Europe Needs To Engage

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 ...

(Reuters) - Gold edged up on Thursday on gains in equities and expectations the U.S. Federal Reserve could do more if necessary to lift the economy, recouping earlier losses triggered by a lack of surprises from the central bank's meeting on interest rates. The Fed has already engaged in two rounds of asset purchases totaling $2.3 trillion, known as quantitative easing, to drive down interest rates and stimulate the economy. The latest QE helped push up commodity prices by providing cheap money to investors who placed it in riskier assets. Fed Chairman Ben Bernanke said U.S. monetary policy was "more or less in the right place" even though the central bank would not hesitate to launch another round of bond purchases if the economy were to weaken. Gold added $3.54 an ounce to $1,647.52 ...

Spain's bond auction demand was overly sufficient but yields were mixed Economic Data (RU) Russia Gold & Forex Reserve w/e Apr 13th: $518.8B v $516.7B prior (DK) Denmark Apr Consumer Confidence: +0.6 v +1.5e (HU) Hungary Feb Avg Gross Wages Y/Y: 6.9% v 6.0%e (NL) Netherlands Mar Unemployment Rate: 5.9% v 5.9% prior (PH) Philippines Mar Balance of Payments: -$209.0M v +$588M prior (GR) Greece Feb Current Account: -€1.1B v -€1.5B prior (IT) Italy Feb Industrial Orders M/M: -2.5% v -1.1%e; Y/Y: -13.2% v -6.2%e (IT) Italy Feb Industrial Sales M/M: +2.3% v -4.9% prior; Y/Y: -1.5% v -4.4% prior (PH) Philippines Central Bank left its Overnight Borrowing Rate unchanged at 4.00%; as expected (HK) Hong Kong Mar Unemployment Rate: 3.4% v 3.5%e Fixed Income (ES) Spain Debt Agency (Tesoro) sold ...

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 ...

The Weekly Bottom Line : 28/01/2012 HIGHLIGHTS OF THE WEEK United States The Federal Reserve committed to keep rates on hold through the end of 2014 this week, while today's Q4 GDP released underscored the fragility of the economic recovery. Unfortunately, further monetary easing isn't what is going to provide the jolt the economy needs. What's holding the economy back right now isn't the price of credit; it's the lack of quality borrowers. The pool of potential borrowers willing and able to take advantage of lower interest rates is limited. And as long as aggregate demand remains depressed, businesses will continue to put off investing until the economic outlook improves. What the economy needs right now is more effective fiscal policy solutions. However, fiscal policy so ...

(Reuters) - Brent crude rose above $111 on Thursday on a surprise draw in U.S. oil stocks and hopes of a recovery in demand as the International Monetary Fund (IMF) sought to boost its resources to help countries grapple with the euro zone crisis. Asian shares rose to a two-month high and copper to a four-month top as the proposal assured markets policymakers will tackle Europe's debt crisis, adding to hopes from a slew of recent indicators that the zone's problems have not seriously derailed global economic activity. For oil, that means steady demand growth amid supply concerns as tensions with Iran rise. Front-month Brent crude rose 74 cents to $111.39 by 0550 GMT, reversing two days of losses. U.S. oil rose 72 cents to $101.31, after rising as high as $101.62. "For oil, the demand ...

Time and time again, Europe solves its debt problems… and every time they don’t get solved at all. Italian bond yields are edging back up. And Greece is negotiating a default. They want to avoid a naked, noisy default…so they are dressing it up as “voluntary” or ‘soft.’ But they can’t disguise the fact that Greece has bills it can’t pay. On the 20th of March it needs to come up with 14.4 billion euros, followed by billions more in the months following. That is more than 6% of national GDP. It would be as though the US had to pay a trillion dollars. Where’s the money to come from? The European Central Bank? The IMF? The Germans? Maybe. But little by little, even the fixers are beginning to realize that this is a problem than can’t be fixed with Band-Aids and bailouts. Greece has too much ...

(Reuters) - The euro and global stocks fell on Wednesday after ratings agency Fitch called on the European Central Bank to do more to solve the currency bloc's debt crisis, unnerving investors ahead of auctions for Spanish and Italian bonds later in the week. U.S. stock index futures also turned lower, pointing to a weaker start on Wall Street, hurt by computer giant Microsoft's (MSFT.O) warning that sales of personal computers will probably be lower than analysts expect in the fourth quarter. The euro hit session lows of $1.2695 after Fitch said the ECB needed to ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro. "Can the euro be saved without more active engagement from the ECB? Quite frankly we think no," David Riley, the ...

Huge oil and gas investments, big efficiency gains and practical use of renewables are all needed to meet rapidly rising energy demand over the next few decades, the heads of the world's largest oil companies said on Tuesday. Despite concerns over energy demand because of the euro zone debt crisis, the chief executives of the biggest oil and gas companies told the World Petroleum Congress they must continue investing trillions of dollars to deliver energy in the longer term and called on governments to help. "In the current economic climate the need to make the right policy choices is critical," said Rex Tillerson, chief executive of ExxonMobil (XOM.N), the world's biggest publically traded energy company. "We must engage in long-term planning, undeterred by the episodic ups and downs ...