Pimco, BlackRock See December Fed Hike Amid Mini Taper Tantrum
Pacific Investment Management Co., BlackRock Inc. and J.P. Morgan Asset Management said the Federal Reserve will probably raise interest rates in December and forgo action this week.
The odds of a move by year-end climbed above 50 percent Friday after the U.S. reported consumer prices in August rose more than analysts predicted. Before their Sept. 20-21 meeting, some Fed officials including Chair Janet Yellen stepped up rhetoric favoring a rate hike, which would be only the second since the authority cut its target to close to zero during the financial crisis of 2008. The Bank of Japan, which also meets on the same days, and the European Central Bank are studying the effectiveness of their own stimulus programs.
Dollar slips from two-week high before Fed and BOJ meetings
The dollar fell from a two-week high on Monday, with a stronger oil price the chief theme in a market battening down the hatches ahead of central bank policy meetings in Japan and the United States.
Commodity-linked currencies including the Canadian, Australian and New Zealand dollars were all half a percent higher in early trade in Europe as crude rose 1.5 percent on the back of speculation about OPEC production controls.
The dollar index .DXY, which measures its value against a basket of six major currencies, fell 0.2 percent to 95.888 =USD. Friday's rise was the dollar's biggest daily gain since late June. The euro was flat at $1.1159 EUR=.
Slim Majority of Economists See BOJ Boosting Stimulus Sept. 21
The Bank of Japan is as hard to predict as ever. Just over half of economists surveyed by Bloomberg forecast an expansion of monetary stimulus at the conclusion of the BOJ’s policy review next week. Others point to November, December and next year.
A small minority still expect no change in the foreseeable future. Among those who do see action this month or later, 53 percent project a deeper cut to the negative rate placed on a portion of commercial banks’ reserves at the BOJ. Thirty-five percent are looking for more purchases of Japanese government bonds, with some suggesting the BOJ may shift to a target range to give it more flexibility.
Oil prices rose almost 2 percent on Monday
Oil prices rose almost 2 percent on Monday, after Venezuela said OPEC and non-OPEC producers were close to reaching an output deal and as clashes in Libya raised concerns that efforts to restart crude exports could be disrupted.
Brent crude futures were at $46.54 per barrel at 0645 GMT (02:45 a.m. EDT), up 77 cents, or 1.7 percent, from their previous settlement. U.S. crude was up 78 cents, or 1.8 percent, at $43.81 a barrel
Reference: Bloomberg,Reuters
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