聯儲局維持買債規模不變
美國聯邦儲備局一如預期維持利率和買債規模不變，暫時不削減第三輪量化寬鬆貨幣政策規模，以推動經濟增長和就業創造。聯儲局制訂貨幣政策的公開市場委員 會，結束一連兩日貨幣政策會議。會議結果及會後聲明都沒有驚喜，聯儲局公開市場委員會以9票對1票，維持每月購買850億美元債券規模不變，利率前瞻性指 引亦沒有改動，重申只要失業率高於百分之六點五，一至兩年的通脹預期不超過百分之二點五，聯邦基金利率目標會維持在0至0.25厘。聯儲局對經濟前景保持 樂觀，指9月會議以來，經濟下滑的風險減弱，經濟保持溫和擴張，家庭支出和企業開支均有增加，但財政政策限制經濟成長，主要是國會兩黨就財政預算和國債上 限的爭拗，影響經濟復蘇。而堪薩斯城聯邦儲備銀行總裁喬治繼續投反對票，擔心貨幣政策持續高度寬鬆，會增加經濟與金融失衡風險，長期通脹預期亦會上升。自 金融危機以來，聯儲局主席伯南克執掌的聯儲局採取了多種超寬鬆貨幣政策，聯儲局在2008年12月將聯邦基金利率降至零至0.25%的歷史低位。從 2008年11月宣布啟動第一輪量化寬鬆貨幣政策以來，聯儲局已經購入大量美國國債和抵押貸款支持證券等資產。聯儲局從去年12月開始執行「擴大版」的第 三輪量化寬鬆貨幣政策，每月資產購買總額達到850億美元。聯儲局下次議息將於12月17日至18日舉行。短期利率期貨交易員認為，聯儲局最早要到後年4 月才會加息。
Fed Keeps $85 Billion QE Pace Looking For Stronger Growth
The Federal Reserve decided to press on with $85 billion in monthly bond purchases, saying it needs to see more evidence that the economy will continue to improve.“The recovery in the housing sector slowed somewhat in recent months,” the Federal Open Market Committee (FDTR) said today at the end of a two-day meeting in Washington. “Fiscal policy is restraining economic growth.”
The Standard & Poor’s 500 Index fell 0.5 percent to 1,763.31 at the close of trading in New York as some investors were disappointed the Fed refrained from providing stronger signals of prolonged stimulus. The yield on the 10-year Treasury note climbed three basis points, or 0.03 percentage point, to 2.54 percent.
Options Open
“If you were looking for dovish signals, you didn’t get it,” said Michael Gapen, a senior U.S. economist at Barclays Plc in New York and former member of the Fed board’s Division of Monetary Affairs. “They’re keeping all of their options open.”The Fed’s purchases will remain divided between $40 billion a month of mortgage bonds and $45 billion in Treasury securities.
“Wait-and-see seems to be the prescription for the day,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “They’re on hold given that the data haven’t moved in their direction,” said Anderson, who predicts the Fed won’t make its first cut to bond buying until March.
The central bank left unchanged its statement that it will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent.
The Fed repeated that inflation “has been running below the committee’s longer-run objective but longer term inflation expectations have remained stable.”
Fuel Charges
Price gains have lagged below the committee’s 2 percent long-run target. The cost of living rose as projected in September as fuel charges climbed, capping the smallest year-to-year gain in five months.The consumer price index increased 0.2 percent after rising 0.1 percent the prior month, a Labor Department report showed today. The Fed’s preferred gauge of inflation, the personal consumption expenditures index, rose 1.2 percent in August and hasn’t breached 2 percent since March 2012.
The Fed removed a sentence from its previous statement in September that had said tighter financial conditions could slow the improvement in the economy.
Borrowing costs have declined in recent weeks. The yield on the 10-year Treasury (USGG10YR) note fell to 2.49 percent late yesterday from as high as 3.01 percent on Sept. 5. The average 30-year mortgage rate fell to 4.13 percent last week from as high as 4.58 percent in August.
Inflation Expectations
Kansas City Fed President Esther George dissented for the seventh meeting in a row, citing the risk the Fed’s stimulus could create financial imbalances and cause long-term inflation expectations to rise.Economists forecast no change to the Fed’s bond buying today. The FOMC won’t reduce the pace of purchases until its March 18-19 meeting, according to the median estimate of an Oct. 17-18 Bloomberg News survey.
President Barack Obama has nominated Vice Chairman Janet Yellen to succeed Bernanke, whose term expires on Jan. 31. If confirmed by the U.S. Senate, Yellen would take on the challenge of dialing down so-called quantitative easing and withdrawing stimulus while maintaining growth.
Central bankers are waiting to see how the economy weathered the budget impasse and debt-limit debate earlier this month. The shutdown reduced growth by 0.3 percentage point this quarter, according to the median estimate in an Oct. 17-18 Bloomberg survey, as businesses from Capitol Hill eateries to Florida Everglades charter boats lost customers while workers were furloughed and national parks were closed.
Before Shutdown
Some data measuring the strength of the economy in the months before the shutdown still hasn’t been released, and delays to other reports may distort the figures, according to economists. A report on economic growth in the third quarter, originally scheduled for release today, was postponed until Nov. 7.“The quality of the data may be suspect because of disruption to the normal survey routines,” said Dana Saporta, a director of U.S. economics research at Credit Suisse Group AG in New York.
“When we look back on this quarter in the future, we might not see much evidence of the government shutdown in the aggregate data,” she said. “But we don’t know that, and it will be several weeks before we can analyze the impact of the shutdown and debt-ceiling debate.”
Some private reports and delayed government indicators for September showed the economy was having trouble accelerating prior to the shutdown.
Home Sales
Employers in the U.S. added 148,000 jobs last month, down from 193,000 in August. Factory output rose less than forecast, and existing-home sales fell for the first time in three months as rising prices and mortgage rates damped demand.At the same time, American consumers kept spending on most types of goods last month, a Commerce Department report showed yesterday. Sales at retailers excluding auto dealers rose 0.4 percent after a 0.1 percent increase the prior month.
The government shutdown took a toll on consumer and business confidence in October, recent reports suggest. The Bloomberg Consumer Comfort (COMFCOMF) Index sank to the lowest level in eight months in the week ended Oct. 20.
Fewer Workers
Companies this month added fewer workers than projected, a private report based on payrolls showed today. The 130,000 increase was the smallest in six months and followed a revised 145,000 gain in September that was weaker than initially estimated, according to the ADP Research Institute in Roseland, New Jersey.The monthly figures are the first to show how employment fared during the government suspension. Limited employment and wage gains, along with the prospect of another fiscal battle early next year, raise the risk of restrained retail sales during the holidays.
Still, gains in stock prices and home values are shoring up household balance sheets. Equities have rallied, pushing the S&P 500 Index (SPX) to records, on rising corporate profits and expectations that the Fed will maintain stimulus.
General Electric Co. is among companies beating analyst estimates. GE, the conglomerate that is the world’s largest maker of jet engines and diesel locomotives, said Oct. 18 that profit margins on its industrial businesses grew 1.2 percentage points as orders climbed in China, sub-Saharan Africa and Russia.
Industrial Strength
“Our third-quarter results were very strong in an improving global business environment,” Chief Executive Officer Jeffrey Immelt said in a statement. “Our industrial strength was broad-based.”The Fed unexpectedly refrained from tapering at its meeting last month, seeking more evidence the economy is strengthening. Economists surveyed by Bloomberg before the gathering predicted the Fed would begin reducing the pace of purchases.
The September decision was characterized as a “close call” by Fed Governors Jerome Powell and Jeremy Stein.
Dollar Rises as Fed Cites Economic Gains, Keeps Buying
The dollar rose to the strongest level in almost two weeks against the yen after the Federal Reserve said it sees economic improvement even as it plans to maintain stimulus while it awaits evidence of further gains.The Bloomberg U.S. Dollar Index touched the highest since Oct. 17, erasing an earlier loss, after policy makers issued a statement following a two-day meeting. The greenback fell earlier amid bets the central bank would keep buying $85 billion of bonds a month under quantitative easing. New Zealand’s dollar rose as the central bank said interest-rate increases are likely next year.
Fed officials “said they’re still seeing improvement in economic activity and labor-market conditions, which is why we saw the dollar rebound,” Eric Viloria, a senior currency strategist at Gain Capital Group LLC in New York, said in a phone interview. “But the trend is still for dollar weakness as they maintain the pace of QE.”
The dollar strengthened 0.3 percent to 98.51 yen at 5 p.m. New York time after touching 98.68, the highest since Oct. 17. It rose 0.1 percent to $1.3736 per euro after gaining as much as 0.4 percent and weakening 0.3 percent. Japan’s currency declined 0.3 percent to 135.32 per euro after reaching 135.51 on Oct. 22, the weakest level since November 2009.
The Bloomberg U.S. Dollar Index, which monitors the greenback against 10 major counterparts, rose 0.1 percent to 1,007.37 and reached 1,009.13, the highest in almost two weeks. The gauge fell 0.3 percent earlier.
Higher Volatility
A measure of price swings among the currencies of Group of Seven nations has gained this week. The JPMorgan G7 Volatility Index increased to as high as 7.84 percent today after sliding on Oct. 28 to 7.48 percent, the lowest since Dec. 21. The 2013 average is 9.38 percent.New Zealand’s dollar rose from a six-week low against its U.S. counterpart, erasing earlier losses, after the nation’s central bank kept its benchmark rate at 2.5 percent while saying “increases will likely be required next year.” The currency, nicknamed the kiwi, gained 0.1 percent to 82.66 U.S. cents after sliding 0.8 percent earlier to 81.93, the weakest level since Sept. 17.
Brazil’s real declined versus most major peers as slower-than-forecast inflation damped speculation the country’s central bank will raise borrowing costs next month. The currency lost 0.2 percent to 2.1904 to the greenback.
Rupiah Drops
The Indonesian rupiah sank versus all of its 31 most-traded counterparts on speculation companies stepped up dollar purchases to meet month-end payments. It decreased 0.7 percent to 11,175 per dollar after earlier sliding 1 percent, the most since Sept. 30.Economists forecast no change to the Fed’s bond buying today. The policy-setting Federal Open Market Committee won’t reduce the pace of purchases until its March 18-19 meeting, according to an Oct. 17-18 Bloomberg News survey.
The Fed buys $45 billion of Treasuries and $40 billion of mortgage-backed securities each month to push down borrowing costs and spur growth, a move that tends to debase the dollar.
“Taking into account the extent of federal fiscal retrenchment over the past year, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy,” the FOMC said in a statement.
It repeated it will “await more evidence that progress will be sustained before adjusting the pace of its purchases.”
‘Slightly Hawkish’
The market “sees this in a slightly hawkish light and the Dollar Index rebound continues,” Kit Juckes, global strategist at Societe Generale SA in London, wrote in an e-mail. “This is the most dovish central bank out there simply failing to surpass expectations.”The cost of living rose 1.2 percent in the 12 months through September, the least since April, the Labor Department reported. The Fed’s inflation target is 2 percent.
American companies hired fewer workers than projected this month, another report showed. Businesses added 130,000 jobs, the Roseland, New Jersey-based ADP Research Institute said, versus a Bloomberg forecast of 150,000.
The euro strengthened versus the yen after Spain’s National Statistics Institute said gross domestic product grew 0.1 percent in the third quarter compared with the previous three months, when it declined 0.1 percent.
Options Trading
Trading in over-the-counter foreign-exchange options totaled $32 billion, from $48 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the euro-dollar exchange rate amounted to $6.6 billion, the largest share of trades at 21 percent. Options on the dollar-yen rate totaled $6.3 billion, or 20 percent.Euro-dollar options trading was 12 percent more than the average for the past five Wednesdays at a similar time in the day, according to Bloomberg analysis. Dollar-yen options trading was 11 percent below average.
U.S. Treasury Says Yuan Hasn’t Strengthened as Needed
The U.S. Treasury Department said China’s yuan is “significantly undervalued” and hasn’t strengthened as fast as needed, while declining to name the country a currency manipulator.The yuan “is appreciating, but not as fast or by as much as needed,” the department said in its semi-annual currency report to Congress released in Washington today.
“The evidence that China has resumed large-scale purchases of foreign exchange this year, despite having accumulated reserves that are more than sufficient by any measure, is suggestive of actions that are impeding market determination and a currency that is significantly undervalued,” the Treasury said.
The yuan fell for a fourth day today, the longest losing streak since July, as the central bank cut the currency’s reference rate amid a rally in the dollar. The People’s Bank of China cut its fixing, which limits the yuan’s daily moves to 1 percent on either side, by 0.06 percent to 6.1412 per dollar, the weakest since Oct. 17.
On Japan, the Treasury said it will “closely monitor” the government’s policies “and the extent to which they support the growth of domestic demand.”
The Treasury said it will urge South Korea to limit its foreign-exchange interventions “to the exceptional circumstances of disorderly market conditions and to commit to transparency with respect to foreign exchange intervention.”
Mexico Peso Bonds Fall as Fed Sees Economic Activity Improvement
Mexico’s peso-denominated bonds fell after the Federal Reserve said it saw improvement in the U.S. economy, a sign the central bank may soon taper stimulus that has pushed investors to higher-yielding emerging markets.Yields on peso bonds due in 2024 rose three basis points, or 0.03 percentage point, to 5.94 percent today in Mexico City, the third straight yield increase, according to data compiled by Bloomberg. The price fell 0.33 centavo to 132.94 centavos per peso. The currency fell 0.1 percent to 12.9349 per U.S. dollar at 3 p.m. in Mexico City.
While the Fed said it would maintain $85 billion of monthly bond purchases, the central bank saw signs of “underlying strength” in economic activity. The Fed was expected to maintain asset purchases until its March meeting, according to a Bloomberg survey of analysts.
“People thought they would say something about how the economy was weak, but they said the opposite, Roberto Ivan Garcia Castellanos, a bond trader at Casa de Bolsa Finamex SAB, said in a telephone interview from Guadalajara.
