Converge When Markets

The Week Ahead ■The Bank of England's next move ■Is this the beginning of the end for the Eurozone? ■Fed officials reluctant to signal more easing ■Broader risk environment outweighs Japanese rhetoric The Bank of England's next move The BOE kept rates on hold when it concluded its May meeting last week; it also allowed the asset purchase program to come to an end. Since the UK slipped back into recession in Q1 2012 and the growth figures at the start of the second quarter have continued to look weak, the decision to hold interest rates was mostly down to the sticky outlook for inflation. The attention now turns to Wednesday's Inflation Report. The focus will be on the Bank's growth and inflation forecasts. The growth forecasts are likely to be revised lower. Even ...

The Week Ahead Highlights FOMC minutes and US labour market in focus More QE for the UK Spain and other sovereign concerns RBA to hold for now Market Moves FOMC minutes and US labour market in focus The past week has seen a multitude of Fed speakers express their views on the economic outlook and monetary policy. Voting members Bernanke, Lacker, Lockhart, Duke, and Dudley all delivered speeches as well as non-voters Plosser, Fisher, and Rosengren. The main focus was on Chairman Bernanke who reiterated his concern that the economic recovery is "slower than we would have hoped" and that "the job market remains far from normal". The Fed Chairman noted the benefits of continued accommodation and kept open the option for further easing. Markets will look to the release ...

The Week Ahead Highlights Searching for the next crisis? What's driving the dollar? Europe: what happened to the LTRO? Searching for the next crisis A couple of weeks ago the market was able to shrug off the prospect of a Greek default and a sharply rising oil price. Even weak Chinese economic data didn't de-rail risky assets. However, that optimism didn't last long and last week investors removed the rose-tinted spectacles and started to worry once more about the outlook for the global economy. Last month China's growth rate was downgraded to 7.5% per year from 8%. Since China has a history of out-performing expectations this downgrade had little market impact. However, a fifth straight decline for the HSBC/ Markit manufacturing PMI survey reading and the markets are ...

Investors known for snapping up distressed debt on the cheap have identified Portugal as their next target but some of these so-called "vultures" say they will wait until a Greek bond swap deal is completed before striking. Many traditional bond investors, such as funds that follow ratings benchmarks, were forced to sell Portuguese debt after it was downgraded to "junk" by Standard & Poor's last month. Others, including some banks, simply fled the volatile market fearing a debt restructuring or under pressure from their shareholders to cut losses on their Portuguese debt holdings, sending the country's bond yields to euro-era highs. That left the door open to a specialized type of investors, often called "vultures" or "vampires," who look to buy bonds when prices hit bottom, hoping to ...

(Reuters) - Italian and Spanish government debt yields fell on Friday, as the European Central Bank bought bonds in the secondary market, but held close to unsustainable levels as contagion fears and money market stress raised the pressure for policymaker action. Italy's new technocrat prime minister, Mario Monti, faces a lower house confidence vote after unveiling sweeping anti-crisis measures on Thursday and Greece's national unity government was due to submit a 2012 austerity budget to parliament. But many in markets say austerity measures will be unable to contain the debt crisis, putting pressure on the European Central Bank to tide the region over with bond purchases until policymakers can agree on more effective action. "They can say whatever they want, whether they can put it in ...

The Week Ahead Highlights Never-ending Greek drama What the central banks didn't do Charts suggesting risk assets may take a dive soon Never-ending Greek drama The week draws to a close with a vote of confidence pending in the Greek parliament around 6 pm EDT/midnight Athens time. In the worst case scenario, if the vote fails, the ruling PASOK party would be forced to engage the opposition New Democrat Party in negotiations to form a coalition government. If the parties are unable to reach agreement, which is not at all certain, snap elections would ensue in three weeks' time under Greek law, leaving the country without a government to formally accept the terms of the EU/IMF bailout package agreed to on Oct. 26. (Possibly a caretaker/national unity government could be ...

NEW YORK (Reuters)- For the small club of companies who trade the food, fuels and metals that keep the world running, the last decade has been sensational. Driven by the rise of Brazil, China, India and other fast-growing economies, the global commodities boom has turbocharged profits at the world's biggest trading houses. They form an exclusive group, whose loosely regulated members are often based in such tax havens as Switzerland. Together, they are worth over a trillion dollars in annual revenue and control more than half the world's freely traded commodities. The top five piled up $629 billion in revenues last year, just below the global top five financial companies and more than the combined sales of leading players in tech or telecoms. Many amass speculative positions worth ...

(Reuters) - The United States is not trying hard enough as a nation to win business overseas, and that is contributing to its economic slump, said General Electric Co Chief Executive Jeff Immelt. That is a big concern since boosting exports is one of the best ways the nation can tackle the stubbornly high unemployment that is leading a growing number of Americans to question how well the economic system is working. "We're not trying that hard," Immelt told a Thomson Reuters Newsmaker event in New York on Monday. "We haven't really tried as hard as we can to compete, educate and sell our products around the world, and I think we can do better." Still, the head of the largest U.S. conglomerate and a top adviser to the Obama administration on jobs and the economy believes the United States ...

The Week Ahead Highlights Will the Fed Twist? BoE's MPC Minutes to provide insight on the QE debate Greek debt crisis remains in focus Will the Fed Twist? The past week's data releases continued to paint a bleak picture of the U.S. economic recovery. Retail sales in August stagnated (0.0% vs. prior 0.2%), regional Fed reports pointed to contraction in the manufacturing sector with September Empire manufacturing at -8.82 and the Philadelphia Fed index at -17.5 and weekly jobless claims climbed stubbornly higher to 428K from the prior 417K. The Fed has extended next week's FOMC meeting to 2 days in order to have adequate time to discuss monetary policy as several options are available to the committee. There should be no surprise in the target rate as the FOMC pledged to keep ...