November 6th – Top Stories
- Two Fed Economists Have Given Us A Big Hint About The Fed’s Next Easing Move - Business Insider – By Joe Weisenthal
Goldman’s top economist Jan Hatzius is out with a new call: It is now the baseline expectation at the bank that at the March 2014 Fed meeting, the FOMC will lower the level at which it would start considering rate hikes.
Currently the Fed is operating under something called Evan’s Rule, which says that that the Fed will not think about rate hikes until either unemployment falls to 6.5% or inflation rises to 2.5%.
Hatzius believes that the Fed will lower the unemployment threshold from 6.5% to 6.0%. This constitutes easing in that it implies low rates for a longer time.
- China Money Rate Drops for Fifth Day as PBOC Boosts Cash Supply - Bloomberg – By Bloomberg News
China’s benchmark money-market rate fell for a fifth day, poised for the longest run of declines since July, as the central bank boosted cash supply.
The People’s Bank of China added 8 billion yuan ($1.3 billion) yesterday by selling seven-day reverse-repurchase contracts at 4.1 percent. The monetary authority today asked lenders to submit orders for 91-day bills, 28-day repurchase contracts and 14-day reverse repos, according to a trader at a primary dealer required to bid at the auctions.
The seven-day repo rate declined 42 basis points, or 0.42 percentage point, to 3.82 percent as of 10:49 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The falling streak is the longest since the 14 days through July 10.
3/ Eurozone & UK
- ECB’s Draghi says euro zone gradually recovering - Reuters – Reporting by Sakari Suoninen ; Editing by Paul Carrel
European Central Bank President Mario Draghi said on Tuesday the euro zone economy is recovering gradually, but that the interest rates households and firms have to pay across the 17-country bloc continue to vary greatly.