‘Humbled’ Janet Yellen is determined to help hardest-hit Americans

Oct 10 • Mind The Gap • 2255 Views • Comments Off on ‘Humbled’ Janet Yellen is determined to help hardest-hit Americans

job-queDuring yesterday’s White House conference, President Obama praised current Fed chairman Ben Bernanke as he winds down towards his leaving in January 2014 for leading the US through;

some of the most daunting circumstances of a lifetime. He has truly been a stabilizing force, not only for our country, but for the entire world.”

Describing Yellen’s nomination as “one of the most important economic decisions that I’ll make as president.” He said Yellen was one of the world’s leading economists with a proven track record at the Fed, where she is currently vice-chair; “She’s a proven leader and she’s tough, not just because she comes from Brooklyn.”

 

Yellen said she was;

honored and humbled. The past six years have been tumultuous. While I think we will agree that more needs to be done to help those hardest hit by the recession, we have made progress, many Americans still cant find a job and worry that they cant pay their bills. We can and must safeguard the financial system.”

 

Treasurys Lew; “No payments guaranteed if debt ceiling breached”

Treasury Secretary Jack Lew will tell lawmakers today that he won’t be able to guarantee payments to any group, whether Social Security recipients or U.S. bondholders, unless Congress approves an increase in the federal debt limit.

With a key deadline in the debt-limit debate one week off, Lew plans to tell a Senate panel that he would minimize the pain of breaching the $16.7 trillion debt limit, according to Treasury officials, but Lew notes that in an unprecedented situation, in which he would be relying entirely on the erratic flow of incoming revenue, the USA economy would suffer and there would not even be certainty that the government could honour all interest payments.

 

Fed in tight call and even tighter place

The Fed surprised economists in September deciding  to continue its stimulus at current levels. The Fed previously signalled it could start tapering the size of the bond-buying scheme by the end of the year. But the Fed’s members were concerned about the economy, with a row over the debt ceiling and the federal budget on the horizon. In their minutes released yesterday evening the Fed stated;

Questions were raised about the effects on the housing sector, and on the broader economy of the tightening in financial conditions in recent months, as well as about the considerable risks surrounding fiscal policy.”

The announcement of a reduction in asset purchases at this meeting might trigger an additional, unwarranted tightening of financial conditions, perhaps because markets would read such an announcement as signalling the committees willingness, notwithstanding mixed recent data, to take an initial step toward exit from its highly accommodative policy. As a result, a number of participants thought a cautious approach was needed and it would be prudent to await further evidence of progress before reducing the pace of asset purchases.”

 

In August 2013, French manufacturing output improved slightly (+0.3%)

In August 2013, manufacturing output increased slightly (+0.3%, after 0.8% in July). This rise is related to the manufacture of transport equipment, sector in which production fell in July. Output increased as well in industrial production as a whole (+0.2%, after 0.6% last month). During the last three months, manufacturing output decreased (0.7%) During the last three months (q-o-q), output declined in the manufacturing sector (0.7%), as well as in industry as a whole (1.1%). Output decreased in other manufacturing (0.6%) and in the manufacture of electrical and electronic equipment.

 

Market Snapshot at 10:00 am UK time

The Nikkei closed up 1.12% in the overnight session. The Hang Seng closed 0.36%, whilst the CSI closed down 0.99%. The ASX 200 closed down 0.11%. European markets have opened strongly with the majority up significantly in the early part of the morning session. STOXX index up 1.34%, FTSE up 0.81%, CAC up 1.28%, DAX up 0.92%.

Commodities are mostly positive; ICE WTI oil is 0.32% at $101.94 per barrel, NYMEX natural is up 1.11% at $3.72 per therm. COMEX gold is down 0.49% at $1300.80 per ounce, with silver on COMEX down 0.30% at $21.82 per ounce.

Equity index futures are pointing to a positive open for the USA indices; DJIA equity index future is up 0.65%, SPX up 0.79%, NASDAQ equity index future is up 0.73%.

 

Forex focus

Australian employers added 9,100 jobs in September, government figures showed earlier today, fewer than the 15,000 estimated by economists surveyed. The unemployment rate dropped to 5.6 percent from a four-year high of 5.8 percent in August. Analysts forecast the figure would be unchanged. The participation rate slipped to 64.9 percent from 65 percent. The Australian dollar lost 0.4 percent to 94.07 U.S. cents after earlier rising as much as 0.3 percent. New Zealand’s kiwi dollar sank 0.7 percent to 82.44 U.S. cents.

The greenback advanced 0.4 percent to 97.76 yen early in London, now set for a three-day gain that would be the longest since Sept. 5th. The last time it traded at 99 was Sept. 27th. The dollar added 0.2 percent to $1.3497 per euro, while the Japanese currency weakened 0.2 percent to 131.96 per euro.

The dollar climbed versus the yen in the longest run of gains in a month on signs of a compromise among U.S. lawmakers that could avert the default. Minutes of the Federal Reserve’s Sept. 17-18 meeting showed yesterday that most policy makers said the central bank was likely to reduce the pace of its $85 billion in monthly bond purchases this year. The meetings did, however, take place before the political deadlock over the budget and debt limit.

The pound traded at $1.5931 early in London after falling to $1.5914, the lowest since Sept. 18th. The U.K. currency was at 84.73 pence per euro after depreciating to 84.87 yesterday, the weakest since Sept. 3rd. The pound was little changed before the Bank of England announces its latest monetary policy decision, economists are predicting the BoE will keep its bond-buying target and benchmark interest rate unchanged.

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