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Fed: Likelihood of Interest Rate Hike in September is 50%

The president of the Federal Reserve Bank of Saint Louis, James Bullard, yesterday announced that the likelihood of a September interest rate rise is 50%.

Today the Bank of Japan’s minutes from meetings on 18th and 19th June became public. A few of the central bank’s nine representatives said that the line of policy that the bank has taken has possibly seen its influence waning, taking into account, amongst other things, the long-term interest rate hikes.

The Bank of Japan’s leadership often uses low returns on state bonds as proof of how the bank’s policies are helping economic growth and countering inflationary pressures. However, the interest on the ten-year bonds grew to around 0.55% in June in comparison with October 2014’s 0.45% when the regulator increased the amount of asset purchases it was making by 33%. The return on the 10-year bonds is now around 0.43%. In June the Bank of Japan kept its monetary policy unchanged.

The minutes from the Reserve Bank of Australia’s 2nd June meeting were also published today. In them we saw a hint of optimism for future growth with regards to employment. Furthermore, the documents mentioned that the demand for labour from the private sector looks sufficiently strong to combat and lower unemployment. Investment, excluding investments in the mining sector, will probably remain conservative for the meanwhile. Profits are rising and conditions for business are on the whole improving: now being a little better than average.

The RBA also indicated that interest rates will be left at a record low of 2.0% for the meanwhile, whilst incoming economic data will help to make clearer whether the current monetary policy situation is appropriate. At the same time it was noted that the Aussie dollar recently fell to a 6-year low against its US counterpart and that it needs to weaken further against other key currencies.

Tomorrow the RBA’s governor, Glenn Stevens, could make an important announcement about the current state of the Australian economy during a press conference.

According to data published today by the Chinese ministry for trade, in the first half of this year, the country was able to attract 420.52 billion yuan (67.7 billion dollars) of FDI. This is 8.3% higher than the same period a year ago. The June figures for FDI were 89.57 billion yen (14.42 billion dollars): 0.7% higher than last year’s June figures. In May, YOY FDI showed an increase of 7.8% to reach 9.33 billion dollars.

Chinese economic growth has slowed, causing doubts about the country’s attractiveness for investment. In 2014 the amount of FDI in the country rose by 1.7% to 119.60 billion dollars. In 2013 the growth was by 5.26%, making a total of 117.59 billion dollars. In the first half of this year, EU FDI in the country reached 4.08 billion (13.7% more than the previous year). In this time, US FDI in China reached 1.09 billion dollars (37.6% less than the first half of last year). From Japan figures showed a reduction of 16.3% to 2.01 billion dollars. In the first half, of the year non-financial direct investment rose YOY by 29.2% to 56 billion dollars.

Today it became clear that the Chinese Central Bank has injected extra capital into two state-private shared banks to help them support the weakening economy. The People’s Bank of China sent 48 billion dollars to the Chinese Development Bank and stumped up 45 billion for the Export-Import Bank of China. The Chinese ministry of finance also offered 16 billion dollars the Agricultural Development Bank of China; one of the largest private sector state shared banks in the country. In April the State Council of China ruled that the capital base for these three state-private banks should be increased as part of a reformation plan.

Today it’s worth casting a glance at the API’s data on US oil reserves.

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