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2013 - The Year Of The Non-G7 Rate Cut

Tyler Durden's picture





 

Israel's 25bp cut in its policy rate earlier in the week was the 514th reduction worldwide since June 2007 (and Serbia this morning the 515th). As Bloomberg's Niraj Shah notes, Eastern European countries have made the biggest cuts this year as their economies struggle to grow. With the ECB's cut taking its 'real' rate to -0.7%, Belarus has cut borrowing costs by an impressive 500bps in 2013 (more than any other central bank) followed by Poland and Hungary. As we noted last week, it seems the Einsteinian repetition of failed actions is not a fool's errand, instead it appears the domain of the smartest people in the room - or simply fighting the hot money flow drivers with their own weapon (but as Bernanke told us - its not competitive devaluation if we all do it).

 

 


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Tue, 05/14/2013 - 20:16 | Link to Comment EscapeKey
EscapeKey's picture

OT - The Nikkei is up another 1.7% in the opening minutes. And 10-yr Jap Govt bonds are up 0.06 to (a still ludicriously low) 0.92.

 

Tue, 05/14/2013 - 20:19 | Link to Comment fonzannoon
fonzannoon's picture

What does it take to halt the 10yr?

Tue, 05/14/2013 - 20:30 | Link to Comment Frozen IcQb
Frozen IcQb's picture

Ask Truman.

Tue, 05/14/2013 - 20:27 | Link to Comment LawsofPhysics
LawsofPhysics's picture

How's this; The Japanese are savers, they are seeing their savings stolen, the are buying gold and other physical asset. This round of printing is going to cover existing liabilities and buy Japanese bonds. It would explain the lack of a bid on U.S. Treasuries. Once the world begins printing to simply cover existing liabilities and interest, things will start unwinding much faster.

Tue, 05/14/2013 - 20:40 | Link to Comment DormRoom
DormRoom's picture

"Neoclassical growth theories normally do not distinguish the overall population from the working-age population for reasons of analytical simplicity. However, without taking into account the distinction between the two variables explicitly, the very challenges that Japan is currently faced with will be outside the scope of analysis." - Masaaki Shirakawa, former governor of the Bank of Japan.

 

src: http://www.boj.or.jp/en/announcements/press/koen_2012/ko120530a.htm/

 

No new babies, Japan needs to export its way to growth to compensate for an accelarated aging population.  Thus crush the yen.  The wider consequence is the aging baby boomer population in advanced economies (huge demographic bulge), and the need for nation states to export their way to growth, all at once.  Not an ideal condition for global harmony.

Tue, 05/14/2013 - 20:19 | Link to Comment knukles
knukles's picture

Golly and gosh Gomorrah, the G's already have rates near the bottom of the proverbial well, excepting a few majors out there like OZ, so the only guys who can cut are the other worlders.
You know, them guys who don't exist for real other than that Jim O'Neil conjured 'em up so Goldman could sell imaginary paper from...

Print, print, print... Debase them currencies

Tue, 05/14/2013 - 20:18 | Link to Comment NoDebt
NoDebt's picture

Sustainable.

Tue, 05/14/2013 - 20:18 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Money for Nothing

(chicks for free)

 

Tue, 05/14/2013 - 20:18 | Link to Comment NoDebt
NoDebt's picture

Sustainable.

Tue, 05/14/2013 - 20:19 | Link to Comment Yen Cross
Yen Cross's picture

     Look at last May selloff, and what did the dollar do?   It went up in value! 

     Look at this may during POMO rampfest, and what is the dollar doing?  The U.S. is Japan light... Good F**king luck with exports 'Chair Satan". You've effectively F**Ked what was left of the middle class, you F**king piker douche bag!

Tue, 05/14/2013 - 20:21 | Link to Comment fonzannoon
fonzannoon's picture

Yen I have been thinking about this. We all agree the US does not export anything really other than dollars at this point. Most US mega caps do more business overseas. Maybe a strong dollar does not hurt like it used to?

Tue, 05/14/2013 - 20:26 | Link to Comment Gromit
Gromit's picture

Doesn't hurt till it does.

Tue, 05/14/2013 - 20:37 | Link to Comment Yen Cross
Yen Cross's picture

   [IMG]http://imageshack.us/a/img10/9232/esdaily.png[/IMG]

  I'm making a lot of money right now fellas. I'm not trading ES. I just follow it. The U.S. multinationals report earnings in the United States, even though they keep vast amounts of cash offshore. Japan has done the multinational route a few times and got eaten alive. U.S. exporters are already bitching about how a stronger dollar was eating into their earnings in Q-1.

Tue, 05/14/2013 - 20:21 | Link to Comment Glass Seagull
Glass Seagull's picture

 

Little guys sick and tired of being the G7 FX whipping posts.

Tue, 05/14/2013 - 20:25 | Link to Comment Seasmoke
Seasmoke's picture

Well at least my Gold will be going up in Belarus

Tue, 05/14/2013 - 20:26 | Link to Comment SeeNoEvil
SeeNoEvil's picture

New World Order 

Tue, 05/14/2013 - 20:57 | Link to Comment q99x2
q99x2's picture

What's worse than a central banker. Two or more central bankers.

Tue, 05/14/2013 - 21:26 | Link to Comment Curiously_Crazy
Curiously_Crazy's picture

The reason the US, UK, Japan and a bunch of others are not on the list is that they already hit the bottom along time ago. Can't make a list of largest cuts when there is only a bees dicks worth to cut.

 

For a point of reference although Australias Reserve Bank interest rates are at an all time low it's still sitting on 2.75%; compare:

USA: 0.25%

UK: 0.5%

ECB: 0.5%

Japan: 0.1%

 

Ref: http://www.global-rates.com/interest-rates/central-banks/central-bank-au...

Wed, 05/15/2013 - 01:11 | Link to Comment Golden_Rule
Golden_Rule's picture

"but as Bernanke told us - its not competitive devaluation if we all do it"

Then its just rape and slavery.

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