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Summers says U.S. economy's freefall has ended
Sun Apr 26, 2009 12:10pm EDT
Obama economic adviser sees positive US economic signs
* Summers says 'sense of unremitting freefall' has ended
* Treasury's Geithner says US to sustain economic support
....
http://www.reuters.com/article/economicNews/idUSN2648927420090426
April 24, 2009
By Manoj Pradhan & Joachim Fels | London
Global quantitative easing (QE) is alive and kicking: Purchases of government securities and risky assets by the Fed, the BoJ and the BoE are slowly but surely delivering the double thrust of an expanding money supply as well as lower yields and tighter spreads. However, markets have not paved the way unquestioningly for these unconventional measures. Money supply growth in the US has eased somewhat since the start of the year even as the Fed has stepped up the size of its ‘active QE’ programme (see “QE2”, The Global Monetary Analyst, March 4, 2009 for the definition of active/passive). Further, 10-year Treasury yields have backed up to within 10bp of the 3% mark, up from the lows of nearly 2% at the end of last year and also up from the 2.5% level reached when plans to purchase Treasury securities were announced on March 18. Are these developments reason enough to doubt the success of QE? Or do they suggest that the Fed now has to do more to get QE back on track? The answer to both questions, in our view, is no. The majority of the active QE programmes by the Fed and other central banks are yet to be implemented, with further enhancements in the size and scope of these purchases still possible. The global, synchronised nature of these unconventional measures is also important because it brings into play the strong links that are present among international financial markets.
...
Global QE fanbase is growing: Active QE is generating some interest even in economies where policy rates are far away from ZIRP. The Reserve Bank of India (RBI) recently announced that it would buy US$16 billion of government bonds and prematurely buy back US$8.4 billion of its own bonds (see India – Flirting with QE, April 7, 2009), resulting in an unsterilised injection of liquidity that seems to be aimed at shoring up falling M1 growth. The purchases of government securities would also encourage bond yields to fall in line with the rate cuts that the RBI has continued to deliver, the latest taking policy rates to 4.75%.
...
Bottom line: Our survey of money supply measures, interest rate levels and spreads all suggest that active and passive QE is doing what it is supposed to do: increase money supply and improve financing conditions. Importantly, most central banks are not even halfway through with their announced active QE programmes, and the size of these programmes could easily be increased, if needed. Thus, we continue to expect global QE to be an important contributor to a bottoming of the global economy over the summer and to prevent temporary and ‘good’ deflation (deriving from declines in energy and food prices) from turning into lasting and ‘bad’ deflation.
http://www.morganstanley.com/views/gef/archive/2009/20090424-Fri.html
http://translate.google.com/translate_t?hl=it#
Summers says U.S. economy's freefall has ended
Sun Apr 26, 2009 12:10pm EDT
Obama economic adviser sees positive US economic signs
* Summers says 'sense of unremitting freefall' has ended
* Treasury's Geithner says US to sustain economic support
....
http://www.reuters.com/article/economicNews/idUSN2648927420090426
April 24, 2009
By Manoj Pradhan & Joachim Fels | London
Global quantitative easing (QE) is alive and kicking: Purchases of government securities and risky assets by the Fed, the BoJ and the BoE are slowly but surely delivering the double thrust of an expanding money supply as well as lower yields and tighter spreads. However, markets have not paved the way unquestioningly for these unconventional measures. Money supply growth in the US has eased somewhat since the start of the year even as the Fed has stepped up the size of its ‘active QE’ programme (see “QE2”, The Global Monetary Analyst, March 4, 2009 for the definition of active/passive). Further, 10-year Treasury yields have backed up to within 10bp of the 3% mark, up from the lows of nearly 2% at the end of last year and also up from the 2.5% level reached when plans to purchase Treasury securities were announced on March 18. Are these developments reason enough to doubt the success of QE? Or do they suggest that the Fed now has to do more to get QE back on track? The answer to both questions, in our view, is no. The majority of the active QE programmes by the Fed and other central banks are yet to be implemented, with further enhancements in the size and scope of these purchases still possible. The global, synchronised nature of these unconventional measures is also important because it brings into play the strong links that are present among international financial markets.
...
Global QE fanbase is growing: Active QE is generating some interest even in economies where policy rates are far away from ZIRP. The Reserve Bank of India (RBI) recently announced that it would buy US$16 billion of government bonds and prematurely buy back US$8.4 billion of its own bonds (see India – Flirting with QE, April 7, 2009), resulting in an unsterilised injection of liquidity that seems to be aimed at shoring up falling M1 growth. The purchases of government securities would also encourage bond yields to fall in line with the rate cuts that the RBI has continued to deliver, the latest taking policy rates to 4.75%.
...
Bottom line: Our survey of money supply measures, interest rate levels and spreads all suggest that active and passive QE is doing what it is supposed to do: increase money supply and improve financing conditions. Importantly, most central banks are not even halfway through with their announced active QE programmes, and the size of these programmes could easily be increased, if needed. Thus, we continue to expect global QE to be an important contributor to a bottoming of the global economy over the summer and to prevent temporary and ‘good’ deflation (deriving from declines in energy and food prices) from turning into lasting and ‘bad’ deflation.
http://www.morganstanley.com/views/gef/archive/2009/20090424-Fri.html
http://translate.google.com/translate_t?hl=it#
