THE PEOPLE’s Bank of China warned in its Q3 monetary policy that while the country’s inflation may continue to moderate, “the foundation of price stability is not yet solid”. In a separate report, The Conference Board said that its leading indicator of ‘prospects over the coming six months’ rose by 0.4%, suggesting the world’s second-biggest economy is weathering moderating export growth and a government campaign to curb consumer and property prices.
France auctions as much as 8.2bn of debt today after after yields on the national 10-year bonds rose yesterday to a euro-era record relative to benchmark German bonds.
Reza Moghadam replaces Antonio Borges who has quit as head of the IMF’s European department less than a year into the job. A respected economist said that Borges “had not been particularly careful about his message discipline” at a time of “acute sensitivity for the IMF”. Moghadam, by contrast, is a veteran staffer, and likely to be more sensitive.
Futures on the Standard & Poor’s 500 Index rose overnight to give some hope that US markets may recover some of yesterday’s losses when they open later. The US equity benchmark sank 1.7% yesterday, after Fitch Ratings said that while American lenders have “manageable direct exposures” to Greece, Ireland, Italy, Portugal and Spain, further turmoil in those markets poses a “serious risk”. Investors were also rattled by Moody’s downgrade of 12 German public-sector banks, seen as likely to receive less federal government support if needed.
Asian stocks swung between gains and losses after China’s central bank said it’s not ready to ease inflation controls. The MSCI Asia Pacific Index declined 16% this year through yesterday, compared with a 1.7% drop by the S&P 500 and a 14% loss by the Stoxx Europe 600 Index.
EUROPEAN indexes are expected to fall today, tracking a sell-off on Wall Street after ratings agency Fitch said the outlook for US banks could worsen if the euro zone debt crisis is not resolved quickly.
The dollar fell against most of its 16 major counterparts before Federal Reserve Bank of New York President William Dudley speaks today amid speculation the US recovery isn’t fast enough to deter further monetary easing. THE EURO dropped to five-week lows versus both the dollar and the yen on Thursday on mounting tension in the European bond market, triggering calls for the European Central Bank to intervene more forcefully in markets.
OIL fell from a five-month high as concern increased that Europe’s debt crisis may spread and China’s central bank said it’s not ready to loosen inflation controls.
Gold will lead a rally in commodities in 2012 as Europe’s sovereign-debt crisis continues to roil financial markets, spurring demand for the metal as a haven asset, according to Morgan Stanley. Gold is rallying for an 11th year, gaining 24%, as investors seek to protect their wealth from declining equities, depreciating currencies and the threat of inflation.