Dow fell 25, decliners over advancers 5-4 & NAZ was off 8 The Financial Index slipped back a fraction to 213. The MLP index was up 1 to 409 & the REIT index fell pocket change in the 261s (little changed in 4 months). Junk bond funds climbed higher & Treasuries were mixed to lower. Oil continued sliding & gold fell $5 to just above $1700.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
ECB President Draghi defended his plan to buy gov bonds in the German parliament with a warning about deflation risks. The ECB’s so-called Outright Monetary Transactions “will not lead to inflation,” Draghi said. “In our assessment, the greater risk to price stability is currently falling prices in some euro-area countries,” he said. “In this sense, OMTs are not in contradiction to our mandate: in fact, they are essential for ensuring we can continue to achieve it.” Draghi is seeking to win support in Europe's largest economy for his plan to purchase gov bonds to stem the debt crisis & safeguard the €. Some German policy makers including Bundesbank President Jens Weidmann have said the proposal is tantamount to printing money to finance govs, which is prohibited by the ECB’s statutes. “OMTs will not lead to disguised financing of governments,” Draghi said. “All this is fully consistent with the Treaty’s prohibition on monetary financing. Moreover, they will focus on shorter maturities and leave room for market discipline.” Speaking at a press conference afterwards, Draghi said while it would be “too ambitious” to claim he had won over the German public, he had a “very productive, wide-ranging” exchange with German parliamentarians, which was aimed at building confidence & trust.
Draghi Defends Bond Purchases With Warning of Deflation
Photo: Bloomberg
The Federal Reserve (FED) stuck to its plan to keep stimulating the US economy until the job market improves & repeated its vow to keep rates near zero until mid-2015. After a 2 day meeting, the FED acknowledged hints of strength in the US housing market, but reiterated a pledge to continue supporting growth even as the recovery picks up. It said it would continue purchasing $40B in mortgage-backed debt per month to push interest rates lower. The FED did nod to a recent increase in inflation but said it was linked to higher energy prices, adding that inflation expectations have remained stable. It also noted household spending has grown "a bit more quickly" but cautioned that business investment was softening. "The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the FOMC said. The FED, which has held rates close to zero for 4 years, had already bought $2.3T in mortgage-related & gov debt before it launched its latest round of stimulus. The problem is, GDP grew at an annual rate of just 1.3% in Q2. While the pace of recovery quickened a bit, it is not enough to put steady downward pressure on the jobless rate. At the same time, a looming tightening of US fiscal policy risks tossing the economy back into recession. Europe's debt crisis, a key source of concern for the FED, also remains unresolved, although it is not flaring up too wildly in financial markets, offering comfort that the US economy will escape any contagion.
Fed Says Growth ‘Moderate’ While Maintaining Bond Buying
Photo: Bloomberg
Americans bought new homes in Sep at the fastest pace in 2 years, another sign the industry is bouncing back. Sales climbed 5.7% to a 389K annual pace, the most since Apr 2010, following a revised 368K rate in Aug, according to the Commerce Dept. The estimate called for an increase to 385K. Population growth & mortgage rates pushed to record lows by Federal Reserve purchases of housing debt are generating sales for builders & spurred the 3 year economic recovery. Housing starts in Sep jumped 15% to the fastest pace since Jul 2008, a report showed last week. Demand for new houses was up 27.1% from a year ago & the median price for a new house climbed 11.7% from the same month last year to $242K. Purchases increased in 3 of 4 regions, led by a 16.8% gain in the South & a 16.7% increase in the Northeast. But sales in the Midwest dropped 37.3%, the biggest decrease since Jan 1994.
Home Sales Rising to Two-Year High Spur U.S. Growth: Economy
This was another dismal day for the markets. The FED said nothing new, to be expected so close to the election. The earnings season continues to dominate the news & it has not been good. There were a few better reports today, but on balance companies are weighed down by sluggish demand for products & services. In addition, negative currency impacts many of the intl giants. On this uneventful day for the markets, Dow lost 50 in the last 1+ hours. Not a good sign going forward as it is only 76 above the 13K floor.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.106% | |
U.S. 2-year |
0.285% | |
U.S. 10-year |
1.770% |
| CLZ12.NYM | Crude Oil Dec 12 | 85.76 |  0.91 (1.05%) |
ECB President Draghi defended his plan to buy gov bonds in the German parliament with a warning about deflation risks. The ECB’s so-called Outright Monetary Transactions “will not lead to inflation,” Draghi said. “In our assessment, the greater risk to price stability is currently falling prices in some euro-area countries,” he said. “In this sense, OMTs are not in contradiction to our mandate: in fact, they are essential for ensuring we can continue to achieve it.” Draghi is seeking to win support in Europe's largest economy for his plan to purchase gov bonds to stem the debt crisis & safeguard the €. Some German policy makers including Bundesbank President Jens Weidmann have said the proposal is tantamount to printing money to finance govs, which is prohibited by the ECB’s statutes. “OMTs will not lead to disguised financing of governments,” Draghi said. “All this is fully consistent with the Treaty’s prohibition on monetary financing. Moreover, they will focus on shorter maturities and leave room for market discipline.” Speaking at a press conference afterwards, Draghi said while it would be “too ambitious” to claim he had won over the German public, he had a “very productive, wide-ranging” exchange with German parliamentarians, which was aimed at building confidence & trust.
Draghi Defends Bond Purchases With Warning of Deflation
Photo: Bloomberg
The Federal Reserve (FED) stuck to its plan to keep stimulating the US economy until the job market improves & repeated its vow to keep rates near zero until mid-2015. After a 2 day meeting, the FED acknowledged hints of strength in the US housing market, but reiterated a pledge to continue supporting growth even as the recovery picks up. It said it would continue purchasing $40B in mortgage-backed debt per month to push interest rates lower. The FED did nod to a recent increase in inflation but said it was linked to higher energy prices, adding that inflation expectations have remained stable. It also noted household spending has grown "a bit more quickly" but cautioned that business investment was softening. "The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the FOMC said. The FED, which has held rates close to zero for 4 years, had already bought $2.3T in mortgage-related & gov debt before it launched its latest round of stimulus. The problem is, GDP grew at an annual rate of just 1.3% in Q2. While the pace of recovery quickened a bit, it is not enough to put steady downward pressure on the jobless rate. At the same time, a looming tightening of US fiscal policy risks tossing the economy back into recession. Europe's debt crisis, a key source of concern for the FED, also remains unresolved, although it is not flaring up too wildly in financial markets, offering comfort that the US economy will escape any contagion.
Fed Says Growth ‘Moderate’ While Maintaining Bond Buying
Americans bought new homes in Sep at the fastest pace in 2 years, another sign the industry is bouncing back. Sales climbed 5.7% to a 389K annual pace, the most since Apr 2010, following a revised 368K rate in Aug, according to the Commerce Dept. The estimate called for an increase to 385K. Population growth & mortgage rates pushed to record lows by Federal Reserve purchases of housing debt are generating sales for builders & spurred the 3 year economic recovery. Housing starts in Sep jumped 15% to the fastest pace since Jul 2008, a report showed last week. Demand for new houses was up 27.1% from a year ago & the median price for a new house climbed 11.7% from the same month last year to $242K. Purchases increased in 3 of 4 regions, led by a 16.8% gain in the South & a 16.7% increase in the Northeast. But sales in the Midwest dropped 37.3%, the biggest decrease since Jan 1994.
Home Sales Rising to Two-Year High Spur U.S. Growth: Economy
This was another dismal day for the markets. The FED said nothing new, to be expected so close to the election. The earnings season continues to dominate the news & it has not been good. There were a few better reports today, but on balance companies are weighed down by sluggish demand for products & services. In addition, negative currency impacts many of the intl giants. On this uneventful day for the markets, Dow lost 50 in the last 1+ hours. Not a good sign going forward as it is only 76 above the 13K floor.
Dow Jones Industrials
No comments:
Post a Comment