Bloomberg
Federal Reserve policy makers said U.S. growth is becoming more durable and higher energy prices will have a temporary effect on inflation as they affirmed plans to buy $600 billion of Treasuries through June. According to Federal Open Market Committee, U.S. economic recovery is on a firmer footing as labor market appears improving though it's gradual. The committee said that inflation effect on the cost of commodities is just "transitory" and official will pay attention to the evolution and inflation expectations. Fed Chairman Ben Bernanke and his colleagues, dropped language that economic recovery is "disappointing slow" and that consumer spending is influence by "tight credit" cause holding back to consumer spending.
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Bloomberg
Tue Mar 15 03:43:11 GMT 2The Bank of Japan’s step to provide short-term liquidity and expand an asset-purchase program failed to contain investor panic today as the risk of nuclear radiation leaks north of Tokyo escalated.
BOJ Governor Masaaki Shirakawa’s pledge yesterday to secure financial stability and prevent investors from becoming more risk averse was overwhelmed today, with the Topix index of stocks suffering its worst drop since the 1987 crash. In the interbank lending market, overnight call loan rates traded between 0.08 percent and 0.13 percent, according to Ueda Yagi Tanshi Co., higher than the BOJ’s target of zero to 0.1 percent.
“The market’s chaos won’t calm down unless the BOJ will take more bold actions,” said Susumu Kato, chief economist for Japan at Credit Agricole CIB and CLSA in Tokyo. “A further plunge in stocks will pressure the BOJ into additional easing.”
While the central bank said after its policy meeting yesterday that the economy remained on course to emerge from its fourth-quarter slump, risks to consumer confidence intensified with the government’s failure to contain a crisis at a nuclear power plant. Prime Minister Naoto Kan said in a televised address that the threat of further radiation leaks is rising.
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Crude-oil futures fell to around $99 a barrel in Asia trading Tuesday, as the worsening nuclear crisis in Japan heightened economic and demand concerns in the world's third-largest energy consumer.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $99.20 a barrel at 0703 GMT, down $1.99 in the Globex electronic session. The contract traded as low as $98.67/barrel earlier in the session.
April Brent crude on London's ICE Futures exchange fell $1.82 to $111.85 a barrel.
The market was repeating a trading pattern seen in the early stages of the previous Asia session, reacting to news of spreading radiation as explosions continued at the quake-hit Fukushima Daiichi nuclear power plant.
Japanese Prime Minister Naoto Kan warned the accidents have produced a high level of radiation with the danger of further leakage, and radiation as high as 0.809 microsievert an hour was detected in part of Tokyo around 0100 GMT, about 23 times higher than normal levels, but not enough to cause immediate harm to the human body.
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The Bank of Japan poured a record 15 trillion yen ($183 billion) into the world’s third-biggest economy today as the strongest earthquake in the nation’s history triggered a plunge in stocks and surge in credit risk.
The yen fell after the central bank added funds to the financial system, reversing earlier gains against the dollar on speculation authorities would sell the currency to aid exporters. Governor Masaaki Shirakawa yesterday said he is ready to unleash “massive” liquidity to support markets.
“This is a big and also appropriate move,” said Stephen Schwartz, chief economist for Asia at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “It’s a short-term measure to ensure stability to prevent this shock from spilling over to the financial markets.”
Japan faces power blackouts, the risk of meltdowns at a nuclear power station, and a predicted death toll of more than 10,000 after the 8.9-magnitude temblor and subsequent tsunami devastated northeastern regions. More than 350,000 people are in emergency shelters. The central bank, meeting from noon in Tokyo, may respond to the disaster with tools other than policy rates, already cut to near zero to counter deflation.
Besides the 15 trillion yen of emergency funds deployed in the central bank’s biggest one-day operation, the Bank of Japan offered to buy 3 trillion yen of government bonds from lenders in repurchase agreements starting March 16.
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Japan aims to compile package to fund rebuilding effort after its strongest earthquake on record, a step that may worsen the challenge of reining the world's biggest public debt.
The Northern Tohoku region most affected by the disaster accounts for about 8 percent of GDP, and home for the car factories and beer making comapnies. Factory shutdowns, power cuts and consumer confidence impact may hurt Japan's GDP. As of today the biggest manufacturing and industries in Japan are non-operational while awaiting for the next thing that they will have to do regarding safety compliance before resuming operation. Stocks already began to respond to quake like Nikkei 225 stock average tumbling 1.7 percent by the close of March 11. More data downtrend are expected as recovery will be the main objective of Japanese government after this phenomenal catastrophy.
]]>Gold climbed to a record in London and New York as escalating violence in Libya and concern inflation will accelerate boosted demand for the metals as an alternative asset.
Silver is also rising to a 31-year high. Clashes between Libyan rebels and government troop loyal to Qaddafi are more becoming deadly affecting and disrupting oil supply that may spread throughout the Middle East. Gold typically move inversely to the dollar, which fell a four-month low against six major currencies. Gold rose to $1,437 an ounce in the morning "fixing" in London, use by some mining companies to sell output from $1,427 at the afternoon fixing on March 4. The U.S. Dollar Index declined today as a report showed European investors confidence rose to the highest level in 3 1/2 year. Silver for immediate delivery was up 2.6% at $36.5275 an ounce after climbing to 36.6625, the highest since Feb. 14, 1980 which reached a record of $50.35 in New York. "The U.S. dollar weakening is supporting the gold prices, said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland.
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The euro’s two-month rally against the dollar is running into renewed rifts over Europe’s sovereign debt crisis just as optimism about the U.S. economy increases.
Bolstered by the prospect of higher European Central Bank interest rates as soon as next month, the euro has appreciated almost 9 percent against the dollar from this year’s low. Bets by futures traders on more strength are at levels that indicated reversals in the past. The euro has gained about half as much versus a group of nine developed-nation peers including the pound, franc and Swedish krona, Bloomberg Correlated-Weighted Currency Indexes show.
While German Chancellor Angela Merkel and French President Nicolas Sarkozy have said nothing will allow the single European currency to crumble, investor concerns are rising as European Union leaders meet this month to debate fixes to the region’s fiscal crisis. Portuguese bond yields have risen to levels that preceded last year’s bailouts of Ireland and Greece, both of which are trying to renegotiate terms of their rescues.
“The European crisis isn’t over,” said Andrew Balls, the London-based head of European portfolio management at Pacific Investment Management Co., which runs the $237 billion Total Return Fund, the world’s biggest bond fund. “The euro-dollar exchange rate has been driven more by relative interest-rate outlooks, but the public statements ahead of the forthcoming meetings suggest that hopes for a grand bargain may be overdone.”
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Oil futures climbed in electronic trading during Asian hours Monday,as fighting in Libya raged on, adding to concern popular unrest will spread to other, nearby oil-producing state. Light sweet crude-oil futures (CLJ11 106.342, +1.90, + 1.82%) climbed $1.330-r 1.3% to 105.75 a barrel in electronic trading on the New York Mercantile Exchange. Over the weekend, heavy fighting in Libya, with pro-government forces battling for control of key towns and ports."As the violence rages on in Libya, there are mounting fears that the country's supply disruptions will be prolonged and that other producers in the immediate vicinity will suffer similar outages due to political unrest," said strategies from Barclays Capital.
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Bloomberg
European Central Bank official signaled an interest rate increase may be necessary next month to stop surging commodity costs from fanning broader inflation. Investors was shocked after ECB President Jean-Claude Trichet call for a possible increase in interest rate coming April secondary to the rising prices of food and fuel cost that may push up and influence other prices. With some economist including the ECB is all but certain to shift rates in April, its first since 2008, the Euro rose to its highest in for 4 months against the U.S dollar.ECB's mandate was to maintain price stability and to ensure that inflation expectations are firmly anchored.
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European Central Bank President Jean-Claude Trichet may tell investors today how he plans to cope with an oil-price shock that's driving inflation beyond the bank's limit while also threatening to damp economic growth. ECB is the world's five largest central banks to announce a policy decision since crude oil surged over $100 a barrel last week.ECB officials will live the interest rate at a record low of 1 percent but Trichet may toughen his inflation fighting language. Trichet will also assure the public that ECB is alert and won't tolerate inflation according to Klause Baader, co-chief euro-area conomist at Societe Generale in London.
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