US Fed raises rates for second time since Great Recession

by finandlife15/12/2016 08:55

MINH TRANG, SENIOR FOREIGN CURRENCY TRADERS, SILICON VALLEY BANK, SANTA CLARA, CALIFORNIA:

"She basically came out to support the rate hike today. She is also giving a guideline for 2017 with possibly three rate hikes. This is a vote of confidence on the economy that's strong enough to support another rate hike. It paints a supportive picture for dollar. The dollar has been strong for the last 30 days. That's been the dominant move. Today that trend continues. The press conference is tempering the initial enthusiasm from the statement. More fiscal stimulus and more rate increases will create a stronger dollar but we are looking pretty far ahead. You are seeing more of a weakness against the yen at this point. I wouldn't be surprised to hear about the parity chant again on the euro with anti-establishment wind blowing there."

Relative:

Official FED Rate hike

 

Thomson Reuters

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Economics

US Fed rate hike drag on investor sentiment

by finandlife14/12/2016 08:47

Anticipation of a US Fed rate hike Thursday and resulting foreign outflows seem to be dragging on local investor sentiment.

The Minister of Industry and Trade has just signed Decision 4846 approving a plan to simplify administrative procedures in 2017. Accordingly, the Ministry of Industry and Trade (MoIT) decided to completely remove 15 procedures, such as the certified declaration of imported steel and the certified demand to import steel, and simplify 108 of 443 procedures under MoIT management.

The removal and simplification of nearly 28% of all administrative procedures will help to reduce time and costs for enterprises, attract investment and stimulate business activities. This is one of the biggest measures of the government to reform and improve the business environment. In 2016, the Government has repeatedly emphasized “improving the business environment” as one of its highest priorities. In 2017, the key indicators of the business environment are targeted to reach the average of the ASEAN-4 countries. Although Vietnam's business environment has been improving recently, there are many indicators where it still lags.

PNJ: PNJ's chairwoman reaffirms the company's insulation from DongA, announced impressive 11M results
* In a meeting this afternoon with analysts, PNJ's CEO and Chairwoman, Madame Dung confirmed that, apart from the investment in DongA Bank which has been fully provisioned, PNJ and its BOD will not be affected by the investigation of said bank.

* Regarding 11M 2016 operating results, PNJ recorded a revenue growth of 9% vs 11M 2015. Retail revenue grew 28%, driven by 25 new stores and a SSSG of 10% in 11M 2016. In line with the strong retail revenue growth, PBT posted a 31% increase year over year.

* For FY2016, PNJ estimates revenue and PBT growth of 11% and 205%, respectively, which trails our current forecast.

* Our view remains that the incident related to DongA Bank will not affect PNJ fundamentally. Hence, we reiterate our BUY recommendation with a TSR of 31.5% inclusive of a 2.6% dividend yield.

 

VCSC Research

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Economics | Stocks

Official FED Rate hike

by finandlife17/12/2015 09:40

An orthodox economist for unorthodox times

Reuters

Fed Raises Rates After Seven Years Near Zero, Expects ‘Gradual’ Tightening Path

Wall Street Journal

Dow rallies on heels of historic Federal Reserve interest-rate hike

 

Marketwatch

Fed Ends Zero-Rate Era; Signals 4 Quarter-Point Increases in 2016

Bloomberg 

“The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.

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Economics

Không nên bỏ qua khả năng tăng lãi suất trong 2015 của FED

by finandlife05/11/2015 09:05

Số liệu kinh tế Mỹ cho thấy nền kinh tế nước này hồi phục rất mạnh mẽ. Chỉ số PMI đã vượt xa dự báo trong tháng 10 (54 so với 52.8) cho thấy nền kinh tế đang hanh thông, số liệu việc làm và tình trạng khang hiếm lao động bắt đầu diễn ra. Những tín hiệu này cho thấy kinh tế Mỹ đã bỏ quá xa so với phần còn lại của thế giới, nhìn vào vòng tròn chu kỳ trên trang Markit, ta sẽ dễ dàng nhận thấy Mỹ đang ở vòng màu xanh, trong khi Việt Nam vẫn còn loay hoay ở vòng tròn màu đỏ. Nếu toàn cầu bước đi cùng nhịp với Mỹ, thị trường hàng hóa sẽ bắt đầu quay lại chu kỳ tăng giá rất sớm, nhưng chính vì sự lạc điệu giữa Mỹ và phần còn lại, đặc biệt là Trung Quốc -  quốc gia tiêu thụ nguyên vật liệu lớn của thế giới, sẽ làm cho quá trình dự báo phức tạp và khó hơn.

Quay lại vấn đề chính mà bài viết muốn đề cập, nếu đứng riêng 1 mình kinh tế Mỹ, có lẽ FED đã quyết định nâng lãi suất. Việc nâng lãi suất trong bối cảnh nội tại của Mỹ là rất hợp lý, 1 mặt giúp kìm cương kinh tế, 1 mặt hạn chế lạm phát sớm quay lại. Tuy vậy, đặt trong bối cảnh toàn cầu hiện nay, lạm phát đang quá thấp, mà nguyên nhân chủ yếu là vì giá nguyên vật liệu và năng lượng giảm mạnh, làm cho quyết định nâng lãi suất trở nên lưỡng lự. Nhưng dù sao đi nữa, quyết định nâng lãi suất vẫn có khả năng xảy ra trong 2015, với xác suất 40%.

Finandlife

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The possibility of a 2015 rate hike in the US should not be ignored

Futures-implied probability of a 2015 rate hike in the United States remains below 40%. Some market participants have all but dismissed this possibility as they look at weak global growth as well as soft inflation and inflation expectations in the US. Some have even suggested that the next policy move by the Fed should be a rate cut into negative territory.


However global growth and US inflation expectations may not necessarily the main focus at the Fed. For example, numerous economists
continue viewing the energy market crash as having only a transient (nhất thời) impact in inflation. The logic here is that if we freeze crude oil prices at current levels (below $45/bbl), by early 2016 the year-on-year change will be around zero.

And a number of energy analysts expect crude oil prices to begin gradually rising going forward. To many forecasters this would imply that crude oil price weakness will no longer have such a severe impact on the rate of inflation.

Of course some would say that low fuel prices have not yet fully made their way through the economy - suggesting that the disinflationary pressures will persist for some time. Similarly some argue that the full effects of the dollar rally in the first half of 2015 are yet to be fully felt.
Nevertheless many economists view the headline inflation approaching the core measures by early 2016, with the core CPI turning higher as well. Moreover, a slew of recent US economic reports suggests that while the
US economy probably slowed in the second half due to dollar strength and weakness abroad, the effect may be transient.

The housing market for example continues to recover and consumer sentiment and spending does not seem to be impacted by the recent market volatility.

 

Even US manufacturing which has been under pressure recently is showing signs of stabilization. The latest Markit manufacturing PMI report surprised to the upside.


But what about the relatively poor payrolls report for September, which clearly missed expectations? Some economists argue that this is as much about slower hiring as it is about tight labor markets. For example (as we saw in the latest Pulte Homes quarterly report), the homebuilding industry is struggling with acute labor shortages. Of course as the Wall Street Journal recently pointed out, the US housing correction has been so severe that a whole generation of construction workers has permanently exited the industry, creating shortages as the sector recovers. Nevertheless when the Fed hears about labor shortages in an industry such as housing, they take notice.

Signs of tighter labor markets have also appeared in the latest NFIB reports on small business. When speaking with small businesses it becomes clear that there is no shortage of applications for each opening they have. But they can't seem to find people with the right experience and/or skill set (skills gap).

Moreover, the broader unemployment measures continue to improve. Here is the so-called "U-6" for example, which according to some economists is about 1% away from "full employment" (see quote).

Whatever the case, many argue that this is a precursor to acceleration in US wage growth. We haven't seen a great deal of evidence of that so far, but many economists (including those at the Fed) are convinced that it's only a matter of time.

One of the concerns the FOMC had in September was the risk of a rapidly deteriorating economy abroad, particularly in China. It has since become clear that while China's economy continues to slow, the combination of aggressive fiscal and monetary stimulus there is likely to cushion the decline.

Some may remember that in September of 2013 in the wake of the so-called "taper tantrum" the Fed decided to continue with QE. The central bank however started tapering three months later. The "playbook" this time around could be similar.

Are global markets prepared for a December liftoff? It seems that while credit markets remain cautious, there is much less uncertainty priced into US equity markets. A relatively strong employment report next week for example could reignite market volatility.

Many argue that the US economy can withstand a rate hike at this point. Indeed it can. However, given that much of the world is currently in a monetary easing mode, such a move by the Fed would result in a further rally in the US dollar. We saw the Bank of Canada strike a dovish tone recently, the PBoC is in the middle of a major easing cycle, the BoJ is in a perpetual QE, and the ECB is fully expected to expand its stimulus.

A further dollar rally would exacerbate the rout in emerging markets, potentially forcing China to resume the RMB devaluation. Disinflationary pressures in the US could worsen and the manufacturing sector would take another hit. Nevertheless, it seems that many at the Fed are willing to overlook such an outcome and begin the first rate hike cycle in nearly a decade.

 

Nguồn: http://soberlook.com/

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Economics

Fed Watch: Yellen Strikes a Dovish Tone

by finandlife19/03/2015 09:06

Tim Duy:

The FOMC concluded its two-day meeting today, and the results were largely as I had anticipated (dự đoán). The Fed took note of the recent data, downgrading the pace of activity from "solid" to "moderated." They continue to expect inflation weakness to be transitory. The risks to the outlook are balanced. And "patient" was dropped; April is still off the table for a rate hike, but data dependence rules from that point on.

Growth, inflation and unemployment forecasts all came down. Especially important was the decrease in longer-run unemployment projections. The Fed's estimates of NAIRU are falling, something almost impossible to avoid given the stickiness of wage growth in the face of falling unemployment. The forecast changes yielded a downward revision to the Fed's interest rate projections. In addition, the strong dollar was clearly on the Fed's mind. Federal Reserve Chair Janet Yellen often referred to the dollar and its impact on growth in the press conference, much more than I expected. I think they are probably happy the dollar took a hit today. On net, I think this from last week stood up well:

...assuming the Federal Reserve takes sufficient note of the rising dollar, and its impact on inflation, by lowering the expected path of short term interest rates. And perhaps this is exactly what is revealed in next week's Summary of Economic Projections. Look for the possibility next week that the Fed is both hawkish - by opening the door for a June hike - and dovish - by lowering the median rate projections in the dot plot.

Note that the Fed is capitulating here. The distance between the bond market and the Fed rate expectations has been something of a conundrum (/kəˈnʌndrəm/ n đau đầu, hóc búa) for policymakers. But it is now clear the bond market is not moving toward the Fed; the Fed is moving toward the bond market. Going forward, they still believe that their rate forecast is accommodative (thích nghi). Based on the new estimate of NAIRU and New York Federal Reserve President William Dudley's recent estimate of the equilibrium (/ˌiːkwɪˈlɪbriəm/ n cân =) rate, they are correct:

 

But if you assume a lower equilibrium interest rate, the Fed's rate forecast has more downside to it if they wish to remain accommodative:

 

For what it's worth, this is what San Fransisco Federal Reserve President John Williams' research suggests about the current equilibrium rate:

Is June really on the table? Regarding the timing of the first rate hike, the FOMC had this to say:

The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

Yellen was pushed to quantify "reasonably confident" during the press conference, but she declined to give a mechanical answer. Actual inflation, the path of the labor market, wage growth, and measures of inflation expectations were all fair game in the assessment. She did say wage growth was not a precondition (điều kiện tiên quyết) for rate hike. I tend to think that unemployment dropping to 5% or an acceleration in wage growth is sufficient to prompt the first rate hike, either of which could still happen by the time of the June meeting. That said, at this point, the inflation and growth data point to a later lift-off, and weighting the expectations for a rate hike at a later date seems appropriate at this juncture.

Bottom Line: Yellen does it again - she moves the Fed both closer to and further from the first rate hike of this cycle. By moving toward the markets on the path of rate hikes, the Fed acknowledges that they are eager to let this recovery run on. Moreover, they proved that they are in fact data dependent by moving policy in the direction of the data. Overall, Yellen has managed the transition away from what the Fed came to see as excessive forward guidance just about as well as could be expected.

After declare, Dow go up strongly and USD Index go down sharply.

Source: economistsview

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Economics

DISCLAIMER

I am currently serving as an Investment Manager at Vietcap Securities JSC, leveraging 16 years of experience in investment analysis. My journey began as a junior analyst at a fund in 2007, allowing me to cultivate a profound understanding of Vietnam's macroeconomics, conduct meticulous equity research, and actively pursue lucrative investment opportunities. Furthermore, I hold the position of Head of Derivatives, equipped with extensive knowledge and expertise in derivatives, ETFs, and CWs.

 

To document my insights and share personal perspectives, I maintain a private blog where I store valuable information. However, it is essential to acknowledge that the content provided on my blog is solely based on my own opinions and does not carry a guarantee of certainty. Consequently, I cannot assume responsibility for any trading or investing activities carried out based on the information shared. Nonetheless, I wholeheartedly welcome any questions or inquiries you may have. You can contact me via email at thuong.huynhngoc@gmail.com.

 

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