GLOBAL NEWS-
The Federal Reserve’s next rate move is going to be a cut in the second half of the year, according to Brandywine Global Investment Management.Francis Scotland, director of global macro research at Legg Mason Inc (NYSE:). unit Brandywine, sees the Fed likely cutting rates in the second half of the year. He doesn’t think policy makers will move before June because they don’t want to be seen as making mistakes -- and they’ve already become more dovish as markets tanked in December and the U.S. economy showed signs of slowing.“The yellow flags are up. There’s no question about that, and that’s why the onus is on the Federal Reserve to begin to react to this,” Scotland said in a press briefing in Hong Kong Tuesday. However, he expects both the global and U.S. economies to avoid recession and find a soft landing.
In its meeting last week, the Fed changed projections to no rate hike in 2019, and decided to slow the drawdown of the U.S. central bank’s bond holdings starting in May, then end them in September. The moves capped a pivot away from policy tightening and toward a much more dovish stance that showed policy makers are closely watching risks to their outlook. Investors have increased bets in recent weeks on the next move being a cut, according to pricing in interest rate futures contracts.
The basket of goods and services that make up the Bank of Japan’s core inflation gauge is chock-full of items that it has little chance of influencing, undermining the effectiveness of monetary policy as debate rages over the BOJ’s 2 percent price target.Japan relies heavily on imports for its energy requirements, leaving it highly exposed to swings in oil prices, which are a key driver of its core consumer price index.
Another large chunk is comprised of prices for things that typically require a nod from the government before they can rise, like hospital charges, public housing and train fares. Needless to say, politicians are loathe to back higher prices in these areas given years of wage stagnation in Japan.As a typical example, this has resulted in a subway journey from Tokyo station to the bustling shopping district of Shibuya costing just 200 yen ($1.80) -- the same amount it did five years ago. A comparable trip in London from Canary Wharf to Piccadilly Circus on the Tube costs the equivalent of about 710 yen in cash and has risen almost 4.3 percent over the same period.
U.K. Prime Minister Theresa May saw signs that her beleaguered Brexit deal might be winning support -- as it became clear that the price might be her job.With Parliament preparing to vote on rival plans that could soften Britain’s departure from the European Union -- or cancel it altogether -- Brexit-backers in May’s Conservative Party began to signal that they could shift and back her deal in preference to risking their prize. But several said the prime minister would have to go.
Former Foreign Secretary Boris Johnson, who would be likely to run to succeed May, gave ITV (LON:) News his price for backing the deal. “What I want to hear is, if this Withdrawal Agreement is to make any sense at all, then there’s got to be a massive change in the U.K.’s negotiating approach,” he said. That sounded like a call for a new leader. Meanwhile Jacob Rees-Mogg, another leading Brexit-backer, said he was ready to support the deal.
The Federal Reserve has handed Egypt another reason to proceed with what could be the world’s deepest series of interest-rate cuts. The U.S. central bank’s surprise forecast for no rate increases in 2019, combined with a rally in Egypt’s currency, means policy makers may deliver a reduction in borrowing costs for the second straight month on Thursday. Renaissance Capital’s global chief economist Charles Robertson expects another cut of 100 basis points “due to a dovish Fed and to counter rapid pound appreciation.”Egypt Is Jewel in the Crown for Emerging-Market Bond Buyers“Domestic demand is fragile, non-food inflation is low and globally central banks are shifting to an easing bias,” he said.Most economists surveyed by Bloomberg predict the central bank will cut by a percentage point. Five analysts see the benchmark staying at 15.75 percent.
Egypt’s central bank is still a long way from unwinding rate increases that it deployed to steady the pound and battle inflation after floating the currency in November 2016. While price growth has since stabilized, it accelerated for a second month to an annual 14.4 percent in February on the back of rising food costs.
New Zealand’s central bank unexpectedly said its next move in interest rates was more likely to be a cut, abandoning its neutral stance at a policy review on Wednesday and knocking the currency down sharply to two-week lows.The Reserve Bank of New Zealand (RBNZ) held the benchmark rate at a record low 1.75 percent, as expected, though the shift to explicitly favour a cut stunned investors as its projections last month showed the cash rate increasing in early 2021.“We now expect a 25 basis point rate cut in May, followed by another cut in August - largely depending on the performance of the currency,” said Kiwibank senior economist Jeremy Couchman, who had previously expected steady rates well into 2021.The New Zealand dollar tumbled from above $0.69 before the policy decision to two-week lows just under $0.68, a move the central bank would welcome as it pointed to currency strength as a factor in its shift in bias.
Gold inched up on Wednesday, after declining the most in nearly two weeks in the previous session, as U.S. recession fears triggered by a sharp decline in U.S. Treasury yields and weak data weighed on the share markets.pot gold was up 0.1 percent at $1,316.09 per ounce as of 0419 GMT. U.S. gold futures were also up about 0.1 percent at $1,315.70 an ounce.
Oil prices crept up on Wednesday, extending the previous session’s rise, but gains were kept in check amid growing fears over the impact of a global economic slowdown on demand.Brent was up by 17 cents, or 0.3 percent, at $68.14 by 0311 GMT, reversing earlier losses of a similar magnitude. On Tuesday, the global benchmark rose 76 cents to $67.97 a barrel, not far below its year-to-date high of $68.69, reached on March 21.U.S. crude futures added 9 cents, or 0.2 percent, to $60.03, also reversing losses in earlier trade. The U.S. benchmark rose $1.12, or 1.9 percent, to $59.94 a barrel in the previous session.