We need to find a fairer way of providing Goods and Services to the rest of the people on Earth.Cryptocurrencies and/or Gold Standard of money....maybe the answer to fight hyperinflation caused by too much printing of paper/fiat currencies by Governments and Central Banks all over the World. (https://nomorefiatmoneyplease.blogspot.com)
China asks for more disclosure for asset-backed securities
China's central bank has strengthened the disclosure rules for financial companies that issue asset-backed securities to improve transparency and encourage the development of the sector.
PHOTO: BLOOMBERG
[BEIJING] China's central bank has strengthened the disclosure rules for financial companies that issue asset-backed securities to improve transparency and encourage the development of the sector.
Issuers of asset-backed securities would be encouraged to publicly give financial information on the underlying assets in their securities, among other requirements, the People's Bank of China said in an online statement.
Bill Gross says Fed to tighten even with job growth slowing
Bill Gross says the Federal Reserve will raise borrowing costs in August or September, even with employment growth slowing, because officials want to normalize policy after keeping interest rates around zero since 2008.
PHOTO: REUTERS
[NEW YORK] Bill Gross says the Federal Reserve will raise borrowing costs in August or September, even with employment growth slowing, because officials want to normalize policy after keeping interest rates around zero since 2008.
"They want to get off the dime," Mr Gross said in a Bloomberg Television interview. "They want to get off zero, if only to prove that they don't have to stay at zero for a long, long time."
The Fed will raise rates 50 basis points per year, bringing its overnight benchmark rate to 2 per cent by 2018, according to Gross, who runs the US$1.5 billion Janus Global Unconstrained Bond Fund. That would still be significantly below the central bank's own forecast of 3.75 per cent.
The Labour Department said on Friday that the economy added 126,000 jobs in March, compared with a median forecast of 245,000 in a Bloomberg News survey. The gains were the smallest since December 2013 and weaker than the most pessimistic forecast in the Bloomberg survey, undermining what had been the only segment of the economy showing consistent growth. Inflation has remained below the Fed's target for almost three years and retail sales have declined for three consecutive months.
The rate at which unemployment becomes neutral in terms of its impact on pushing inflation higher or lower may be as little as 4.5 per cent, given that the underemployment rate is at 10.9 per cent, according to Mr Gross. A more typical difference between that and the jobless rate, currently 5.5 per cent, is about three percentage points, he said.
"Obviously, the economy's cooling," Mr Gross said. "It's a weaker economy at the moment." Janus under Mr Gross has bought shorter-term Treasuries with an average maturity of about four years while selling short German sovereign debt, which has traded at record low yields, with five-year securities yielding as little as 0.12 per cent below zero and 10-year debt at 0.17 per cent.
Mr Gross, 70, had been the chief investment officer at Pacific Investment Management Co until his abrupt departure in September. He earned his reputation by building Pimco into a US$2 trillion money manager at its peak, with some of the industry's highest returns. His Pimco Total Return Bond Fund, which he managed until he left, ballooned to US$293 billion in April 2013, before performance faltered and clients started to pull money amid concern that interest rates would rise.
The odds of a June liftoff implied by fed funds futures fell to 14 per cent after the report from 18 per cent Thursday. The implied probability of a September rate rise also slumped after the release, dropping to 35 per cent from 39 per cent.
Options on Eurodollar futures imply traders see only a 47 per cent chance the Fed will raise rates this year, and just a 55 per cent chance it climbs from near zero by March 2016.
US job growth weakest since 2013; unemployment rate steady
US employers added the fewest jobs in more than a year in March amid signs the economy was starting to take strain from a strong dollar and lower oil prices, which could delay an anticipated interest rate increase from the Federal Reserve.
PHOTO: BLOOMBERG
[WASHINGTON] US employers added the fewest jobs in more than a year in March amid signs the economy was starting to take strain from a strong dollar and lower oil prices, which could delay an anticipated interest rate increase from the Federal Reserve.
Nonfarm payrolls increased 126,000 last month, the smallest gain since December 2013, the Labor Department said on Friday. The goods producing sector, which had been hurt by a strong dollar, shed 13,000 jobs last month, the largest drop since July 2013.
March's tepid increase in payrolls ended 12 straight months of job gains above 200,000, which had been the longest streak since 1994. In addition, data for January and February was revised to show 69,000 fewer jobs created than previously reported, giving the report an even weaker tone.
Economists polled by Reuters had forecast payrolls increasing 245,000 last month. The small job gains could fan fears that the recent weakness in economic activity could be more fundamental rather than the result of transitory factors.
There was no sign that the weather had impacted the payrolls gain, though construction employment fell.
The labor market had largely shrugged off a harsh winter, a buoyant dollar, weaker global demand and a now-resolved labor dispute at West Coast ports, which have combined to undermine economic activity in the first quarter.
Growth braked sharply over the past three months. Gross domestic product estimates are as low as a 0.6 per cent annual pace for the first quarter, but the slowdown is expected to be temporary.
There was some good news in the report.
Average hourly earnings, which are being closely watched for clues on the timing of a Fed rate hike, increased seven cents, leaving the year-on-year gain at 2.1 per cent.
The unemployment rate held at a more than 6-1/2-year low of 5.5 per cent, as people left the labor force.
With Wal-Mart and McDonald's announcing pay increases for their hourly workers, wage growth could gain some traction in the months ahead. Other companies, including TJX Cos Inc and health insurer Aetna, also have announced wage increases.
The US central bank has sounded keen to raise overnight interest rates, which it has kept near zero since December 2008. But the economy's recent softness has led investors to push back bets on the rate lift-off. Some believe the Fed could even wait until 2016.
Private payrolls increased 129,000 last month, slowing from 264,000 in February. Employment growth was held back by a decline in the goods producing sector payrolls. Construction employment fell 1,000. Manufacturing, which has been hit by the strong dollar and softer global demand, reduced payrolls by 1,000. Government employment fell 3,000.
The mining sector saw more job losses last month, with payrolls falling 11,000. That reflected ongoing losses in oil and gas extraction, which has taken a hit from lower crude oil prices.
Canada Mortgage and Housing Corporation is hiking premiums for mortgage insurance on its highest-risk borrowers.
Home buyers who put down less than 10 per cent down payment will see their insurance premiums jump 15 per cent starting in June. The increases only affect borrowers who are taking out new mortgages.
CMHC said the increases come after the Crown corporation raised its target capital requirements last August from 200 per cent to 220 per cent of the minimum requirements set by the Office of the Superintendent of Financial Institutions.
According to 2014 figures, borrowers who bought homes with a down payment of just 5 per cent typically took on about $252,000 in mortgage debt, the housing agency said, and will see premiums rise by $5 a month.
The changes are “not expected to have a material impact on housing markets,” the organization said.
The new rate for a loan-to-value ratio up to 95 per cent is 3.6 per cent, up from 3.15 per cent. For a loan-to-value ratio from 90.01 to 95 per cent, but a non-traditional down payment, the premium climbs to 3.85 per cent from 3.35 per cent.
“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said Steven Mennill, CMHC’s senior vice-president, insurance.
“The premium increase for homebuyers with less than a 10 per cent down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”
The federal agency is the country’s largest insurer of home mortgages.
Financial institutions generally require mortgage loan insurance for buyers making a down payment of less than 20 per cent.
The insurance protects the lenders from defaults, but the costs usually are borne by the borrowers.
Canada’s merchandise trade deficit narrowed in February as prices for exported energy recovered from lows set during a crude oil crash last year.
The deficit of C$984 million ($778 million) followed a January shortfall that was revised to C$1.48 billion from an initial estimate of C$2.45 billion, Statistics Canada said Thursday in Ottawa. Economists surveyed by Bloomberg forecast a C$2 billion deficit for February, based on the median of 17 forecasts.
Energy exports rose 14.9 percent to C$8.78 billion, including a 45.1 percent jump for natural gas and a 9.3 percent rise for crude oil and bitumen. Prices rose 17.5 percent and volumes fell by 2.3 percent.
The report is the second this week signaling the effects of the crash in prices for crude oil, Canada’s top export, aren’t as dramatic as policy makers predicted. Statistics Canada two days ago reported the economy shrank 0.1 percent in January as increased oil production made up for lower prices, a report that came just after Bank of Canada Governor Stephen Poloz told the Financial Times that first-quarter growth could be “atrocious.”
Total exports rose 0.4 percent to C$43.5 billion in February, following a 1.7 percent decline in January.
Imports fell 0.7 percent to C$44.5 billion, Statistics Canada said.
The volume of exports declined 3.3 percent and import volumes fell 1.7 percent, Statistics Canada said. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.
The surplus with the U.S. widened to C$2.95 billion in February from C$2.24 billion a month earlier. Exports make up about one-third of Canada’s economy, with about 75 percent of the shipments going to the U.S.
