Another Asian central bank cuts interest rates — analysts say the region’s not done easing yet

Indonesia’s surprise interest rate cut is the latest in a wave of monetary policy easing in Asia, and analysts say central banks in the region have to ease monetary policy further as growth threatens to stall. Bank Indonesia on Thursday cut its key policy rate by 25 basis points to 5.5% to support growth amid an increasingly fragile global economy. A total of 17 out of 19 economists polled by Reuters had expected the central bank to keep policy steady in August after last month’s easing. A lower


Indonesia’s surprise interest rate cut is the latest in a wave of monetary policy easing in Asia, and analysts say central banks in the region have to ease monetary policy further as growth threatens to stall. Bank Indonesia on Thursday cut its key policy rate by 25 basis points to 5.5% to support growth amid an increasingly fragile global economy. A total of 17 out of 19 economists polled by Reuters had expected the central bank to keep policy steady in August after last month’s easing. A lower
Another Asian central bank cuts interest rates — analysts say the region’s not done easing yet Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: yen nee lee
Keywords: news, cnbc, companies, central, inflation, regions, monetary, global, easing, growth, rates, policy, rate, economy, say, indonesias, analysts, bank, interest, asian, cuts


Another Asian central bank cuts interest rates — analysts say the region's not done easing yet

Indonesia’s surprise interest rate cut is the latest in a wave of monetary policy easing in Asia, and analysts say central banks in the region have to ease monetary policy further as growth threatens to stall.

Bank Indonesia on Thursday cut its key policy rate by 25 basis points to 5.5% to support growth amid an increasingly fragile global economy. A total of 17 out of 19 economists polled by Reuters had expected the central bank to keep policy steady in August after last month’s easing.

Perry Warjiyo, Indonesia’s central bank governor, told CNBC on Friday there’s room to cut interest rates this time because inflation for the year is expected to remain within its target range of 2.5% to 4.5%. That will help Indonesia to maintain its growth momentum at a time when the ongoing tariff fight between the U.S. and China has held back global economic activity, he explained.

A lower interest rate environment generally encourages businesses and consumers to spend more, which boost the economy but could cause inflation to rise. Prices rising too much and too quickly are harmful for the economy, so central banks typically adjust monetary policies to keep inflation in check.

“This is a preemptive move to support our growth momentum and to anticipate the possibility of downward risks on the global economic outlook going forward,” Warjiyo told CNBC’s “Street Signs.”

The central bank expects Indonesia’s economy to grow between 5% and 5.4% this year. Last year, the country — Southeast Asia’s largest economy — grew by 5.17%.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: yen nee lee
Keywords: news, cnbc, companies, central, inflation, regions, monetary, global, easing, growth, rates, policy, rate, economy, say, indonesias, analysts, bank, interest, asian, cuts


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

IMF chief economist says it’s getting harder to find bright spots in the global economy

The outlook for the global economy keeps getting bleaker, the chief economist at the International Monetary Fund said Friday. “As the year is progressing, it’s getting harder to find those bright spots,” Gita Gopinath told CNBC’s Steve Liesman. “There was the potential of recovery, and we’re still expecting that for many parts of the world … but I’ve got to admit it’s getting harder to see that.” One of the risks we keep flagging is risks on the trade front,” Gopinath said. “The developments tha


The outlook for the global economy keeps getting bleaker, the chief economist at the International Monetary Fund said Friday. “As the year is progressing, it’s getting harder to find those bright spots,” Gita Gopinath told CNBC’s Steve Liesman. “There was the potential of recovery, and we’re still expecting that for many parts of the world … but I’ve got to admit it’s getting harder to see that.” One of the risks we keep flagging is risks on the trade front,” Gopinath said. “The developments tha
IMF chief economist says it’s getting harder to find bright spots in the global economy Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: fred imbert
Keywords: news, cnbc, companies, economist, chief, going, growth, harder, world, trade, getting, gopinath, imf, bright, risks, economy, youtube, global, spots


IMF chief economist says it's getting harder to find bright spots in the global economy

The outlook for the global economy keeps getting bleaker, the chief economist at the International Monetary Fund said Friday.

“As the year is progressing, it’s getting harder to find those bright spots,” Gita Gopinath told CNBC’s Steve Liesman. “There was the potential of recovery, and we’re still expecting that for many parts of the world … but I’ve got to admit it’s getting harder to see that.”

Gopinath’s comments come as economic growth overseas has slowed down. In Germany, the manufacturing sector is contracting. Meanwhile, China’s economy grew at its slowest pace in 27 years in the previous quarter.

The slowdown is taking place as China and the U.S. wage a trade war against each other.

China unveiled on Friday a series of tariffs targeting $75 billion in U.S. products. U.S. autos are among the goods being targeted. President Donald Trump escalated the already tense situation by ordering U.S. companies to move their operations out of China.

“Global growth is subdued, and we describe it as fragile. There are many downside risks. One of the risks we keep flagging is risks on the trade front,” Gopinath said. “The developments that we’re seeing as recently as today give us great concern about what’s going to happen to growth going forward.”

Subscribe to CNBC on YouTube.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: fred imbert
Keywords: news, cnbc, companies, economist, chief, going, growth, harder, world, trade, getting, gopinath, imf, bright, risks, economy, youtube, global, spots


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

‘The lungs of the Earth are in flames’: Brazil faces global backlash over Amazon fires

The Amazon rainforest, often referred to as the lungs of the Earth, has been ravaged by a record number of fires this year, sparking global outrage over Brazil’s environmental policies. Literally,” Macron said via Twitter on Thursday, highlighting that the world’s largest rainforest produces 20% of the world’s oxygen. The Amazon must be protected,” UN Secretary-General Antonio Guterres said via Twitter, adding that he was “deeply concerned” about the fires. Richard Mello, head of the WWF Amazon


The Amazon rainforest, often referred to as the lungs of the Earth, has been ravaged by a record number of fires this year, sparking global outrage over Brazil’s environmental policies. Literally,” Macron said via Twitter on Thursday, highlighting that the world’s largest rainforest produces 20% of the world’s oxygen. The Amazon must be protected,” UN Secretary-General Antonio Guterres said via Twitter, adding that he was “deeply concerned” about the fires. Richard Mello, head of the WWF Amazon
‘The lungs of the Earth are in flames’: Brazil faces global backlash over Amazon fires Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: sam meredith
Keywords: news, cnbc, companies, faces, brazil, wwf, rainforest, amazon, twitter, lungs, world, climate, backlash, flames, environmental, summit, fires, earth, global, worlds


'The lungs of the Earth are in flames': Brazil faces global backlash over Amazon fires

The Amazon rainforest, often referred to as the lungs of the Earth, has been ravaged by a record number of fires this year, sparking global outrage over Brazil’s environmental policies. World leaders, environmental groups and celebrities have publicly decried the vast swaths of forest being destroyed by the fires, while satellite images of dark smoke billowing out of the Amazon has been shared on social media by space agency NASA. An intensifying wave of international criticism comes shortly after Brazil’s research center, the National Institute for Space Research (INPE), reported that it had detected 72,843 fires in the world’s largest rainforest so far this year. That marked an 84% rise when compared to 2018 and the highest since records began in 2013.

What have world leaders said?

French President Emmanuel Macron has described the phenomenon as an “international crisis” that needs to be top of the agenda at this weekend’s Group of Seven (G-7) summit. “Our house is burning. Literally,” Macron said via Twitter on Thursday, highlighting that the world’s largest rainforest produces 20% of the world’s oxygen. Canadian Prime Minister Justin Trudeau said he “couldn’t agree more” with Macron’s call to raise the issue at the G-7 summit, saying world leaders needed to act for the Amazon. In response, Brazil’s firebrand right-wing President Jair Bolsonaro has angrily told foreign powers not to interfere with his country’s sovereignty, despite admitting his country is not equipped to fight the fires. He also accused non-governmental organizations (NGOs) of starting some of the fires, but admitted he had no evidence to support this claim. On Twitter, Bolsonaro singled out Macron and accused him of sensationalizing the issue for personal political gain. The long-time climate sceptic added that the prospect of the Amazon fires being discussed at the upcoming G-7 summit, without the participation of any Amazonian countries, evoked a “misplaced colonialist mindset.”

What makes the Amazon unique?

The Amazon rainforest produces around 20% of the world’s fresh water and serves as the habitat of more than 34 million people, according to the World Wide Fund for Nature (WWF). It covers roughly 5.5 million square kilometers — about half the size of Europe. “We have so much to lose with the Amazon burning and yet not enough action is being taken to stop its destruction!” the WWF said via Twitter. The Amazon is critical in absorbing the planet’s carbon dioxide — making it a vital bulwark against an intensifying climate crisis.

Brazil’s President Jair Bolsonaro speaks during a discussion on US-Brazil relations at the US Chamber of Commerce in Washington, DC on March 18, 2019. Mandel Ngan | AFP | Getty Images

The United Nations (UN) has recognized climate change as “the defining issue of our time,” with a recent report calling the crisis “the greatest challenge to sustainable development.” “In the midst of the global climate crisis, we cannot afford more damage to a major source of oxygen and biodiversity. The Amazon must be protected,” UN Secretary-General Antonio Guterres said via Twitter, adding that he was “deeply concerned” about the fires. Actor and environmental activist Leonardo DiCaprio said in an Instagram post published Thursday that “the lungs of the Earth are in flames,” calling on his 34 million followers to become more environmentally conscious.

What caused these fires?

Although fires in the Amazon basin are a regular and natural occurrence during the dry season at this time of the year, environmental activists have blamed the sharp rise on farmers setting alight clear land to pasture. Richard Mello, head of the WWF Amazon Programme, told the BBC that the fires were “a consequence of the increase in deforestation seen in recent figures.”

Smoke billows during a fire in an area of the Amazon rainforest near Porto Velho, Rondonia State, Brazil, Brazil August 21, 2019. REUTERS | Ueslei Marcelino


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: sam meredith
Keywords: news, cnbc, companies, faces, brazil, wwf, rainforest, amazon, twitter, lungs, world, climate, backlash, flames, environmental, summit, fires, earth, global, worlds


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

James Bullard says Fed should cut rates because inverted yield curve is ‘not a good place to be’

That’s not a good place to be,” Bullard told CNBC’s Steve Liesman during an interview in Jackson Hole, Wyoming. There is concern that slower global growth and the trade war could drag down the U.S. economy. The Fed already cut rates in July by 25 basis points, citing “global developments” and “muted inflation.” So there is some downside risk, and I think you’d like to take out insurance against that downside risk, ” Bullard said. His comments come hours before a speech at the Fed symposium in Wy


That’s not a good place to be,” Bullard told CNBC’s Steve Liesman during an interview in Jackson Hole, Wyoming. There is concern that slower global growth and the trade war could drag down the U.S. economy. The Fed already cut rates in July by 25 basis points, citing “global developments” and “muted inflation.” So there is some downside risk, and I think you’d like to take out insurance against that downside risk, ” Bullard said. His comments come hours before a speech at the Fed symposium in Wy
James Bullard says Fed should cut rates because inverted yield curve is ‘not a good place to be’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: fred imbert
Keywords: news, cnbc, companies, fed, rates, cut, risk, james, yield, place, trade, war, curve, yieldcurve, come, bullard, week, global, inverted, good


James Bullard says Fed should cut rates because inverted yield curve is 'not a good place to be'

St. Louis Federal Reserve President James Bullard said Friday the central bank should continue to ease monetary policy because of the recession signal being flashed by the bond market.

“The yield curve is inverted here. We’ve got one of the higher rates on the yield curve here. That’s not a good place to be,” Bullard told CNBC’s Steve Liesman during an interview in Jackson Hole, Wyoming.

The so-called yield-curve inversion refers to the 10-year Treasury yield trading below its 2-year counterpart. This briefly happened this week and last week. Experts fear a yield-curve inversion because it has historically preceded a recession.

These moves in the bond market come as economic growth across the globe is slowing down while China and the U.S. remain engaged in a trade war. There is concern that slower global growth and the trade war could drag down the U.S. economy.

The Fed already cut rates in July by 25 basis points, citing “global developments” and “muted inflation.” Bullard said further cuts would help lift inflation in the U.S. and mitigate the impact of a global economic slowdown.

“The question is: Looking forward, how much risk are we facing from the fact that you’ve got a global manufacturing contraction going on and possibly more to come? So there is some downside risk, and I think you’d like to take out insurance against that downside risk, ” Bullard said. He added that the Fed could always “take back” an insurance rate cut.

His comments come hours before a speech at the Fed symposium in Wyoming from Fed Chairman Jerome Powell. Bullard is a voting member of the Federal Open Market Committee this year.

Subscribe to CNBC on YouTube.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: fred imbert
Keywords: news, cnbc, companies, fed, rates, cut, risk, james, yield, place, trade, war, curve, yieldcurve, come, bullard, week, global, inverted, good


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Here’s a list of American products targeted by China’s new tariffs

Chinese shipping containers are stored beside a US flag after they were unloaded at the Port of Los Angeles in Long Beach, California on May 14, 2019. – Global markets remain on red alert over a trade war between the two superpowers China and the US, that most observers warn could shatter global economic growth, and hurt demand for commodities like oil. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images)MARK RALSTON | AFP | Getty Images


Chinese shipping containers are stored beside a US flag after they were unloaded at the Port of Los Angeles in Long Beach, California on May 14, 2019. – Global markets remain on red alert over a trade war between the two superpowers China and the US, that most observers warn could shatter global economic growth, and hurt demand for commodities like oil. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images)MARK RALSTON | AFP | Getty Images
Here’s a list of American products targeted by China’s new tariffs Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, warn, chinas, american, ralston, afp, tariffs, mark, list, targeted, war, products, unloaded, trade, stored, heres, superpowers, global


Here's a list of American products targeted by China's new tariffs

Chinese shipping containers are stored beside a US flag after they were unloaded at the Port of Los Angeles in Long Beach, California on May 14, 2019. – Global markets remain on red alert over a trade war between the two superpowers China and the US, that most observers warn could shatter global economic growth, and hurt demand for commodities like oil. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images)

MARK RALSTON | AFP | Getty Images


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, warn, chinas, american, ralston, afp, tariffs, mark, list, targeted, war, products, unloaded, trade, stored, heres, superpowers, global


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Greenlanders welcome global attention, but there’s no love lost for Trump

Authorities and residents in Greenland have branded President Donald Trump’s talk of buying the island “insulting” but have welcomed the global attention it has brought to a nation keen to establish its autonomy from Denmark. Trump cancelled a state visit to Denmark after Danish Prime Minister Mette Frederiksen called his idea “absurd,” sparking a diplomatic spat between the two nations. There are a range of geopolitical and economic factors at play behind Washington’s interest in the mostly ice


Authorities and residents in Greenland have branded President Donald Trump’s talk of buying the island “insulting” but have welcomed the global attention it has brought to a nation keen to establish its autonomy from Denmark. Trump cancelled a state visit to Denmark after Danish Prime Minister Mette Frederiksen called his idea “absurd,” sparking a diplomatic spat between the two nations. There are a range of geopolitical and economic factors at play behind Washington’s interest in the mostly ice
Greenlanders welcome global attention, but there’s no love lost for Trump Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: elliot smith
Keywords: news, cnbc, companies, washingtons, vast, lost, trump, theres, zinc, welcomed, visit, titanium, attention, talk, global, love, greenlanders, welcome, trumps, including, island


Greenlanders welcome global attention, but there's no love lost for Trump

Authorities and residents in Greenland have branded President Donald Trump’s talk of buying the island “insulting” but have welcomed the global attention it has brought to a nation keen to establish its autonomy from Denmark.

Trump cancelled a state visit to Denmark after Danish Prime Minister Mette Frederiksen called his idea “absurd,” sparking a diplomatic spat between the two nations.

There are a range of geopolitical and economic factors at play behind Washington’s interest in the mostly ice-capped island, including its new shipping lanes and vast natural resources, including oil, titanium, nickel, copper, zinc, gold and lead.

Another key driver is China’s increased reach in the Arctic, having already secured significant Greenlandic infrastructure projects in direct conflict with the existing U.S. military presence in the country.


Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: elliot smith
Keywords: news, cnbc, companies, washingtons, vast, lost, trump, theres, zinc, welcomed, visit, titanium, attention, talk, global, love, greenlanders, welcome, trumps, including, island


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Amazon opens its biggest global campus in India

Amazon has 62,000 employees in India, roughly a third of whom are based in Hyderabad. “The investment to create an office of this size indicates that we are going to continue to grow,” Amazon India country manager Amit Agarwal told Reuters on Wednesday. The company’s vice president of global real estate and facilities, John Schoettler, said the Hyderabad campus would host employees across divisions, including Amazon Web Services. In late December, India modified rules around foreign direct inves


Amazon has 62,000 employees in India, roughly a third of whom are based in Hyderabad. “The investment to create an office of this size indicates that we are going to continue to grow,” Amazon India country manager Amit Agarwal told Reuters on Wednesday. The company’s vice president of global real estate and facilities, John Schoettler, said the Hyderabad campus would host employees across divisions, including Amazon Web Services. In late December, India modified rules around foreign direct inves
Amazon opens its biggest global campus in India Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-21
Keywords: news, cnbc, companies, india, ecommerce, biggest, amazon, company, operations, hyderabad, prime, investment, opens, global, campus, employees


Amazon opens its biggest global campus in India

Jeff Bezos, right, CEO of Amazon, is presented with the 2016 USIBC Global Leadership Award by Indian Prime Minister Narendra Modi during the 41st Annual Leadership Summit at the Mellen Auditorium, June 7, 2016 in Washington.

Amazon on Wednesday launched its biggest campus in the world in the southern Indian city of Hyderabad, underscoring its expansion plans in the country that has been one of its fastest growing overseas markets.

The move comes months after the Seattle-based company scrapped plans to build a major outpost in New York, blaming opposition from local leaders. Amazon picked Arlington, Virginia, as the site for its upcoming second headquarters.

The new campus in India, spread over 9.5 acres and costing “hundreds of millions of dollars”, will house over 15,000 employees, the company said. Amazon has 62,000 employees in India, roughly a third of whom are based in Hyderabad.

“The investment to create an office of this size indicates that we are going to continue to grow,” Amazon India country manager Amit Agarwal told Reuters on Wednesday.

The company’s vice president of global real estate and facilities, John Schoettler, said the Hyderabad campus would host employees across divisions, including Amazon Web Services.

India is considered the last major growth market for the e-commerce giant, but it faces increasing competition from local players. Founder Jeff Bezos has committed an investment of over $5 billion for India operations as the company seeks to fend off competition from Walmart Inc’s e-commerce unit Flipkart.

Amazon has also been exploring other possible tie-ups with brick-and-mortar retailers in the country.

In late December, India modified rules around foreign direct investment in e-commerce, adding to hurdles for Amazon and Flipkart.

Amazon started operations in India in 2004 from Hyderabad, but it launched its retail operations only in 2013.

The company has since added video streaming and grocery delivery services under its Prime offerings and is also working on a restaurant food delivery service.

WATCH: Why Danone’s dairy division failed in India


Company: cnbc, Activity: cnbc, Date: 2019-08-21
Keywords: news, cnbc, companies, india, ecommerce, biggest, amazon, company, operations, hyderabad, prime, investment, opens, global, campus, employees


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Kyle Bass says US interest rates will follow the rest of the world to zero — ‘This is insane’

Central banks are just getting started with monetary easing, hedge fund manager Kyle Bass said, predicting U.S. interest rates will keep falling and follow global interest rates all the way down to zero. All the money is going to come here,” Bass, founder and chief investment officer of Hayman Capital Management, told CNBC’s David Faber on Tuesday. Bass’ comments come as several central banks around the world have implemented stimulative policies to the point where around $15 trillion of global


Central banks are just getting started with monetary easing, hedge fund manager Kyle Bass said, predicting U.S. interest rates will keep falling and follow global interest rates all the way down to zero. All the money is going to come here,” Bass, founder and chief investment officer of Hayman Capital Management, told CNBC’s David Faber on Tuesday. Bass’ comments come as several central banks around the world have implemented stimulative policies to the point where around $15 trillion of global
Kyle Bass says US interest rates will follow the rest of the world to zero — ‘This is insane’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: fred imbert
Keywords: news, cnbc, companies, global, yields, zero, follow, rest, rates, insane, stimulative, kyle, bass, interest, going, central, world, rate, tool


Kyle Bass says US interest rates will follow the rest of the world to zero — 'This is insane'

Central banks are just getting started with monetary easing, hedge fund manager Kyle Bass said, predicting U.S. interest rates will keep falling and follow global interest rates all the way down to zero.

“We’re the only country that has an integer in front of our bond yields. We have 90% of the world’s investment-grade debt. We actually have rule of law and we have a decent economy. All the money is going to come here,” Bass, founder and chief investment officer of Hayman Capital Management, told CNBC’s David Faber on Tuesday.

Bass’ comments come as several central banks around the world have implemented stimulative policies to the point where around $15 trillion of global debt trades with a negative rate. Germany and France’s respective 10-year yields are in negative territory along with Japan’s benchmark rate. China has also implemented stimulative measures to mitigate slowing economic growth.

“This is insane. The Japanese are going to keep going. The Chinese print money like it’s a national pastime today. Europe is going to restart QE,” Bass said. “QE” refers to quantitative easing, a monetary stimulus tool used by central banks.

In the U.S., the Federal Reserve cut interest rates by 25 basis points last month, citing “global developments” and “muted inflation.” Market expectations for lower rates in September are also at 100%, according to the CME Group’s FedWatch tool.


Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: fred imbert
Keywords: news, cnbc, companies, global, yields, zero, follow, rest, rates, insane, stimulative, kyle, bass, interest, going, central, world, rate, tool


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Investing in the strange negative yield world — ‘It’s very hard to wrap your arms around’

That doesn’t mean U.S. Treasury yields will also go negative with the other $15 trillion in negative yielding debt. But some strategists say they could, and at the very least Treasurys should continue to see new low rates as European and other negative yields hit new lows. Yields move opposite price, so in an extremely low yield or negative world, investors hope for price appreciation on instruments where they had once looked for yield. “It’s very hard to wrap your arms around the idea of negati


That doesn’t mean U.S. Treasury yields will also go negative with the other $15 trillion in negative yielding debt. But some strategists say they could, and at the very least Treasurys should continue to see new low rates as European and other negative yields hit new lows. Yields move opposite price, so in an extremely low yield or negative world, investors hope for price appreciation on instruments where they had once looked for yield. “It’s very hard to wrap your arms around the idea of negati
Investing in the strange negative yield world — ‘It’s very hard to wrap your arms around’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: patti domm
Keywords: news, cnbc, companies, bond, investing, morgan, world, rates, global, arms, strange, yields, hard, lower, negative, investors, going, wrap, yield


Investing in the strange negative yield world — 'It's very hard to wrap your arms around'

The bond market has entered a financial twilight zone, and at this point, there doesn’t seem to be a smooth way out. For the last several weeks, investors have been watching a swift move lower in global bond yields — with the amount of negative yielding debt increasing to the point where it now equals nearly a third of tradeable bonds worldwide, according to J.P. Morgan. Investors have jumped into the safety of bonds, amid worries the global economy is slowing and that the trade wars will take a bigger toll on growth. Yields are also cascading lower, as global central banks rush to cut interest rates, a factor feeding the downward spiral in yields.

That doesn’t mean U.S. Treasury yields will also go negative with the other $15 trillion in negative yielding debt. But some strategists say they could, and at the very least Treasurys should continue to see new low rates as European and other negative yields hit new lows. Yields move opposite price, so in an extremely low yield or negative world, investors hope for price appreciation on instruments where they had once looked for yield. “It’s very depressing…Just think about it as a saver or investor,” said Michael Schumacher, director rates at Wells Fargo. “It’s very hard to wrap your arms around the idea of negative yields. It doesn’t really sit well…It’s terrible for the financial system. Look how European banks have done for the last six, seven years—very poorly.” As rates drop around the world, the U.S. has become an even more attractive market, for the remaining yield it has and the fact the economy is growing. Contrast that to Germany where its economy is shrinking and the 10-year bund is yielding a negative 0.69%, compared to the U.S. 10-year yield, at 1.54%.

Disorderly and painful

Strategists say the reversal of the bond market trade could be disorderly and painful if it happens quickly. J.P. Morgan strategists point out that four countries — Denmark, Germany, Netherlands and Finland — now have negative yields across their full spectrum of rates. “In our conversations with clients, the experiments of central banks with negative rates are viewed more as a policy mistake rather than stimulus and create a sense of an abnormal and uncertain environment that damages not only banks but also consumer and business confidence,” the J.P. Morgan strategists wrote. The Federal Reserve is expected to cut rates again in September and possibly later, triggering lower interest rates around the world. The differentials between global interest rates is putting pressure on currency moves. “I think the momentum trade is basically saying to the Fed: ‘You’re falling behind the curve.’ The Fed does need to keep up with what’s going on in global markets. The one barometer we have to look at, to make it simple, is the dollar. The stronger the dollar gets, the more negative it is for the global economy,” said Jim Caron, portfolio manager at Morgan Stanley Investment Management. “A lot of the world’s debt is in dollars. The slower the Fed goes, the stronger the dollar gets.” Caron said investors continue to buy bonds for performance, and they are finding it as rates continue to drop. “People are getting socialized to lower yields…It’s bizarre,” said Caron. “It could definitely stay like that for awhile.”

Positioning in the bond market has become so extreme that the rules are being thrown out, and the spiral lower is feeding on itself. U.S. yields are going down as investors that need to hold long term securities move into the long end of the Treasury curve. “I think the main driver right now is basically the lack of foreign yields…Tomorrow, Germany is going to issue a 30-year bond. It’s going to have a zero coupon, but it’s probably going to come at a premium,” said Hans Mikkelsen, head of investment grade corporate strategy at Bank of America Merrill Lynch. “The existing 30-year debt is trading at negative 0.18%.”

‘Self reinforcing’


Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: patti domm
Keywords: news, cnbc, companies, bond, investing, morgan, world, rates, global, arms, strange, yields, hard, lower, negative, investors, going, wrap, yield


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post

Climate change to slow global economic growth, new study finds

Climate change will exact a toll on global economic output as higher temperatures hamstring industries from farming to manufacturing, according to a new study published by the National Bureau of Economic Research. In other words, if global GDP doubles or halves by 2100, the results suggest real GDP per capita would still be 7.22% below where it would be otherwise. The first tested the impact of climate change in the absence of climate change policies (known as “RCP 8.5” in the table), implying a


Climate change will exact a toll on global economic output as higher temperatures hamstring industries from farming to manufacturing, according to a new study published by the National Bureau of Economic Research. In other words, if global GDP doubles or halves by 2100, the results suggest real GDP per capita would still be 7.22% below where it would be otherwise. The first tested the impact of climate change in the absence of climate change policies (known as “RCP 8.5” in the table), implying a
Climate change to slow global economic growth, new study finds Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: thomas franck
Keywords: news, cnbc, companies, average, increase, temperatures, growth, global, degrees, celsius, climate, temperature, researchers, study, finds, change, economic, gdp, slow, capita


Climate change to slow global economic growth, new study finds

Hogs are stranded on the roof of a farm June 18, 2008 as floodwaters continue to overrun the town of Oakville, Iowa.

Climate change will exact a toll on global economic output as higher temperatures hamstring industries from farming to manufacturing, according to a new study published by the National Bureau of Economic Research.

Record-breaking heat across the globe made headlines throughout July, and now researchers say a persistent increase in average global temperature by 0.04 degrees Celsius per year, barring major policy breakthroughs, is set to reduce world real GDP per capita by 7.22% by 2100.

The researchers — hailing from the International Monetary Fund, the University of Cambridge and the University of Southern California — found little evidence that precipitation had an impact on GDP, but instead observed a large temperature-related effect.

The U.S. is expected to see its GDP per capita decline 10.5%, China’s by 4.3% and the European Union’s by 4.6% over the next 81 years as a result of temperature fluctuations. In other words, if global GDP doubles or halves by 2100, the results suggest real GDP per capita would still be 7.22% below where it would be otherwise.

In the nearer term, and assuming no major policy changes and continued greenhouse emissions, the climate-related drag on global GDP per capita is projected to surpass 2.5% and exceed 3.7% in the U.S. by 2050.

“A persistent above-norm increase in average global temperature by 0.04 Celsius per year leads to substantial output losses, reducing real per capita output by 0.8%, 2.51% and 7.22% percent in 2030, 2050 and 2100, respectively,” the researchers wrote. “Furthermore, we show that our empirical findings apply equally to poor or rich, and hot or cold countries.”

Using a panel data set of 174 countries over the years 1960 to 2014, the team tested two scenarios. The first tested the impact of climate change in the absence of climate change policies (known as “RCP 8.5” in the table), implying an annual increase of 0.04 degrees Celsius.

The other scenario corresponded to the December 2015 Paris Agreement that President Donald Trump decided to abandoned (known as “RCP 2.6” in the table). That scenario implies an annual increase of 0.01 degrees Celsius.

In the first scenario, which assumes an increase in average global temperate of 0.04 degrees Celsius, the researchers found that the U.S. faces a GDP decline above 10% by 2100 if global temperatures continue to rise at their historic pace. In the second scenario, which abides by the Paris Agreement’s global annual temperature increase of 0.01 degrees Celsius, the U.S. would still see a comparatively large, albeit smaller 1.88% GDP reduction.

Part of the outsized impact is due to the fact that temperatures in the U.S. are rising faster than the rest of the world, the researchers wrote, with the nation’s average annual increase of 0.026 degrees Celsius well above the globe’s 0.018-degree annual average.

“Our results provided evidence for the damage climate change causes in the United States using [gross state product], GSP per capita, labour productivity, and employment as well as output growth in ten economic sectors,” the researchers wrote.

Long-run GDP Impact by Region

Source: “Long-term Macroeconomic Effects of Climate Change” (2019), Kahn et al.

“While certain sectors in the U.S. economy might have adapted to higher temperatures, economic activity in the U.S. overall and at the sectoral level continues to be sensitive to deviations of temperature and precipitation from their historical norms.”

Countries that derive a large proportion of their GDP from agriculture could be most at risk. Excessive heat or rainfall can not only kill crops like corn and soybeans, but delay fieldwork and stall equipment shipments.

Though the new study did not find evidence that increased rain damages economic growth, one business leader says increased precipitation can dampen profits. Commenting on Friday, the chief economist at farm equipment maker Deere noted that doubts surrounding crop production have already weighed on government corn production estimates.

“The wettest 12-month period in U.S. history brought flooding and record planting delays across major corn and soybean growing regions,” Luke Chandler said on Deere’s fiscal third-quarter earnings call. “The result was heightened uncertainty around row crop production.”

“This uncertainty was reflected in the USDA’s latest estimates released this past Monday, which surprised the market, particularly the forecast of national corn production,” he added. The U.S. Department of Agriculture reported on Aug. 12 that soybean production is down 19 percent from 2018 while corn growers are expected to decrease their production 4 percent from last year.

But relief from the unusual weather looks unlikely. The recent deluge of recent meteorological data shows a persistent pattern of record-breaking heat.

The U.S. National Oceanic and Atmospheric Administration announced on Thursday that July was the hottest month ever recorded, shrinking the Arctic and Antarctic sea ice to historic lows.

The 2015 Paris Agreement seeks to combat those effects: It was designed to prevent global temperatures from rising by more than 2 degrees Celsius above pre-industrial levels. It mandates 195 national signatories — nearly every country in the world — to devise a plans to cut emissions in an attempt to stem the impact of climate change.

The average global temperature in July was 1.71 degrees Fahrenheit above the 20th-century average of 60.4 degrees, making it the hottest July in the 140-year record. Meanwhile, nine of the 10 hottest Julys have occurred since 2005, with the last five years ranking as the five hottest.


Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: thomas franck
Keywords: news, cnbc, companies, average, increase, temperatures, growth, global, degrees, celsius, climate, temperature, researchers, study, finds, change, economic, gdp, slow, capita


Home Forums

    • Forum
    • Topics
    • Posts
    • Last Post