China is worried about deflation and ready to cut rates and loosen lending restrictions, according to sourcescited by Reuters.
The story is a very good reason to buy the Australian dollar or other commodity currencies to start the week.
“Top leaders have changed their views,” said a senior economist at a government think-tank involved in internal policy discussions.
The economist, who declined to be named, said the People’s Bank of China had shifted its focus toward broad-based stimulus and were open to more rate cuts as well as a cut to the banking industry’s reserve requirement ratio (RRR), which effectively restricts the amount of capital available to fund loans.
China cut the RRR for some banks this year but has not announced a banking-wide reduction in the ratio since May 2012.
“Further interest rate cuts should be in the pipeline as we have entered into a rate-cut cycle and RRR cuts are also likely,” the think-tank’s economist said.
The also highlight that local governments are struggling to manage high debt burdens, which is the principle worry of most China bears.
On Friday, I warned that almost everyone was missing the point on the Chinese rate cut and what mattered not was the actual action but whether or not it was the beginning of an easing cycle. The signals are still mixed but this is a big vote in favor of more easing.
The days when OPEC members could almost guarantee consensus when deciding production levels for oil are long gone, according to a veteran of almost two decades of the group’s meetings.
The global glut of crude, which has contributed to a 30 percent decline in prices since June 19, has left the organization dependent on non-members to shore up the market, said former Qatari Oil Minister Abdullah Bin Hamad Al Attiyah. The 12-member Organization of Petroleum Exporting Countries is scheduled to meet in Vienna on Nov. 27.
“OPEC can’t balance the market alone,” Al Attiyah, who participated in the group’s policy meetings from 1992 to 2011, said in a Nov. 19 phone interview. “This time, Russia, Norwayand Mexico must all come to the table. OPEC can make a cut, but what will happen is that non-OPEC supply will continue to grow. Then what will the market do?”
Global demand will increase this year by the least in five years, to 92.4 million barrels a day, before picking up in 2015 as economic recovery gathers pace, the International Energy Agency said on Nov. 14. Further complicating OPEC’s task is the boom in U.S. shale production, which has put the world’s biggest economy on course toward energy self-reliance. U.S. output is expected to grow 12 percent next year to the highest since 1970, according to the U.S. Energy Information Administration.>> Read More
New European Commission chief Jean Claude Juncker has made a 300-billion-euro investment plan a centrepiece of his five-year agenda, but days before a highly awaited unveiling doubts are rife that it can deliver.
Two years after the eurozone debt crisis, the economy is flat-lining and unemployment is high, while the lack of response by European Union leaders has again become a concern for the world.
The stakes are huge for the EU, the world’s largest economy, its 500 million citizens, and global markets.
The heart of the problem in the 28-nation EU is a drastic lack of investment, which remains way off pre-crisis levels, in stark contrast to the US and emerging economies.
“The EU is crying out for new investment,” said Jan Randolph, an analyst at IHS Global Insight in London.>> Read More
Moscow will not seek to rebuild it and others will not be able to
Russia is not isolated over the crisis in Ukraine
Following on from foreign minister Lavrov’s accusation yesterday of the West seeking regime change in Moscow the president is also out on the front foot today in comments reported by Tass
We understand the fatality of an “Iron Curtain” for us
We will not go down this path in any case and no one will build a wall around us. That is impossible
It’s far from certain that sanctions, sharp falls in the oil price and the depreciation of the national currency will cause negative effects or catastrophic consequences only for us. No such thing will happen
President Vladimir Putin considers U.S. President Barack Obama to be an intelligent person, according to an interview TASS news agency published Sunday.
Asked about his recent placement at the top of Forbes’ list of the world’s most powerful people for the second year running, Putin said: “I don’t know how Forbes made these assessments; it is their business. Perhaps, they do this on purpose to exacerbate my relations with Barack Obama, placing him second.”
The Russian president went on to note, however, that Obama is a smart man, even if the two aren’t particularly close. “The President of the United States and I know each other. I can’t say that we have quite close relationships but he is a clever person and can evaluate all this. This could be a method of internal political struggle in the United States, especially on the eve of the elections to the Senate. Let them sort out these things themselves,” Putin said, according to TASS.
The Russian president refrained during the interview from making any assessment of Obama’s foreign policies: “I don’t want now to give an assessment of the US President’s steps on the international scene, and we have a lot of contradictions and our views frequently diverge and, all the more so, I don’t want to assess his internal political initiatives as this is a separate theme but I know that Obama realistically assesses what is going on in his country.”>> Read More
With Russia’s economy battered by economic sanctions and plunging oil prices, President Vladimir Putin has allowed the central bank to administer strong medicine, sharply raising interest rates even as it freed the rouble to float.
Such tough measures may well help push the country deeper into recession next year, but have so far staved off financial panic, runaway inflation or a currency meltdown like the one that helped catapult Putin into power in the 1990s.
Those who follow the central bank say the hawkish moves are a result of Putin, known for closely managing Russia’s machineryof power, giving the bank’s technocrats free rein.
“There is ongoing criticism of the central bank and of the whole government being Putin’s lap dog,” said a high-ranked government source. “But all things considered, the central bank is now much more autonomous than it is broadly perceived.”
The high interest rates will hurt. The European Bank for Reconstruction and Development says recession is certain, predicting 0.2 percent contraction for the full year of 2015.
Politicians have grumbled. Economy Minister Alexei Ulyukayev sent a letter to the Kremlin in the summer urging greater “cooperation” between the bank and the government, viewed as a plea for looser policy.>> Read More
1. Position adjustments were minor in the Commitment of Traders reporting week ending November 18. There were only two gross positions adjusted by more than 5k contracts.The gross short yen position grew 9.2k contracts to 139.1k. The gross short sterling position rose 12.1k contracts to 65.7k.
2. The net short position in the US 10-year Treasury futures rose to 127k contracts from 112k. This was the result of a small add by the longs (8.3k contracts to 398.9k) and a larger sale by the shorts (+23.2k contracts to 526.2k).
3. Given how closely the capital markets are watching oil, we note that the speculative long position in the futures market eased 21.5k contract to stands to 255.3k. The gross longs were culled by nearly 38.5k contracts to 403.7k. Almost 17k gross short contracts were covered to leave 148.4k.
Two days before the scheduled deadline in the negotiations between the six world powers and Iran over a “framework agreement” for the Islamic republic’s nuclear program, the talks seemed deadlocked, with the two sides unable to bridge their differences.
Western diplomats said Saturday that, in light of the gaps, they will begin discussing on Sunday an extension to the negotiations by a few more months.
One Western diplomat participating in the talks sounded very pessimistic during a press briefing Saturday. Reaching a permanent agreement by Monday is no longer possible, he said. The talks resumed in Vienna’s Palais Coburg on Saturday morning, in a last-ditch attempt to reach an agreement.
U.S. Secretary of State John Kerry, Iranian Foreign Minister Mohammad Javad Zarif and EU representative Catherine Ashton met in a trilateral meeting last night. The three met a number of times during the day.>> Read More