Oct 22, 2013
GATA | THE GATA DISPATCH OCTOBER 22, 2013: Talk Shifts Away From "Tapering" and Toward Increase Bond Buying.
Talk shifts away from 'tapering' and toward increased bond buying
By Katherine Rushton
The Telegraph, London
Tuesday, October 22, 2013
American employers created fewer jobs in September than forecast, raising expectations that the US Federal Reserve will keep pumping money into the world's largest economy at the same rate for several months yet.
Stock markets rose on Tuesday as investors bet that the central bank would keep on buying bonds at the rate of $85 billion a month until next year, and potentially even increase that figure to help fuel America's still-fragile economic recovery.
America added 148,000 jobs in September, according to delayed figures from the US Labour Department -- far short of analysts' forecasts of 180,000 jobs, and the 193,000 extra jobs created in August. The increase was also well below the average increase of 181,000 jobs a month which America has seen since the start of the year.
The country's labour market is expected to grow even more slowly in the last few months of 2013, as the US absorbs the impact of the political standoff which forced the government to shut down earlier this month.
"The October payrolls number will be bad due to the government shutdown. I think this might [delay] tapering to March," said Craig Dismuke, chief economic strategist at the US analysis firm, Vining Sparks.
Joseph Trevisani, chief market strategist at WorldWideMarkets, added that "another weak payroll" could push the Fed to increase its quantitative easing programme rather than scale it back.
The Fed has said it will start weaning the US economy off its fiscal stimulus scheme only after America's employment situation shows sustained improvement.
The country's unemployment rate fell to 7.2 percent in September, the lowest since November 2008, but the central bank has made it clear that it needs to see a sustained improvement in other factors, including job creation, before tapering begins.
It had been expected to start reducing its bond buying habit in the autumn, and surprised markets last month when it decided to keep the taps on full. The employment situation is just one of a number of factors which now appear to be kicking it into the long grass.
In addition to the weak jobs data, the government shutdown is expected to have forced a delay. Standard & Poor's, the ratings agency, estimated that the episode has sucked $24bn out of the US economy, shaving around 0.6 of a percentage point of its fourth quarter growth.
Chris Williamson, an analyst at Markit, said that tapering looks unlikely to happen before March and could be kicked back even further if it turns out that the US budget standoff had a major impact on business confidence. March "is by no means assured," he said.
The Fed is likely to ally its tapering decision to jobs growth even more closely under Janet Yellen, who will replace Ben Bernanke as chairman in January next year. Ms Yellen was one of the architects of the Fed's policy of linking fiscal stimulus measures to America's jobs situation, and is expected to be very vocal about ensuring the labour market is in good health before it starts pulling back on QE.
"I think it's reinforcing Yellen's hand as the dove on the committee," said Aaron Kohli, an interest rate strategist at, BNP Paribas.
The Dow Jones Industrial Average was up 119 points, or 0.8pc, to 15,511 in mid-morning trading in New York, whilst the S&P 500 index rose 14.1 points, or 0.8pc, to 1759. In London, the FTSE 100 had risen 53.4 points, or 0.9pc, to 6,713, by mid-afternoon.
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China makes renminbi-trading agreement with Singapore
Financial Times, London
Tuesday, October 22, 2013
China is to further internationalise its currency by allowing Singapore-based investors to buy renminbi-denominated securities, paving the way for direct trading between the two countries' currencies.
The accord follows last week's announcement from George Osborne, Britain's chancellor -- or finance minister -- who touted a similar agreement as a breakthrough for London as a global hub for renminbi trading.
The deals highlight how China has been carefully handling the granting of trading privileges to financial centres jostling to win status as offshore renminbi hubs as use of the Chinese currency outside the country grows.
In the latest agreement, China will extend its so-called renminbi qualified foreign institutional investors (RFQII) programme to Singapore, allowing Singapore-based banks and asset managers a quota of Rmb50 billion ($8.2 billion) to invest in Chinese securities, the Monetary Authority of Singapore said.
Under a similar arrangement struck last week with Britain, that quota was set at Rmb80 billion for financial institutions based in that country. Hong Kong is the only territory with an existing RFQII arrangement.
Under RQFII, those holding renminbi offshore are able to invest directly in mainland Chinese assets -- from stocks to bonds to money market funds. By widening the investment options for renminbi sitting outside China, the system is partly designed to encourage the use of the currency for trade settlement.
It also helps to increase foreign participation in China's domestic markets, something the authorities have been keen to do in an attempt to attract more long-term investment.
For Singapore, a tiny island nation of only 5.3 million people, the agreement with China marks another significant step in building itself up as the renminbi hub for southeast Asia.
One of China's biggest state-owned banks, Industrial & Commercial Bank of China, in May started clearing services for renminbi transactions in Singapore.
In September, Singapore overtook Japan as Asia's biggest foreign exchange centre for the first time, making it the third-largest such hub in the world after London and New York.
Currency strategists say that Singapore is not likely to rival Hong Kong as an offshore renminbi centre, and is seen as a future renminbi hub for business done in the Chinese currency across the Association of Southeast Asian Nations.
"Singapore is a significant foreign exchange hub, meaning the market structure is already in place, and its position as a regional manufacturing and trading centre will ensure there is real and growing demand around renminbi," said Loh Boon Chye, deputy president for Asia Pacific at Bank of America Merrill Lynch in Singapore.
However, use of the currency for trade settlement generally has failed to keep pace with trading.
While the renminbi was the eighth most popular trading currency in August this year -- the most recent month for which figures are available -- it was only the 12th most used payments currency, according to Swift, the payments system.
The MAS said Singapore would also be "given consideration" as one of the investment destinations under a separate "renminbi qualified domestic institutional investor" scheme. This would allow Chinese investors to use the renminbi to invest in Singapore's capital markets.
In addition SGX, the Singapore exchange, and the Shanghai Futures Exchange signed an initial agreement to jointly develop commodity derivatives.
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NYT | Asian Morning Today's Headlines October 22, 2013: Civilian Deaths in Drone Strikes Cited in Report
Tuesday, October 22, 2013
By DECLAN WALSH and IHSANULLAH TIPU MEHSUD
The study asserts that the C.I.A. drone campaign in Pakistan has at times killed civilians indiscriminately. In interviews, residents spoke of terror and strain within a society caught between militants and the drones.
By CATHERINE RAMPELL
A Labor Department report showing lackluster hiring in September - 148,000 jobs - is expected to further put off the Federal Reserve's decision to reduce its stimulus efforts.
By SUSAN STELLIN
The T.S.A. has at its fingertips a large range of personal records to prescreen passengers, including past travel, property records and vehicle registrations.
NFA | Enforcement Actions on October 15. 2013 to INTERBANK FX LLC: NFA issued a Complaint charging Interbank with failing to maintain complete and accurate records and failing to timely report trade data and other required information to NFA.