May 2, 2024 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) The Federal Reserve signaled fresh concerns about inflation while indicating it was likely to keep borrowing costs elevated for longer rather than raising them again.
(2) Another suspected intervention by Japanese authorities to support the yen, this time in late New York trading, ran into resistance from traders keen to keep selling the currency.
(3) The Federal Reserve and other top US regulators are forging ahead with their landmark plan to make big banks hold more capital despite calls from some critics to scrap it.
(4) The UK defied a decline in foreign direct investment across Europe last year, in a welcome vote of confidence for Prime Minister Rishi Sunak's economic program.
(5) Tesla is rescinding offers just weeks before internships were set to start, prompting aspiring employees to take to LinkedIn to appeal to other employers to take them in.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
This is the Blueberg Daybake You podcast, available every morning
on Apples, Spotify or wherever you listen. It's Thursday, the
second of May in London. I'm Caroline Hepkin.
Speaker 2 (00:10):
And I'm Stephen Carroll. Coming up today, The Federal Reserve
chief Jerown Pal says he wants to see more evidence
inflation is cooling before moving to cut rates.
Speaker 1 (00:19):
Traders push back against another suspected yen intervention by the
Japanese government.
Speaker 2 (00:24):
Plus not working out Tesla Pull's internship offers as Musk
continues his drive to reduce headcount, Let's.
Speaker 1 (00:31):
Start with a roundup of our top stories.
Speaker 2 (00:33):
The Federal Reserve charge your Own Power has downplayed the
prospect of further rate hikes while keeping hopes alive for
a cut this year. The comments come after officials unanimously
decided to leave rates on hold following a slew of
data that pointed to lingering price pressures in the US economy.
Speaking after the policy announcement, Pal consider that the Fed
(00:54):
won't be able to reduce borrowing costs as soon as
previously forecast.
Speaker 3 (01:00):
We do not expect that it will be appropriate to
reduce the target range for the Federal funds rate until
we have gained greater confidence that inflation is moving sustainably
toward two percent. So far this year, the data have
not given us that greater confidence. In particular, and as
I noted, earlier readings on inflation have come in above expectations,
it is likely that gaining such greater confidence will take
(01:20):
longer than previously expected.
Speaker 2 (01:23):
During the press conference, Pile also gave clear guidance that
he expects the FAD to keep borrowing costs elevated for longer,
rather than raising them again.
Speaker 3 (01:31):
I do think it's clear that policy is restrictive, and
we believe over time it will be sufficiently restrictive. That
will be a question that the data will have to answer.
I think it's unlikely that the next policy rate move
will be a hike.
Speaker 2 (01:46):
Those remarks from Piles sooths investors who'd worried the Fed
might react more aggressively to signs that inflation progress has stalled. However,
three straight months of disappointing inflation figures have driven a
major repricing of interest rate xctations, with futures markets now
showing just one cost this year.
Speaker 1 (02:05):
A surge in the Japanese and in late New York
trading has traders wondering if Japan is intervening in the
market again. The Can'tcy moved three percent to hit one
hundred and fifty three per dollar before weakening. Blueberg's rates
reporter Michael Wilson has been talking to traders who think
the state had a hand in the moves.
Speaker 4 (02:25):
I spoke to a couple of chaps in New York
before they went home and that what they described at
what they saw was much like what happened on Monday.
And you know a situation where you know, Dollian would
say around one fifty five, seventy, just pick a number,
you know, suddenly office would come in, some of which
came from Japanese banks all the way like twenty points
(02:46):
through the level, at least ten points through the level. Now,
that's not typically how the Japanese banks, you know, clear
their business. It does seem predatory in terms of, you know,
the effect on the market.
Speaker 1 (03:00):
Wilson says that we'll only know for sure when the
government confirms any FX action. Looking ahead, the likelihood of
sharp moves in the market during a looming four day
holiday in Japan and also London markets being closed on
Monday may also have been a concern for Japan's currency officials.
Speaker 2 (03:19):
Standard Charters has reported adjusted pre tax profit of two
point one three billion dollars for the first three months
of twenty twenty four, beating analyst expectations. That's a twenty
five percent increase on last year's number. The banks on
increased income from corporate and investment banking alongside its wealth
and retail divisions.
Speaker 1 (03:39):
The Federal Reserve and other top us regulators plan on
finalizing bank capital rules despite strong pushback from the sector.
Bloomberg's Banking regulation reporter Katanga Johnson says that there had
been talk of scrapping the plan.
Speaker 5 (03:55):
Whilst we have been waiting. After regulators said in March
that they would make broad material changes to the plan.
They waited to see whether that meant withdrawing it, scrapping
it all together and putting a new one forward. Agencies
will not be scrapping their plan. Instead, they'll be making changes,
including in particular market risk and what that particular gapital
requirement would be. But the discussions are still ongoing and
(04:19):
it could be finalized as soon as August. At least
some corners of Washington are pushing for.
Speaker 1 (04:23):
That Johnson adds that this comes in spite of a
FIC lobbying campaign form of the financial world. Under the
old proposal, the largest US banks would face about a
nineteen percent increase in how much capital they must hold
in order to buffer themselves against losses. US administrative law
requires any changes don't stray too significantly from what was
(04:47):
originally planned.
Speaker 2 (04:49):
Voters in England and Wales had to the polls today
for local elections that could give clues as to the
performance of political parties in the upcoming general election. Polling
stations are open from seven am to ten pm, with
elections in one hundred and seven local authorities and ten
mayoral races taking place. Results of our expectors start coming
in early on Friday morning, with the count in some
(05:10):
areas continuing through to Sunday.
Speaker 1 (05:13):
The UK is beating the odds and attracting growing foreign
direct investment that as its European peers see a decline
in new externally funded projects. Bloombergs Tea Adebayo has the details.
Speaker 6 (05:25):
Foreign direct investment is stalling across Europe. The number of
projects is down fourteen percent from its twenty seventeen peak.
That's according to consultancy firm Ey, who say the figures
should act as a wake up call for the region.
But the UK, it seems, is bucking the trend, attracting
nine hundred and eighty five FDI projects in twenty twenty three,
(05:47):
six percent more than the year before. That number puts
the country second in the European Foreign Investment League tables,
behind France. A sharp increase in software and IT investment
in London could be behind the boost in London. Do
you add a Bayo Boomberg Radio.
Speaker 2 (06:05):
And Tesla is rescinding internship offers just weeks before candidates
are due to start. It comes as the firm goes
through a series of sweeping job cuts and acted by
CEO Elon Musk. Provoking internships isn't likely to save Tesla
a lot of money. According to Glassdoor, the automaker typically
offers eighteen dollars to twenty eight dollars an hour for
the positions. Now, in a moment, we'll dig into what
(06:27):
we heard from the Fed charge your own Powell at
yesterday's meeting, plus look at the latest moves that we've
seen in the Yen. But the story that caught our
eye this morning very close to my heart about restaurant bookings.
If you think things in London are bad and how
foreign advance, you have to try and book to get
a place in a restaurant. Our opinion columnist Harod try
One has been writing about the latest phenomenon in New York,
which is a secondary market for bookings where people are
(06:49):
paying to get spots at top eteries that other people
have already booked. You make the booking and then you
resell it.
Speaker 1 (06:55):
So you have to be like a ticket master.
Speaker 2 (06:58):
Or out there online trying to get your place in
the restaurant. But Howard's pointed to system that's used at
some high end restaurants in Japan, which he says could
provide inspirations for others. And this is no first time bookings,
So if you want to get in, you have to
either be a regular or be invited by a regular.
And if you pass muster on your first visit as
(07:19):
a guest of somebody who they know and like, then
you may be invited to book yourself for your return visit.
So the idea is for the restaurants they get a
regular clientele. For those who go there, you know, they
get to they know what the food is and then
the chef and the diners are all happy. That's the
idea anyway, But Howard points out that's not really in
line with the Western ideal of perpetual growth and the
(07:40):
magic escalator of scalability. But it could work for those
who want to keep themselves off the radar. There's a
great story in the piece, which I won't spoil, about
Howard's trip to a restaurant called Sugita and Tokyo, one
of those regular only places. Whether or not he gets
invited back, you'll have to read the piece to find out.
Speaker 1 (07:58):
How does one pass muster in a restaurant these days?
Not quite sure. I think London's still obsessed with the
celebrity chef. In fact, I've I've put a table on
Saturday night for one such day.
Speaker 5 (08:10):
There we go.
Speaker 1 (08:11):
Read that story on the Blueberg Tournament. A bit of
fun for you this morning. Let's get on though, with
the business of things out of the US yesterday, gaining
confidence that inflation is falling towards the target will take
longer than previously expected. That was the message from Jeroam Power,
who signaled rates will remain higher for longer, but that
a hike is unlikely to be the Fed's next move.
(08:33):
Blueberg's TV anchor Kritti Gupta is with us this morning
to go over everything that we heard about yesterday from
the Fed on the rate path. Was this meeting what
you described as nothing Burger, keeping that kind of restauranting theme.
Speaker 7 (08:47):
I appreciate that you called it nothing burger.
Speaker 5 (08:49):
I love when Fritz to do that.
Speaker 7 (08:51):
Yes, in that the cuts or if you say, the
rate decision didn't actually move right. They kept a rate steady,
so that made a lot of sense. It also reiterated
this idea that hikes are not in the near future
for the Federal Reserve, and I think that was kind
of the changing point for a lot of this press conference,
simply because the expectation going into the conference, as we
(09:12):
know and as we discussed twenty four hours ago, was
simply that there may be a case for a hike.
J Powell doing a very good job of throwing cold
water on that, saying if the bars even higher, that
policy rates are still very restrictive. That hasn't eroded the
ability of the tool itself. And that's a really important
piece of the equation because one of the arguments that
was made in terms of a hike was that maybe
things aren't restrictive enough because the US economy is outperforming.
(09:36):
That being said, what got really interesting was the really
really nerdy piece of QT, and I think that is
I found the most fascinating part because of some of
the analysis that came out after Basically they're halting the
pace of QT the runoff essentially, which means that it's
not quite q E, but it has more of a
less hawkish effect than it did previously. Obviously, I love
(09:57):
what Alberto Gallo or Andromeda Capital said. He says, keeping
front end rates high while tapering QT is like pulling
the handbrake while pushing the accelerator pedal, So essentially moving
kind of the two year yield, which you have seen
move in response to kind of this hawkishness and this
resilience in the data, while still kind of creating that
liquidity and that easing in the back end of the curve.
(10:17):
What it does is kind of manipulate the way the
curve moves to some extent, kind of jawbone to guide
markets where they want to go. That's a pretty big
deal when we're talking about whether or not these are
early signs of this kind of more easier monetary policy
that is coming down the road. When it comes to
the actual rate cut, though, that seems me moved further
and further.
Speaker 2 (10:37):
Oh so the question of how do you send a
segment to the markets without sending a segment on interest rates?
Essentially is what the Fed appears to have don't have?
What do the markets look at next?
Speaker 7 (10:46):
Then the next data point payrolls, I suppose on Friday.
What's important to keep about this? Keep about about this idea.
I'm gonna get my words right this morning. But basically
what you need to keep in mind here is that
basically the cuts are now one cut is now priced
in forward December. So one of the key pieces here
is that does the Fed kind of back themselves into
a corner because they are still sticking to this narrative
(11:07):
that the inflationary trend is not an acceleration of inflation.
It is still on the kind of paths of deceleration. However,
they are saying it's taking longer and longer to get
to that two percent inflation target, and that's where the
concern lies. Where do cuts then go into twenty twenty
five that meets with election risk to what extent does
payrolls even matter if the FED is going to be
sticking to that easier policy.
Speaker 1 (11:27):
Yeah, okay, so that's on the FED. The other story
that was of interest, and we gave you a little
snippet of it around the rules for bank capital, which
has been a huge deal on Wall Street, and it
looks like the whole plans are not going to be scrapped.
There's still going to be a drive basically for the
banks to hold more capital, especially the kind of larger banks.
You know, thoughts on that and when we're going to
(11:49):
get the decision as well.
Speaker 7 (11:50):
Yeah, one of those pieces of significance here is these
kind of reserve ratios that were initially going to be
bumped up. Was initially a move in response to the
Silicon Valley bank story, and it was this idea that
you needed more capital to prevent bank runs, to prevent
basically these big losses you sar kind of the Archagos
deal with Credit Suisse involved as well. So there are
(12:11):
a lot of concerns around the fact that some of
the big banks could have some sort of GFC two
point zero kind of moment. The issue with that, though,
is that is also essentially restrictive policy because it means
less lending ability into the rest of the economy. The
fact that they're pulling back on that and they're not
making as stringent of those rules is also a positive.
It's stimulative and therefore kind of in that easing camp. However,
(12:33):
that could change going into twenty twenty five again because
they're going to be reevaluating the story and the banks.
Jamie Diamond in particular has come across a lot of pushback,
especially on Congress, in terms of just how secure they
are in terms of that cushion that they need.
Speaker 2 (12:46):
Okay, Christy goope to thank you very much, Bimberg TV
anchor bringing its details.
Speaker 1 (12:51):
Now, we've had another suspected currency intervention by Japanese authorities,
saw the yen strengthen suddenly before then facing further selling pressure.
Our executive editor for Asian Markets, Paul Dobson joins us
now for more, just take us through the scale of
the moves that we've seen in the Japanese Yeah, and
I mean it's the dope fight. The third issue, isn't it?
Speaker 8 (13:10):
Well a little bit, although the currency market seems pretty
willing to take the Japanese authorities on to a certain extent,
but what we saw in the last few minutes of
the New York trading session was quite a pronounced move
again stronger for the yen, about a five yen move,
which is typically the sort of impact and scale and
(13:32):
scope of change that you would see with an intervention
by those authorities looking to give it a little bit
of a boost. Based on that, the evidence suggests that
it's a second intervention by the authorities this week, a
second attempt to stop the yen from continuing with this
weakening path. The problem that they face is almost immediately
once that was over, the weakening began again, and we
(13:54):
already you know, took back at about one percent of
those advances that we saw in those last minutes of
the New York session, And so it points to this
idea that still the trend is very much for a
week again, and so the impact or the influence that
the authorities can have is is going to be tested
at the very least.
Speaker 2 (14:13):
Does that is that likely to put them off doing
it again? Though, Paul, I mean, could we see further
interventions like this? Of course, they haven't officially confirmed it,
Japan's top currency official telling us that he had nothing
to say about whether they'd intervened.
Speaker 8 (14:27):
Quite right, they haven't confirmed it, although a lot of
the data, including a look at the current account that's
published about the Bank of Japan, points in that direction. No,
I don't think that it's going to deter them from
doing it. Now that they've started, it makes it much
more likely that they're going to continue on this path
until they get the message across. Even if all they
can hope is to slow the pace of depreciation of
(14:48):
the yen, that's still probably a good reason to get
involved at this point, to try to keep the market
guessing a little bit, which is part of the reason
why there isn't any kind of admission of what the
action looks like, keep the market guessing, keep traders a
little bit nervous. What they really want, more than anything
else is to avoid speculative trading. As they put it,
too much money being pushed on a speculative basis against
(15:11):
the general sharp moves in the currency over a short
period of time to destabilize our financial markets or destabilized
price expectations.
Speaker 2 (15:21):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (15:27):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (15:33):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (15:39):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
I'm Caroline Hepka and.
Speaker 2 (15:48):
I'm Stephen Carroll. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe
This is the Blueberg Daybake You podcast, available every morning
on Apples, Spotify or wherever you listen. It's Thursday, the
second of May in London. I'm Caroline Hepkin.
Speaker 2 (00:10):
And I'm Stephen Carroll. Coming up today, The Federal Reserve
chief Jerown Pal says he wants to see more evidence
inflation is cooling before moving to cut rates.
Speaker 1 (00:19):
Traders push back against another suspected yen intervention by the
Japanese government.
Speaker 2 (00:24):
Plus not working out Tesla Pull's internship offers as Musk
continues his drive to reduce headcount, Let's.
Speaker 1 (00:31):
Start with a roundup of our top stories.
Speaker 2 (00:33):
The Federal Reserve charge your Own Power has downplayed the
prospect of further rate hikes while keeping hopes alive for
a cut this year. The comments come after officials unanimously
decided to leave rates on hold following a slew of
data that pointed to lingering price pressures in the US economy.
Speaking after the policy announcement, Pal consider that the Fed
(00:54):
won't be able to reduce borrowing costs as soon as
previously forecast.
Speaker 3 (01:00):
We do not expect that it will be appropriate to
reduce the target range for the Federal funds rate until
we have gained greater confidence that inflation is moving sustainably
toward two percent. So far this year, the data have
not given us that greater confidence. In particular, and as
I noted, earlier readings on inflation have come in above expectations,
it is likely that gaining such greater confidence will take
(01:20):
longer than previously expected.
Speaker 2 (01:23):
During the press conference, Pile also gave clear guidance that
he expects the FAD to keep borrowing costs elevated for longer,
rather than raising them again.
Speaker 3 (01:31):
I do think it's clear that policy is restrictive, and
we believe over time it will be sufficiently restrictive. That
will be a question that the data will have to answer.
I think it's unlikely that the next policy rate move
will be a hike.
Speaker 2 (01:46):
Those remarks from Piles sooths investors who'd worried the Fed
might react more aggressively to signs that inflation progress has stalled. However,
three straight months of disappointing inflation figures have driven a
major repricing of interest rate xctations, with futures markets now
showing just one cost this year.
Speaker 1 (02:05):
A surge in the Japanese and in late New York
trading has traders wondering if Japan is intervening in the
market again. The Can'tcy moved three percent to hit one
hundred and fifty three per dollar before weakening. Blueberg's rates
reporter Michael Wilson has been talking to traders who think
the state had a hand in the moves.
Speaker 4 (02:25):
I spoke to a couple of chaps in New York
before they went home and that what they described at
what they saw was much like what happened on Monday.
And you know a situation where you know, Dollian would
say around one fifty five, seventy, just pick a number,
you know, suddenly office would come in, some of which
came from Japanese banks all the way like twenty points
(02:46):
through the level, at least ten points through the level. Now,
that's not typically how the Japanese banks, you know, clear
their business. It does seem predatory in terms of, you know,
the effect on the market.
Speaker 1 (03:00):
Wilson says that we'll only know for sure when the
government confirms any FX action. Looking ahead, the likelihood of
sharp moves in the market during a looming four day
holiday in Japan and also London markets being closed on
Monday may also have been a concern for Japan's currency officials.
Speaker 2 (03:19):
Standard Charters has reported adjusted pre tax profit of two
point one three billion dollars for the first three months
of twenty twenty four, beating analyst expectations. That's a twenty
five percent increase on last year's number. The banks on
increased income from corporate and investment banking alongside its wealth
and retail divisions.
Speaker 1 (03:39):
The Federal Reserve and other top us regulators plan on
finalizing bank capital rules despite strong pushback from the sector.
Bloomberg's Banking regulation reporter Katanga Johnson says that there had
been talk of scrapping the plan.
Speaker 5 (03:55):
Whilst we have been waiting. After regulators said in March
that they would make broad material changes to the plan.
They waited to see whether that meant withdrawing it, scrapping
it all together and putting a new one forward. Agencies
will not be scrapping their plan. Instead, they'll be making changes,
including in particular market risk and what that particular gapital
requirement would be. But the discussions are still ongoing and
(04:19):
it could be finalized as soon as August. At least
some corners of Washington are pushing for.
Speaker 1 (04:23):
That Johnson adds that this comes in spite of a
FIC lobbying campaign form of the financial world. Under the
old proposal, the largest US banks would face about a
nineteen percent increase in how much capital they must hold
in order to buffer themselves against losses. US administrative law
requires any changes don't stray too significantly from what was
(04:47):
originally planned.
Speaker 2 (04:49):
Voters in England and Wales had to the polls today
for local elections that could give clues as to the
performance of political parties in the upcoming general election. Polling
stations are open from seven am to ten pm, with
elections in one hundred and seven local authorities and ten
mayoral races taking place. Results of our expectors start coming
in early on Friday morning, with the count in some
(05:10):
areas continuing through to Sunday.
Speaker 1 (05:13):
The UK is beating the odds and attracting growing foreign
direct investment that as its European peers see a decline
in new externally funded projects. Bloombergs Tea Adebayo has the details.
Speaker 6 (05:25):
Foreign direct investment is stalling across Europe. The number of
projects is down fourteen percent from its twenty seventeen peak.
That's according to consultancy firm Ey, who say the figures
should act as a wake up call for the region.
But the UK, it seems, is bucking the trend, attracting
nine hundred and eighty five FDI projects in twenty twenty three,
(05:47):
six percent more than the year before. That number puts
the country second in the European Foreign Investment League tables,
behind France. A sharp increase in software and IT investment
in London could be behind the boost in London. Do
you add a Bayo Boomberg Radio.
Speaker 2 (06:05):
And Tesla is rescinding internship offers just weeks before candidates
are due to start. It comes as the firm goes
through a series of sweeping job cuts and acted by
CEO Elon Musk. Provoking internships isn't likely to save Tesla
a lot of money. According to Glassdoor, the automaker typically
offers eighteen dollars to twenty eight dollars an hour for
the positions. Now, in a moment, we'll dig into what
(06:27):
we heard from the Fed charge your own Powell at
yesterday's meeting, plus look at the latest moves that we've
seen in the Yen. But the story that caught our
eye this morning very close to my heart about restaurant bookings.
If you think things in London are bad and how
foreign advance, you have to try and book to get
a place in a restaurant. Our opinion columnist Harod try
One has been writing about the latest phenomenon in New York,
which is a secondary market for bookings where people are
(06:49):
paying to get spots at top eteries that other people
have already booked. You make the booking and then you
resell it.
Speaker 1 (06:55):
So you have to be like a ticket master.
Speaker 2 (06:58):
Or out there online trying to get your place in
the restaurant. But Howard's pointed to system that's used at
some high end restaurants in Japan, which he says could
provide inspirations for others. And this is no first time bookings,
So if you want to get in, you have to
either be a regular or be invited by a regular.
And if you pass muster on your first visit as
(07:19):
a guest of somebody who they know and like, then
you may be invited to book yourself for your return visit.
So the idea is for the restaurants they get a
regular clientele. For those who go there, you know, they
get to they know what the food is and then
the chef and the diners are all happy. That's the
idea anyway, But Howard points out that's not really in
line with the Western ideal of perpetual growth and the
(07:40):
magic escalator of scalability. But it could work for those
who want to keep themselves off the radar. There's a
great story in the piece, which I won't spoil, about
Howard's trip to a restaurant called Sugita and Tokyo, one
of those regular only places. Whether or not he gets
invited back, you'll have to read the piece to find out.
Speaker 1 (07:58):
How does one pass muster in a restaurant these days?
Not quite sure. I think London's still obsessed with the
celebrity chef. In fact, I've I've put a table on
Saturday night for one such day.
Speaker 5 (08:10):
There we go.
Speaker 1 (08:11):
Read that story on the Blueberg Tournament. A bit of
fun for you this morning. Let's get on though, with
the business of things out of the US yesterday, gaining
confidence that inflation is falling towards the target will take
longer than previously expected. That was the message from Jeroam Power,
who signaled rates will remain higher for longer, but that
a hike is unlikely to be the Fed's next move.
(08:33):
Blueberg's TV anchor Kritti Gupta is with us this morning
to go over everything that we heard about yesterday from
the Fed on the rate path. Was this meeting what
you described as nothing Burger, keeping that kind of restauranting theme.
Speaker 7 (08:47):
I appreciate that you called it nothing burger.
Speaker 5 (08:49):
I love when Fritz to do that.
Speaker 7 (08:51):
Yes, in that the cuts or if you say, the
rate decision didn't actually move right. They kept a rate steady,
so that made a lot of sense. It also reiterated
this idea that hikes are not in the near future
for the Federal Reserve, and I think that was kind
of the changing point for a lot of this press conference,
simply because the expectation going into the conference, as we
(09:12):
know and as we discussed twenty four hours ago, was
simply that there may be a case for a hike.
J Powell doing a very good job of throwing cold
water on that, saying if the bars even higher, that
policy rates are still very restrictive. That hasn't eroded the
ability of the tool itself. And that's a really important
piece of the equation because one of the arguments that
was made in terms of a hike was that maybe
things aren't restrictive enough because the US economy is outperforming.
(09:36):
That being said, what got really interesting was the really
really nerdy piece of QT, and I think that is
I found the most fascinating part because of some of
the analysis that came out after Basically they're halting the
pace of QT the runoff essentially, which means that it's
not quite q E, but it has more of a
less hawkish effect than it did previously. Obviously, I love
(09:57):
what Alberto Gallo or Andromeda Capital said. He says, keeping
front end rates high while tapering QT is like pulling
the handbrake while pushing the accelerator pedal, So essentially moving
kind of the two year yield, which you have seen
move in response to kind of this hawkishness and this
resilience in the data, while still kind of creating that
liquidity and that easing in the back end of the curve.
(10:17):
What it does is kind of manipulate the way the
curve moves to some extent, kind of jawbone to guide
markets where they want to go. That's a pretty big
deal when we're talking about whether or not these are
early signs of this kind of more easier monetary policy
that is coming down the road. When it comes to
the actual rate cut, though, that seems me moved further
and further.
Speaker 2 (10:37):
Oh so the question of how do you send a
segment to the markets without sending a segment on interest rates?
Essentially is what the Fed appears to have don't have?
What do the markets look at next?
Speaker 7 (10:46):
Then the next data point payrolls, I suppose on Friday.
What's important to keep about this? Keep about about this idea.
I'm gonna get my words right this morning. But basically
what you need to keep in mind here is that
basically the cuts are now one cut is now priced
in forward December. So one of the key pieces here
is that does the Fed kind of back themselves into
a corner because they are still sticking to this narrative
(11:07):
that the inflationary trend is not an acceleration of inflation.
It is still on the kind of paths of deceleration. However,
they are saying it's taking longer and longer to get
to that two percent inflation target, and that's where the
concern lies. Where do cuts then go into twenty twenty
five that meets with election risk to what extent does
payrolls even matter if the FED is going to be
sticking to that easier policy.
Speaker 1 (11:27):
Yeah, okay, so that's on the FED. The other story
that was of interest, and we gave you a little
snippet of it around the rules for bank capital, which
has been a huge deal on Wall Street, and it
looks like the whole plans are not going to be scrapped.
There's still going to be a drive basically for the
banks to hold more capital, especially the kind of larger banks.
You know, thoughts on that and when we're going to
(11:49):
get the decision as well.
Speaker 7 (11:50):
Yeah, one of those pieces of significance here is these
kind of reserve ratios that were initially going to be
bumped up. Was initially a move in response to the
Silicon Valley bank story, and it was this idea that
you needed more capital to prevent bank runs, to prevent
basically these big losses you sar kind of the Archagos
deal with Credit Suisse involved as well. So there are
(12:11):
a lot of concerns around the fact that some of
the big banks could have some sort of GFC two
point zero kind of moment. The issue with that, though,
is that is also essentially restrictive policy because it means
less lending ability into the rest of the economy. The
fact that they're pulling back on that and they're not
making as stringent of those rules is also a positive.
It's stimulative and therefore kind of in that easing camp. However,
(12:33):
that could change going into twenty twenty five again because
they're going to be reevaluating the story and the banks.
Jamie Diamond in particular has come across a lot of pushback,
especially on Congress, in terms of just how secure they
are in terms of that cushion that they need.
Speaker 2 (12:46):
Okay, Christy goope to thank you very much, Bimberg TV
anchor bringing its details.
Speaker 1 (12:51):
Now, we've had another suspected currency intervention by Japanese authorities,
saw the yen strengthen suddenly before then facing further selling pressure.
Our executive editor for Asian Markets, Paul Dobson joins us
now for more, just take us through the scale of
the moves that we've seen in the Japanese Yeah, and
I mean it's the dope fight. The third issue, isn't it?
Speaker 8 (13:10):
Well a little bit, although the currency market seems pretty
willing to take the Japanese authorities on to a certain extent,
but what we saw in the last few minutes of
the New York trading session was quite a pronounced move
again stronger for the yen, about a five yen move,
which is typically the sort of impact and scale and
(13:32):
scope of change that you would see with an intervention
by those authorities looking to give it a little bit
of a boost. Based on that, the evidence suggests that
it's a second intervention by the authorities this week, a
second attempt to stop the yen from continuing with this
weakening path. The problem that they face is almost immediately
once that was over, the weakening began again, and we
(13:54):
already you know, took back at about one percent of
those advances that we saw in those last minutes of
the New York session, And so it points to this
idea that still the trend is very much for a
week again, and so the impact or the influence that
the authorities can have is is going to be tested
at the very least.
Speaker 2 (14:13):
Does that is that likely to put them off doing
it again? Though, Paul, I mean, could we see further
interventions like this? Of course, they haven't officially confirmed it,
Japan's top currency official telling us that he had nothing
to say about whether they'd intervened.
Speaker 8 (14:27):
Quite right, they haven't confirmed it, although a lot of
the data, including a look at the current account that's
published about the Bank of Japan, points in that direction. No,
I don't think that it's going to deter them from
doing it. Now that they've started, it makes it much
more likely that they're going to continue on this path
until they get the message across. Even if all they
can hope is to slow the pace of depreciation of
(14:48):
the yen, that's still probably a good reason to get
involved at this point, to try to keep the market
guessing a little bit, which is part of the reason
why there isn't any kind of admission of what the
action looks like, keep the market guessing, keep traders a
little bit nervous. What they really want, more than anything
else is to avoid speculative trading. As they put it,
too much money being pushed on a speculative basis against
(15:11):
the general sharp moves in the currency over a short
period of time to destabilize our financial markets or destabilized
price expectations.
Speaker 2 (15:21):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (15:27):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (15:33):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (15:39):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
I'm Caroline Hepka and.
Speaker 2 (15:48):
I'm Stephen Carroll. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.