Here is what I read on late on Monday and early Tuesday morning. Some are related to markets, some to geo-politics and some are for fun. Hope you will find these interesting.
- How DIY Bond Traders Displaced Wall Street’s Hot Shots – “The liquidity is provided by the clients, not the dealers,” said MacQueen, a 34-year bond-market veteran who oversees $11 billion at Sage Advisory Services Ltd. in Austin, Texas. “Bigger firms are finding it increasingly difficult.”
- China’s Zhou Says PBOC Has Room to Act on Growth Slowdown – “China’s inflation is also declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not,” People’s Bank of China Governor Zhou Xiaochuan, 67, said Sunday in remarks at the Boao Forum for Asia, an annual conference on the southern Chinese island of Hainan. “China can have room to act,” both with interest rates and “quantitative” measures, he said.
- All of the bullish stuff economists said about the oil crash has been wrong – Following last year’s widely-publicized plunge in gasoline prices, a lot of economists were optimistic we could be on the brink of a new boom in consumer spending, something that’d be especially bullish as personal consumption accounts for nearly 70% of the US economy.
- Why are interest rates so low? – If you asked the person in the street, “Why are interest rates so low?”, he or she would likely answer that the Fed is keeping them low. That’s true only in a very narrow sense. The Fed does, of course, set the benchmark nominal short-term interest rate. The Fed’s policies are also the primary determinant of inflation and inflation expectations over the longer term, and inflation trends affect interest rates, as the figure above shows. But what matters most for the economy is the real, or inflation-adjusted, interest rate (the market, or nominal, interest rate minus the inflation rate). The real interest rate is most relevant for capital investment decisions, for example. The Fed’s ability to affect real rates of return, especially longer-term real rates, is transitory and limited. Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.