much better placed than before the 1997 Asian currency crisis. “Record levels of reserves” should give “troubled countries a window for reform.” Reserves stand roughly 10 times higher than the past crisis. “While no amount of reserves can withstand the loss of market trust, money does buy time. Using reserves to offset capital flight allows central banks temporarily to avoid the classic EM crisis response of tighter monetary policy amid a recession to protect their currency and avoid imported inflation.”
Tags: Asia, Banks, Capital, Crisis, Emerging markets, Market, Monetary policy, Outflows, Recession Inflation, Reform, Reserves
Wall Street Journal (September 5)
“You can’t say Mario Draghi isn’t doing his part.” Trying to deliver another economic “miracle,” the European Central Bank (ECB) President lowered interest rates and increased the negative rate institutions pay on funds deposited with the ECB. “Too bad the politicians keep using Mr. Draghi as an excuse to dodge their responsibility to pass pro-growth reforms…. Europe’s main economic problem is a political class that doesn’t want to address the structural impediments to growth that have nothing to do with monetary policy.”
Tags: ECB, Europe, Excuse, Growth reforms, Interest rates, Mario Draghi, Monetary policy, Politicians, Responsibility, Structural impediments
Forbes (August 22)
Steve Forbes urges India’s new Prime Minister Narendra Modi to first create a “sound and stable currency” through disciplined monetary policy that initially includes a dollar or euro peg. Among his other tips: “Simplify the tax code with a low-rate flat tax” and “Be extremely cautious in attacking subsidies, especially those that benefit the poor, until the economy is in a true boom.”
Tags: Currency, Dollar, Economy, euro, Flat tax, India, Monetary policy, Narendra Modi, Peg, Poor, Steve Forbes, Subsidies, Tax code
Institutional Investor (January 6, 2014)
Monetary expansion continues to be the central-bank fashion in much of the developed world. In contrast, the Central Bank of Russia (CBR), “has surprised the market with a hard-line monetary stance.” Instead of stoking short-term economic growth, CBR Governor Elvira Nabiullna is firmly committed to moderating inflation, and “most analysts credit her tight-money policy as the best option under the circumstances.”Monetary expansion continues to be the central-bank fashion in much of the developed world. In contrast, the Central Bank of Russia (CBR), “has surprised the market with a hard-line monetary stance.” Instead of stoking short-term economic growth, CBR Governor Elvira Nabiullna is firmly committed to moderating inflation, and “most analysts credit her tight-money policy as the best option under the circumstances.”
Tags: Analysts, Central Bank of Russia, Economic growth, Elvira Nabiullna, Inflation, Monetary expansion, Monetary policy, Russia, Tight-money policy
Financial Times (December 10, 2013)
“South Korea was one of the only winners in the summer’s emerging market sell-off, sparked by fears about the outlook for US monetary policy.” In search of a safe haven, foreign buyers poured into South Korea, but now they are pouring out in favor of more promising markets. “Caught between Japan’s fresh Abenomics-fuelled rally and reform-gripped China, South Korea looks in need of a new narrative.”South Korea, Emerging markets, Sell-off, Outlook, U.S., Monetary policy, Safe haven, Foreign buyers, Abenomics, Rally, Reform, China, South Korea
Tags: Abenomics, China, Emerging markets, Foreign buyers, Monetary policy, Outlook, Rally, Reform, Safe haven, Sell-off, South Korea, U.S.
Euromoney (October Issue)
“As investors lament the unsustainable credit boom and reform inertia that has blighted China, India and Indonesia, in particular, in recent years—raising the spectre this summer of a repeat of the 1997 Asia crisis—Singapore has consolidated its status as the region’s competitive dynamo, thanks to a flurry of supply-side reforms, backed by judicious fiscal and monetary policies.” Singapore’s economy is now “the most competitive in the world, according to the World Bank, with the highest income per capita in southeast Asia, outpacing the US in recent years.”“As investors lament the unsustainable credit boom and reform inertia that has blighted China, India and Indonesia, in particular, in recent years—raising the spectre this summer of a repeat of the 1997 Asia crisis—Singapore has consolidated its status as the region’s competitive dynamo, thanks to a flurry of supply-side reforms, backed by judicious fiscal and monetary policies.” Singapore’s economy is now “the most competitive in the world, according to the World Bank, with the highest income per capita in southeast Asia, outpacing the US in recent years.”
Tags: Asia crisis, China, Credit boom, Fiscal policy, India, Indonesia, Investors, Monetary policy, Reform, Singapore, Supply-side reforms
Wall Street Journal (July 21)
“Since taking office in December, Mr. Abe has shown a nearly unprecedented level of resolve on all three fronts [fiscal, monetary, regulatory] compared to recent prime ministers.” In his quest to reignite Japan’s economy, “Mr. Abe still faces a long and difficult road to get from where Japan is now to where he wants it to be. He may yet fail, or only partially succeed, in some of his priorities. But outside observers should not discount the extent to which Mr. Abe is giving voters something tangible to support. Voters certainly didn’t discount that on Sunday when they gave their support to Mr. Abe’s party.”
Tags: Fiscal policy, Japan’s economy, Monetary policy, Prime minister, Regulatory policy, Resolve, Shinzo Abe, Support, Voters
Wall Street Journal (June 11)
Unemployment has been slowly trending down in the U.S. but still remains too high. The Federal Reserve has been doing everything it can to improve the situation, but there are limits to monetary policy. In contrast, “the fiscal cupboard is not bare. There are things we could be doing to boost employment right now. That we are not doing anything constitutes malign neglect of the nation’s worst economic problem.” Instead of complacency, “policy makers should be running around like their hair is on fire…. Congress could make a good start on faster job creation simply by ending what it’s doing—destroying government jobs.”
