March 22 2018

Janet Yellen defends U.S. regulations

March 22 2018, 03:57 | Clarence Walton

Moves were mainly small ahead of speeches later by Federal Reserve and European Central Bank heads Janet Yellen and Mario Draghi at one of the highlights of central banking calendar, the Jackson Hole, Wyoming, symposium, but there was some traction.

Draghi said global trade and cooperation is under threat, a risk to productivity and ultimately growth in advanced economies.

Back in 2014 at the Kansas Fed mountain resort, Draghi made a last-minute addition to his speech to say euro-area inflation expectations were falling "at all horizons", meeting a precondition that he had previously said would warrant QE.

"There was a risk that Yellen would've said something", Chandler said.

The dollar index, which tracks the greenback against a basket of other major currencies, fell 0.3 percent to 92.498, its lowest level since January 2015. Growth is spreading beyond traditional powerhouses like Germany and the Netherlands to Italy and Spain, whose economy expanded by 0.9% in the second quarter, the fastest pace in nearly two years.

Yellen's predecessor, Ben Bernanke, signaled a new round of Fed bond purchases in 2010 to try to invigorate a weak USA recovery.

"The worry still remains about the 10-year (benchmark Treasury note) rate, still below 2.2 percent", said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

As far as Ms Yellen's Fed is concerned, the absence of any overt message about balance sheet normalisation and interest rates hikes in last week's speech was to be expected and has little to no implications for either of these policy tools over the rest of the year. WTI was last trading at $47.81 a barrel, up 0.84% and Brent crude was at $52.55, up 0.98%. The Dow Jones Industrial Average, S&P 500, and NASDAQ all rose on the news as did oil and gold. "A further nudge down would see the chartists salivating, calling for another 5-plus percent fall".

European share markets closed lower.

For want of answers from Ms Yellen on the direction of monetary policy, investors sent the United States dollar tumbling, leaving it down 0.8 per cent against a basket of currencies shortly after 2000 GMT.

He said Harvey would likely further weigh on the US dollar since it's "a major negative weather event "and "obviously bad for the economy".

Treasury Secretary Steven Mnuchin said the US debt ceiling, a hurdle to be crossed before any tax reform can take place, will be raised in September and that after talks with congressional leaders from both parties everyone is "on the same page".

Petroleum-linked stocks gained as some oil producers curtailed production due to Hurricane Harvey and gasoline prices rose in anticipation of refinery outages.

OIL: Benchmark U.S. crude oil fell 19 cents to $48.22 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the worldwide pricing standard, fell 15 cents to $52.42 per barrel in London.

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