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11 Dec 2014
US developments that if you blinked you missed - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman noted that the markets have been more tumultuous than usual in recent days.
Key Quotes:
“There were developments that are important for investors to know about, but many likely missed”.
“Yesterday the US reported the November budget deficit. At $56.8 bln, it was more than 10% less than economists projected. The budget shortfall in November 2013 was $135.2 bln”.
“The new fiscal year is two months old. Thus far the budget deficit for the FY15 is $178.5 bln down from $225.8 bln in the first two months of the last fiscal year”.
“The path the US took seemed perverse to many. The US adopted aggressive monetary and fiscal policies to address a debt crisis relatively early on. This produced large budget deficits, which translated into greater debt. The budget deficit peaked over 10% of GDP. It took a couple of years to demonstrate the superiority of the US strategy over that which tended to be deployed by Europe, under Germany and other creditors' tutelage.”
“The US one-year T-bill rate hit a three-year high yesterday of nearly 23 bp. It essentially doubled from the end of last month”. It is especially noteworthy because the heavy losses in the equity market typically sees lower Treasury yields as investors flock to security”.
“The Federal Reserve is developing the tools that it will employ to manage huge volume of excess reserves when it raises interest rates. Given the higher bill and Fed funds rates, Fed officials may be confident that they will be prepared to raise rates when the time comes”.
Key Quotes:
“There were developments that are important for investors to know about, but many likely missed”.
“Yesterday the US reported the November budget deficit. At $56.8 bln, it was more than 10% less than economists projected. The budget shortfall in November 2013 was $135.2 bln”.
“The new fiscal year is two months old. Thus far the budget deficit for the FY15 is $178.5 bln down from $225.8 bln in the first two months of the last fiscal year”.
“The path the US took seemed perverse to many. The US adopted aggressive monetary and fiscal policies to address a debt crisis relatively early on. This produced large budget deficits, which translated into greater debt. The budget deficit peaked over 10% of GDP. It took a couple of years to demonstrate the superiority of the US strategy over that which tended to be deployed by Europe, under Germany and other creditors' tutelage.”
“The US one-year T-bill rate hit a three-year high yesterday of nearly 23 bp. It essentially doubled from the end of last month”. It is especially noteworthy because the heavy losses in the equity market typically sees lower Treasury yields as investors flock to security”.
“The Federal Reserve is developing the tools that it will employ to manage huge volume of excess reserves when it raises interest rates. Given the higher bill and Fed funds rates, Fed officials may be confident that they will be prepared to raise rates when the time comes”.