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    Daily Digest 9/30 – Household Debt Rises, Fed Ready With More Stimulus

    by saxplayer00o1

    Wednesday, September 30, 2015, 2:08 PM

Economy

Fed ready with more stimulus if economy slumps -Evans

Responding to audience questions at Marquette University, Evans said additional bond purchases, known as quantitative easing, are an option if more monetary stimulus is needed. “We need to consider those Plan Bs,” he said, noting the global environment continues to be challenging.

Abe adviser calls for extra stimulus in Japan

Japan needs more economic stimulus to stave off a serious shock from China, according to one of Prime Minister Shinzo Abe’s closest advisers.

Global trade to grow at slowest pace since financial crisis: BOK (Korea)

Global trade in 2015 and 2016 is expected to grow at the slowest pace since the financial crisis, which could pose serious challenges for an export-oriented economy like South Korea, the central bank said Tuesday.

IMF downgrades 2015 economic forecast on Russia to minus 3.8% of GDP

The International Monetary Fund (IMF) downgraded its economic forecast for Russia as it projects recession of 3.8% in GDP for 2015 and of 0.6% for 2016 in its new analytical research prepared to annual meeting, TASS correspondent reports with reference to informed sources.

Credit Suisse warns of oil losses pummeling banks in Norway

The fallout of lower oil prices already has had a huge impact on Norway’s economy. Its central bank unexpectedly cut interest rates last week to a record low and signaled it may ease further as a 50 percent drop in Brent crude over the past year kills jobs in western Europe’s biggest oil producer.

Central Bank in Denmark Loses Tool After Debt Funding Need Jumps

Well after markets had closed on Monday night, AAA-rated Denmark’s government revealed it will need to borrow 153 billion in kroner ($23.5 billion) next year, 6.3 percent more than estimated in August. This year’s borrowing need was revised up by 4.8 percent, to 132 billion kroner.

IMF says Sweden needs to do more to cool housing market

“Housing prices are rising fast from elevated levels, resulting in households taking on higher debt burdens and making the economy more vulnerable to shocks,” the IMF said in its annual report on Sweden.

German inflation turns negative in Sept for first time in 8 months

German annual inflation turned negative in September for the first time in eight months, preliminary data from the Federal Statistics Office showed, undershooting the consensus forecast for consumer prices in Europe’s largest economy to stagnate.

Malaysia faces another bond litmus test as contagion worries grow

Foreign investors could pull up to another billion dollars out of embattled Malaysia’s bond markets this week, pushing the country a step closer to a currency reserves crisis that would send shudders across the region.

Brazil’s Broadest Inflation Index Faster Than All Estimates

Inflation in Latin America’s largest economy is running at more than double the official target, as the currency loses value and pushes up the price of imports. The central bank ended its monetary tightening cycle this month, holding interest rates at their highest since 2006. Even so, traders are betting the monetary authority will be forced to tighten further.

European Yields Reflect Slow Inflation Adding to Pressure on ECB

The rout in equities and commodities, together with the prospect of China’s slowdown dimming the outlook for global growth, has boosted buying of sovereign debt on speculation central banks will maintain or extend stimulus. Spanish bonds extended Monday’s gains as a report showed consumer prices dropped in September by the most since February.

Bubble Seen in China Bonds as Record Borrowings Raise Stakes

The credit market is “overheating,” according to nineteen of 21 respondents in a survey of onshore analysts, traders and fund managers. Chinese companies sold a record 3.5 trillion yuan($550 billion) of notes this quarter, up 90 percent from the same period last year, as borrowing costs plunged to six-year lows. Risks of a bubble have emerged, according to Industrial Securities Co. and Huachuang Securities Co.

Indonesia c.bank official sees room to cut rates if inflation falls

“If we are looking at domestic factors alone, if inflation falls and to support growth, there is room (to cut rates),” Warjiyo said.

Household debt rises at fastest pace in nearly three years (Canada)

The central bank released new data showing that total Canadian outstanding household credit rose to $1.869-trillion in August, up an annualized pace of 5.9 per cent from July. Compared with a year earlier, household debts were up 5 per cent, the highest year-over-year increase since October, 2012.

Analysts Cut 2015 and 2016 Growth Forecasts for Brazil

Analysts surveyed by the Central Bank expect Brazil’s gross domestic product (GDP) to contract by 2.8 percent in 2015 and 1 percent in 2016.

Offshore Yuan Gains as Record Loan Rate Linked to Intervention

“It looks like further intervention today,” said Michael Every, Hong Kong-based head of financial markets research at Rabobank Group. “What purpose this kind of intervention actually serves is hard to say. It certainly does no favors for the yuan as a reserve currency.”

Brazil Currency Volatility Climbs as Central Bank Adds Support

The central bank sold 20,000 foreign-exchange swap contracts worth $987.6 million Tuesday and will offer $2 billion in credit lines to support the real. Officials resumed new sales of the instruments Sept. 23 after ending a similar program in March.

‘Cold Fusion’ Is Citi’s Answer to Fading Central Bank Firepower

As the International Monetary Fund prepares to downgrade its outlook for the world economy again, monetary policy makers are running low of ammunition to fight a fresh downturn. Bank of America Merrill Lynch calculates they have reduced interest rates more than 600 times since the 2008 collapse of Lehman Brothers Holdings Inc. with the Reserve Bank of India extending the run on Tuesday by cutting its benchmark more than expected.

India central bank cuts key interest rate to 6.75%

The central bank said Tuesday it is marking down its growth forecast for this fiscal year, which ends in March, to 7.4% from 7.6%.

Icahn sees ‘danger ahead’ over zero rates, junk bonds

Those bonds, he said, are extremely risky and being sold “en masse” to the public, who he says don’t really understand what they are buying. The numbers on that market are “amazingly risky,” he argued, noting growth in that market has been incredible, with the junk bonds and leveraged loan market now worth $2.2 trillion, up $1 trillion from five years ago.

Spanish inflation dives, falls to -1.2%

Spain’s consumer prices fell in September at their fastest pace in six months, driven by a decrease in energy costs that some economists expect could lead to months of falling prices in the eurozone’s fourth-largest economy.

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