When Yellen Gets Less Predictable She's Getting Back to Normal
(Bloomberg) -- Janet Yellen wants to be less predictable, if only a little.
Should the Federal Reserve this week jettison a promise to remain "patient" about raising interest rates, as anticipated by economists, the omission will mark the end of an era in Fed communications policy and could usher in a period of greater market volatility.
Beginning in June, and for the first time since 2008, officials would be making rate decisions meeting-by-meeting, based purely on the data in front of them, rather than committing themselves to keeping borrowing costs low.
China's Swaps Drop Most in Six Weeks as Central Bank Cuts Yield
(Bloomberg) -- China's interest-rate swaps dropped the most in six weeks after the central bank cut a short-term lending rate for the second time this month, helping counter a slowdown in the world's second-largest economy.
The People's Bank of China said it auctioned seven-day reverse-repurchase agreements at 3.65 percent, down from 3.75 percent last week. The rate was also lowered by 10 basis points on March 3, two days after benchmark interest rates were reduced for the second time in three months. Capital outflows are complicating efforts to bring down borrowing costs as the economy expands at the slowest pace in two decades.
The cost of one-year swaps, the fixed payment to receive the floating seven-day repurchase rate, fell 13 basis points to 3.63 percent as of 4:38 p.m. in Shanghai, data compiled by Bloomberg show. That's the biggest drop since Feb. 4. The rate climbed to 3.83 percent earlier, the highest level since July.
Brent comes off 6-week low to rise above $54, but glut worries drag
(Reuters) Brent Crude rose above $54 a barrel in choppy trade on Tuesday, recovering some of the previous session's losses when it hit a six-week low, but concerns over a growing supply glut kept a lid on gains.
Prices on the other side of the Atlantic fell for a sixth session to just above a six-year low, keeping their discount to Brent at near $10, a trend that analysts say could deepen.
"The oil market is currently oversupplied, driven in part by the success of North American shale," Morgan Stanley said.
While the U.S. rig count has dropped from 1,809 rigs a year ago to 1,125 last week, past cycles have shown there is "often a lag between when drilling stops and when oil supply stops growing", the bank said in a note.