The gathering of central bankers came amid continuing uncertainty for the global economy as growth slows and market sentiment remains fragile.
Venezuela, which has the largest crude reserves on the planet, has defied predictions of default since the oil collapse started in 2014 and analysts are split as to how long the nation of 30 million can hold out. With that in mind, Bloomberg is taking a close look each month at some of the key components that may determine its fate.
The cost of Oregon’s public pension system will increase about $885 million during the next two years, a higher increase than previously was expected. The new costs are 10 percent higher than previously forecast and 44 percent above the $2 billion per biennium that public employers are paying, The Oregonian/OregonLive reported.
“As we seek to close what’s a $100-plus million deficit this year, everything’s on the table. Seventy five percent of our costs are wages and benefits so that’s a core area of focus for us,” MBTA Chief Administrator Brian Shortsleeve told reporters on Monday.
A 2014 analysis of higher education funding by the Illinois Department of Insurance revealed that all of the money public universities get from the state essentially goes toward funding university retiree pensions. The report said $6.9 billion in tax-based funding has subsidized university pensions over the past decade, with $1.51 billion spent in 2014 alone.
Twice in recent decades CalPERS fell below 100 percent of the funding needed for promised pensions, and twice CalPERS climbed back. But since a $100 billion investment loss in 2008, the CalPERS funding level has not recovered.
The junk-rated metropolis will pay at least $902 million in 2017 to its four retirement funds that are only 23 percent funded, meaning the pensions have 23 cents for every dollar owed, according to an annual financial analysis released Friday. That's down from 35 percent last year. The shortfall across the four funds ballooned to $33.8 billion from $20 billion a year earlier, mostly due to new accounting rules.
Chief Financial Officer Carole Brown acknowledged that the city needs “in the ballpark” of $250 million to $300 million in new annual revenue to shore up a Municipal Employees Pension fund with 71,000 members and $18.6 billion in unfunded liabilities.
Investors hold about 465 billion euros of corporate investment grade bonds at negative yields, which is 11 times as much as they owned in such securities at the start of the year, BofAML estimated last month.
The U.S. Treasury Department said on Monday it expects to borrow $201 billion in net marketable debt in the July-September quarter, about $47 billion higher than its estimate in May, due to lower anticipated receipts and an increased cash balance on Sept. 30.
Saudi Arabia is taking unprecedented steps to shore up its finances as the collapse in crude prices hobbles domestic banks, which hold 2.26 trillion riyals in assets, in a country that gets more than 70 percent of its revenue from oil. SAMA is seeking to stimulate borrowing and boost the financial industry. Liquidity has tightened since the government withdrew some of its deposits and sold local-currency debt to banks to fund the budget deficit.
The Fund's annual report on Japan's economy came as the country's government announced a new fiscal stimulus package of $13.5 trillion yen (about $132 billion) and the central bank announced a comprehensive review of monetary policy, keeping alive expectations for "helicopter money" – printing money for government debt.
Many investors thought that, Brexit or not, you can’t fight the European Central Bank, which is buying more and more corporate and sovereign bonds and driving yields lower. Taking more risk may be the only way to earn higher returns.
“Even if they had not fully made up their minds at [the previous meeting], the weakness of the flash [purchasing managers indexes] since that meeting—as well as other evidence from business and consumer confidence surveys—is likely to have sealed the deal. We expect a 25 basis points cut to the bank rate to 0.25%, and measures to support credit to the real economy,” analysts at HSBC said in a note.
Australia's central bank has reduced interest rates to a record low, cutting its cash rate from 1.75% to 1.5%. The decision by the Reserve Bank of Australia was widely expected after a recent run of weak inflation numbers.
The latest government stimulus comes just days after the Bank of Japan eased monetary policy slightly and announced a plan to review its monetary stimulus programme in September. That raised expectations for so-called "helicopter money", printing money to pay for government debt.
Cash could be transferred to people in the form of a government tax break, or even as crudely as simply sending everyone a cheque. The Bank's current £375bn quantitative easing programme has bought government debt from financial institutions, which are then encouraged to use this cash to lend for mortgages and business expansion. The problem is, it is very hard to measure what effect, if any, this move has had.
Around the world, governments are planning fresh spending to boost growth and support wages, heeding the advice of the Harvard University economist and others who have argued that economies need the jolt as society ages and productivity sags. That’s signaling the ascendancy of energizers like Japanese Prime Minister Shinzo Abe, and the firing of austerity advocates such as former U.K. Chancellor George Osborne.
As elections loom next year in France, Germany and the Netherlands, the prospects for political progress to shore up confidence in the single currency’s durability are diminishing, even with the added urgency of the U.K.’s divorce from the European Union. The 19-nation euro area still displays a fundamental split over the direction of its incomplete banking union and, beyond, how to create a common budget to complement monetary policy.
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