Citing the risk of high inflation, the U.S. Federal Reserve voted to hold the Federal Funds rate steady at 2.0% yesterday (Wednesday).
“Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased,” the accompanying Federal Open Market Committee (FOMC) statement read.
The Fed’s policy meeting looms large today. And it looks likely that, with the inflation cat out of the bag, that the feds will hold off on more rate cuts.
In fact, every one of the 101 economists surveyed by Bloomberg said that they thought the Fed would leave rates unchanged.
Money Morning’s Jennifer Yousfi examines why the likelihood of further rate cuts has fallen in recent days…
Moody’s Investors Service on Friday downgraded the debt rating of key bond insurers MBIA Inc. (MBI) and Ambac Financial Group Inc. (ABK), increasing expectations that more write-downs are in the offing for the U.S. financial-services sector, which has already written off nearly $400 billion in losses.
Moody’s Investors Service, subsidiary of Moody’s Corp. (MCO), downgraded MBIA to A2 from Aaa, and Ambac from Aaa to Aa. The downgrade caused MBIA shares to shed more than 13% of their value, with an 86-cent decline to close at $5.59 on Friday. Ambac shares fared a bit better, gaining 2 cents to close at $2.05.
Moody’s downgrades follow similar reductions from Standard & Poor’s and Fitch Ratings Inc.
Volatile oil prices… Bush blames Democrats for fuel crisis… More gloom on Wall Street… Stocks take a beating…
Crude futures encountered a volatile week last week as traders analyzed the contrasting news from aboard. On one hand, the news that Saudi Arabia may be increasing oil production and that China is hiking gasoline and diesel fuel prices should dampen demand and move prices lower. On the other hand, Israel threatened Iran’s nuclear facilities and rebels reportedly attacked a Chevron Corp. (CVX) plant in Nigeria late last week (both should contribute to higher oil prices). For now, crude stands around the $135 per barrel level.
The blahs seem to have taken firm hold of the industrial metals, with yesterday being a day of little change, just like Monday.
If the Aussie market follows the U.S. lead today, look out. Before we break for lunch here in Colorado, stocks in New York are taking a beating. The Dow Jones Industrials are down nearly 200 points. And it’s such a nice day out, too.
When is a Black Swan not a Black Swan? When the “perfect storm of highly improbable events” happens all the time.
It was the usual doom and gloom when I opened the paper this morning. The Bank of England predicts a protracted slowdown. It’s revised its growth forecast for next year to 1.5%, down from a 2009 forecast of 2.8% made last year.
Now the days are not only longer but finally starting to warm, what happened in the financial world this week? Well, on Monday Mervyn King stepped up to the plate and offered a deal for UK banks. They could swap assets of unknown worth mortgage-backed securities for those of known worth government bonds .
Who’s this menacing figure storming out of 11 Downing Street? Why, if it isn’t scary Alistair Darling, who’s been up all night practicing Chinese burns in preparation for today’s Big Meeting with the Council of Mortgage Lenders.
