Kinder Morgan to Consolidate Empire (WSJ)
War Risks Slow Company Bond Sales to Least Since July '13 (Bloomberg)
Maliki digs in as U.S. pushes for new Iraq government (Reuters)
China Loosens Monetary Conditions in Test of Credit Power (Bloomberg)
Stanley Fischer, the new vice chairman at the Fed, gave his second speech since being nominated for his position early this morning. His dovish rhetoric was very aligned with Janet Yellen's, citing slowdowns in productivity because of a drop in the labor force. He also highlighted how it is difficult for a central banker to determine whether the output gap (they call it "slack") in the economy is due to temporary factors - ie post recession regulation and labor displacement - or permanent factors due to the aging demographic in the US. In terms of an exit process, he alluded to the use of the reverse repo facility as a key tool in keeping a floor under money market rates.
Although many investors may be pointing to the easing of tensions in Russia, or Israel, or Iraq as the reason behind the rally, this is the true story of the morning. When it comes to Fed policy, at the moment the only opinions that "matter" are those from the dovish side - Yellen, Fischer, and Dudley. By comparison, Dallas Fed President Richard Fisher, a former market professional (who thinks he goes back to the buyside after his time at the Fed?) will be out of the FRB by the time they even start hiking, so his opinions hold less value by default.
Was that not one of the best golf tournaments you've watched in a very long time?
China inflation data over the weekend was exactly inline with expectations on the input and output side of things. Away from that, the Bloomberg article published last night (linked above) that discusses its Monetary Conditions Index is well worth the read. A front-page commnetary in the China Securities Journal, considered the mouthpiece for the PBoC, said that liquidity conditions will remain relatively loose in the second half of the year. It also said that lowering companies financing costs and preventing financial systemic risk (presumably from trust products blowing up) are the central bank's two main goals the rest of this year. Translated link.
- China CPI YoY (July) unchanged at 2.3% vs 2.3% expected
- China PPI YoY up to -0.9% vs -0.9% exp, prior -1.1%
- Japan consumer confidence index (July) up to 41.5 vs 42 exp, prior 41.1
- Japan machine tool orders (July prelim) YoY up 37.7%, prior 34.1%
US Economics (Time Zone: EST)
No major reports scheduled
11:30 Treasury to sell $28b 3-month bills and $25b 6-month bills
3:15am Fischer (dove, vice chair) spoke in Stockholm
Dean Foods (DF)
Caesars Entertainment (CZR)
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