News / Economy

Fed in Focus as Investors Seek Reassurance

The Federal Reserve headquarters in Washington, Sept. 18, 2013.
The Federal Reserve headquarters in Washington, Sept. 18, 2013.
Reuters
— Investors will look to the Federal Reserve for reassurance in the coming week, with little economic data to assuage their concerns over the strength of the global recovery, amid signs Iraq may be sliding into civil war.
 
The Fed, which wraps up a policy meeting on Wednesday, is expected to keep steadily reducing its massive bond-buying stimulus by $10 billion per month.
 
Financial markets will be listening out for any hints on when the U.S. central bank might begin raising interest rates.
 
“The Federal Reserve is preparing to move to the second step of the monetary policy exit. With the tapering of asset purchases virtually on auto pilot - QE3 is projected to end in late summer or early autumn - the focus is gradually shifting towards actual rate hikes,” Unicredit said in an investor note.
 
It said the notion that U.S. monetary policy has reached a turning point could be strengthened if the Fed policymakers' median rate forecast for the end of 2016 stays at 2.25 percent, where it stood in March, up from 1.75 percent in December.
 
The matrix of dots for when each rate-setter expects policy to begin tightening - and how quickly - will be keenly scrutinized, as will any comments about rate hikes or slack in the economy from Fed Chair Janet Yellen, who speaks after the results of the meeting are released.
 
While the world's largest economy got off to a weaker than expected start this year, many analysts believe the underlying trend for growth remains solid.
 
Global stocks are likely to stay on the back foot due to concerns over a growing radical Islamist insurgency in Iraq. U.S. President Barrack Obama said he didn't rule out air strikes to help Iraq counter the insurgency, but later said he needed several days to determine how the United States would react.
 
The escalating violence in Iraq drove oil prices to a nine-month high on Friday.
 
BOE minutes

The monetary policy outlook will also be in focus in Britain after Bank of England Governor Mark Carney stunned the markets by saying rates could rise sooner than financial markets expect.
 
His comments, which put the British central bank out ahead of the world's other major policy guardians on the monetary tightening front, pushed sterling to near five-year highs against the dollar on Friday.
 
The Bank publishes the minutes of its June policy meeting on Wednesday, which will be closely watched for signs of any further division among its members on rates, and several of its policymakers will be speaking during the week.
 
The Bank's new Financial Policy Committee, which has the power to rein in an overheating housing market, meets on Tuesday, although the meeting minutes will not be published for a couple of weeks.
 
Meanwhile, the ECB's fight against deflation via interest rate cuts and measures aimed at stimulating lending to crisis-hit companies, means few expect further action from it for now.
 
“The ECB has bought itself some quiet time, maybe for the remainder of this year. It doesn't want to be pushed in to any additional movements before then,” economist at Deutsche Bank Gilles Moec said.
 
There will be few key economic indicators from the euro zone, with the German Zew index for June in focus after better-than-expected industrial output data and rising confidence in the bloc suggesting growth is accelerating in the second quarter.
 
Bond markets will look to absorb debt supply from Spain, Germany and France after a heavy issuance last week including 9 billion euros of a new 10-year bond from Spain and paper from France, Italy, Germany and Portugal.
 
Yield-hungry investors will be watching for news of a possible debt sale by Cyprus just a year after it bailed in bank depositors and imposed capital controls. That would make it the last euro zone member that took financial aid to make a market comeback.
 
The Bank of Japan publishes the minutes of its monthly policy meeting on Friday but is not expected to have moved from an optimistic viewpoint that the country is in the midst of a virtuous cycle of employment and output growth, analysts say.
 
“There is some support to this theory. The unemployment rate remains very low and job offers to applicants ratios are moving steadily higher. Add to this the slight improvement in cash wages, and the firmer backdrop to the Japanese economy than that prevailing back in 1997,” said ING in an investors note.
 
China will issue foreign direct investment data on Tuesday and house price figures on Wednesday. A slowdown in property inflation is likely to stoke fears about a deepening downturn in the sector.

You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Treatment for Childhood Epilepsy Heats up Medical Marijuana Debatei
X
Shelley Schlender
July 24, 2014 6:43 PM
In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video Death Toll From Israel-Gaza Conflict Surpasses 700

Gaza officials say a shelling hit a compound housing a United Nations-run school in the Gaza Strip, killing more than a dozen people, during an Israeli offensive in the area. Heavy fighting between the Israeli military and Hamas militants continued on Thursday, pushing up the death toll. So far, more than 730 Palestinians and 35 Israelis have been killed in the conflict. VOA's Scott Bobb has the latest from Jerusalem.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Researchers Target Low-Cost Avatar Technology

Scientists at the University of Southern California Institute for Creative Technologies say 3-dimensional representations could revolutionize social media. Elizabeth Lee has more from Los Angeles.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.