Russia’s economic crisis deepened as the government acknowledged it’s heading for recession and a former central banker spoke of “some panic” in the financial system as oil prices plunged.
It came amid rumors that the People’s Bank of China (PBoC) may unveil another round of stimulus, according to Reuters, citing analysts, which could include a cut in the reserve requirements for banks.
Indian bonds rallied, pushing the 10-year yield to a 16-month low, as the central bank signaled it may ease policy in early 2015 after keeping borrowing costs unchanged at a meeting today.
Kokusai Asset Management Co., which oversees Japan’s second-biggest bond fund, is preparing for central bank buying to drive yields below zero all the way out to five-year notes.
The recent decision by the Bank of Japan to increase the scope of its quantitative easing is a signal that another round of currency wars may be under way. The BOJ’s effort to weaken the yen is a beggar-thy-neighbor approach that is inducing policy reactions throughout Asia and around the world.
Central banks in China, South Korea, Taiwan, Singapore, and Thailand, fearful of losing competitiveness relative to Japan, are easing their own monetary policies – or will soon ease more.
The leader of Greece’s popular left-wing opposition said Tuesday he will demand a reduction in the country’s debt from its bailout, if his party comes to power in a possible snap election early next year.
“Markets no longer believe that central banks will be able to bring inflation back to target any time soon. The longer this lasts, the more self-fulfilling these prophecies become,” Fels said.
“This is why central banks have a strong interest in lifting inflation […] We think they have already started the battle against lowflation, but there is more to come,” he added.
The Prosecutor General’s Office is looking into the Central Bank’s operations after a ruling party lawmaker accused it being an “enemy of the country” by supposedly driving down the ruble and plotting “evil” against Russia.
Deflation can also worsen public debt and that’s not what Europe needs. Though the nominal amount of debt remains the same, it in effect grows because prices are lower.
It is extremely rare for a major country to collapse in this fashion, and the trauma is likely to have political consequences. “This has become disorderly. There are no real buyers of the rouble. We know that voices close to president Vladimir Putin want capital controls, and we cannot rule this out,” said Lars Christensen, at Danske Bank.
Colombian Finance Minister Mauricio Cardenas welcomed the recent selloff that has pushed the peso to the weakest since 2009, describing it as a “breath of fresh air” that will boost exports.
Gold & Silver
Provided daily by the Peak Prosperity Gold & Silver Group
Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."