Here's why the Fed can't raise rates
Mauldin Economics said, “I think the Fed is targeting a 2% inflation rate because it offers the best excuse to keep interest rates low. And the reason the Fed wants to keep interest rates low is that the carrying cost of our nearly $19 trillion of national debt would explode if rates moved substantially higher.”
Commodity rout over worst as China fears Ebb, Citigroup says
Commodity prices have probably bottomed amid brighter prospects for Chinese demand, a weaker dollar and signs of tighter supplies, according to Citigroup Inc.
“There is growing evidence that virtually all commodities have stared at a price bottom and are groping for a return to normal,” analysts including Ed Morse said in a report received Monday. Petroleum and natural gas markets are recovering, while industrial metals are advancing as China’s property market picks up, they said. Iron ore’s rally will fade amid oversupply.
Recent signs of stabilization in China are “likely a result of improved real estate activity and infrastructure investment on the back of broad-based credit easing,” the analysts wrote. In a further indication of a stronger Chinese property market, data released Monday showed home-price increases spreading to more cities.
Raw materials were battered at the start of this year on fears that a slowdown in China, the world’s biggest consumer, would hit demand for everything from oil to iron ore and copper. Prices have recovered after the country’s leaders took steps to stabilize Asia’s biggest economy, with the Bloomberg Commodity Index up 9 percent from January, when the gauge fell to the lowest since the data started in 1991.
Dollar falls near 18-month low against yen as oil producers fail to agree on freeze
The yen was sharply higher against rival currencies on Monday after major oil producers failed to reach a deal to curb production, prompting investors to rush into the safe-haven Japanese currency.
The U.S. dollar USDJPY, -0.69% tumbled to ¥107.75 yen, near its 18-month low of ¥107.63 hit on April 11, before recovering to trade at ¥108.26. That compared with ¥108.78 late Friday in New York — a drop of 0.5%.
Botched Doha deal undermines OPEC credibility, oil prices tumble
Benchmark U.S. crude futures were down more than 5 percent at $38.31 a barrel.
Oil prices tumbled on Monday after a meeting by major exporters in Qatar collapsed without an agreement to freeze output, leaving the credibility of the OPEC producer cartel in tatters and the world awash with unwanted fuel.
Tensions between Saudi Arabia and Iran were blamed for the failure, which revived industry fears that major government-controlled producers will increase their battle for market share by offering ever-steeper discounts.
"OPEC's credibility to coordinate output is now very low," said Peter Lee, oil analyst at BMI Research, a unit of rating agency Fitch. "But this isn't just about oil for the Saudis. It's as much about regional politics."
"In the near-term, lower oil prices are bound to weigh on investor confidence and could exacerbate financial volatility," said Frederic Neumann, co-head of Asian economics research at HSBC.
Reference: Business Insider, Energy Voice, MarketWatch, Reuters
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