Barclays has created the following chart which lays out what "coordinated global renormalization" would look like. It can serve as a benchmark to those keeping tabs on where various central banks are in the current attempt to restore monetary normalcy.
The three key stakeholders in this argument, governments, businesses and consumers, all have varied benefits from shifting away from cash... although the advantages of moving away from cash are perhaps the most pronounced for governments.
The Russian Central Bank surprised markets when it unexpectedly cut interest rates by 25 bps to 9.75% (30 economists expected no change, 8 predicted a 25 bps cut), its first rate cut in four meetings or 7 months, as inflation, which has dropped from a peak of 17% to just 4.6% last month, appears to be under control.
Asian shares and S&P futures rose on optimism that today's rescheduled U.S. vote on health care will pass following Trump's Ultimatum to the Freedom Caucus. European stocks gave up some of Thursday’s gains, falling for the fourth time in five days, and moving further away from a 15-month high reached a week ago while the yen weakened for the first time in nine days.
This morning Yellen has decided to continue her trolling of the US population, and following her September 2014 speech in which she explained to the poor, that it is important to get rich, in today's speech Yellen tells her audience that “considerable evidence shows that growing up poor makes it harder to succeed as an adult." Maybe it's time to give every baby a million dollars then?
European and Asian stocks were modestly in the green, with U.S. futures higher, before a critical procedural vote on a Republican health-care bill to repeal Obamacare, while Janet Yellen is set to speak in Washington at 8:45am.
During the so-called Chinese Banking Liquidity Crisis of 2013, the relative cost of funds for non-bank institutions spiked to 100bps. So, the fact that the 'shadow banking' liquidity premium has exploded to almost 250 points - by far a record - in the last few days should indicate just how stressed Chinese money markets are.
Despite what appears to be an inflection point of radical change, most of which remains unknown, the consensus opinion of professional economists and markets, in general, are well-aligned, optimistic and seemingly convinced about how the economy and markets will evolve throughout the year. The consensus forecast based upon an assessment of economic projections from major financial institutions appears to be the result of a Ph.D. echo chamber, not rigorous independent analysis.
As is customary virtually every time the Chinese central bank commences some form of tightening, overnight China’s central bank injected hundreds of billions of yuan into the financial system after some smaller lenders failed to repay borrowings in the interbank market, according to traders cited by Bloomberg.
The key economic releases this week are the new home sales report on Thursday and the durable goods report on Friday. In addition, there are several scheduled speaking engagements by Fed officials this week, including a speech by Chair Yellen on Thursday.