Archive for August, 2008
FOMC Minutes of August 5th
* Base scenario includes a slowdown throughout 2008 and relatively high (although temporary) inflation rates * Members gave equal weight to growing growth and inflation risks * The minutes explicitly mentioned that the Board expects the next interest rate move to be a rate hike. But did not commit to such move anytime soon The minutes for August’ FOMC meeting reinforced the views we expressed in our last Fed Watch. The Fed has purposely stirred from its July’s message, time when it expressed
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FOMC: Continued wide disagreement
Overview : The minutes from the August 5 monetary policy meeting were released last night at 20:00 CET. Compared to the meeting statement and the recent Fed communication the minutes did not reveal much new information. However, the disagreement within the committee remains wide; the general impression from the minutes is that the monetary policy will remain on a firm hold for now. Given this 'well-anticipated' message the market reaction was generally muted, with the Treasury curve moving
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Hungary: Unchanged rates for the second successive month
In line with our and consensus expectations the Hungarian central bank (MNB) today left its key policy rate unchanged at 8.5%. This is the second successive month at which rates were kept unchanged following 100 basis points worth of hikes since March 2008. MNB opted for unchanged rates as inflation ticked down in June. Headline inflation thus fell from 6.9% y/y in May to 6.7% y/y in June - core inflation ticked down too. Wages data also surprised positively in May. Wages were thus up 9.6% y/y
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FOMC: Hawks and doves in bird-fight
Overview : The minutes of the June 24-25 monetary policy meeting were released yesterday evening (July 16) at 20:00 CET. Following Bernanke's testimony to Congress on July 15-16, much of the information con-tained in the minutes was redundant. Most committee members probably felt more comfortable about the growth outlook back in June than they do now, as also indicated by Bernanke's testimony. The most interesting information suggested by the minutes, was increasing evidence of disagreement
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Japan: BoJ leaves rates unchanged, but sees increasing downside risk to economy
The Bank of Japan (BoJ), as widely expected, left its leading O/N target interest rate unchanged at 0.5% in a unanimous decision at today's monetary policy meeting. More interestingly, the BoJ revised down its forecast for GDP growth, and is currently working on the assumption that GDP growth will be substantially below potential for the rest of the year. The BoJ's inflation forecast, in contrast, was revised substantially up, and the underlying assumption now seems to be that inflation will
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Use Circumstances to Build Discipline
One of the greatest stumbling blocks to achieving success in the important aspects of life is circumstances. We seem to use them to get us off track or keep us from continuing to the end. On the other hand, successful people use circumstances to drive them towards their goals. As a trader, we all need to understand that there will be times when things arise that could easily cause us to make huge errors, become lazy in our decisions or even quit. Instead, let's use the bumps in the road to
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Be An Achiever
Every day we trade we experience challenges that can disrupt our session. These include the market movement, the economic outlook, our emotions, our attitude and so much more. These items can cause us to do many things. including quitting. However, the achiever recognizes all challenges when they arise and then adjusts so as to continue to move forward. For all of us as traders, we need to never allow challenges to keep us from growing and becoming better at what we do. We need to use
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ECB and the Euro
The currency debate between the euro and the US dollar has shifted topic. It is no longer about the rate policy of the ECB and the Federal Reserve, both banks are on long term hiatus. It is not primarily about the US economy which though weak has not collapsed and has been a story for many months. The debate is now about the economic health of the Eurozone and it is brought to the market courtesy of Jean Claude Trichet the President of the European Central Bank. It is a debate the Eurozone and
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Czech Republic: CNB reacts to (too?) strong CZK
The Czech central bank (CNB) today cut its key policy rate by 25bp to 3.50% - this was in line with our expectation, but contrary to consensus forecasts. Although the consensus was looking for unchanged rates, a large minority (including us) had anticipated a cut - so it was not a totally unexpected move today.
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FedWatch: FOMC Meeting August 5th
FOMC Meeting August 5th The Fed maintained its target rate at 2%. It also reiterated its concerns regarding both growth and inflation risks. The FOMC backtracked from its previous assessment on growth. It
recognized that GDP has been better than expected, but it now
underlined continuing risks to growth. As expected, the balance of risks was rendered as balanced, with no suggestion of any rate change for the near future
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