U.S. jobless claims fall unexpectedly in latest week
The number of Americans filing initial claims for unemployment benefits fell unexpectedly last week back to near the lowest levels in decades. Initial claims for state unemployment benefits declined by 15,000 to a seasonally adjusted 234,000 for the week ended Jan. 14, the Labour Department said on Thursday. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 254,000 in the latest week. The number of claims for the previous week was revised up by 2,000 to 249,000.
ECB Keeps Stimulus on High Even as Economy Picks Up
Frankfurt, Germany (AP) — President Mario Draghi has some explaining to do – about why the European Central Bank is leaving its stimulus programs running nearly full blast while inflation and growth are picking up. Draghi is expected to use his news conference Thursday to underline the bank’s determination to stick with its December decision to keep pumping newly printed money into the economy at least through the end of the year. The purchases are aimed at boosting inflation from dangerously low levels and supporting an economy that’s slowly gathering steam. The central bank left its key interest rates and stimulus programs unchanged at a meeting Thursday of its 25-member governing council, as analysts expected. The ECB head is likely to stress that there’s no convincing sign yet of an upturn in inflation, and that the recent uptick is caused by higher oil prices and not by a fundamental improvement in demand for goods in the economy.
China state banks offer funds in bid to cool fierce liquidity squeeze, yuan dips
Short-term funding costs in China shot to their stiffest level in nearly 10 years on Thursday on fears of a cash crunch heading into its most important holiday of the year, but ended well off the day’s highs as state banks stepped in to offer more yuan supplies. Chinese households and companies usually withdraw huge amounts of cash from banks ahead of the week-long Lunar New Year holiday, which starts on Jan. 27. This year, the holiday also extends over the month-end, when corporate cash demand increases and some tax payments are due, adding to the drain. While liquidity always tightens in China ahead of big holidays, and the People’s Bank of China (PBOC) routinely pumps more funds into markets to ensure there is ample liquidity, some traders say its injections have barely been keeping up with heavier demand this year. A key overnight rate for borrowing funds surged to as high as 22.099 percent in early trade on Thursday – the highest since data became available in April 2007.
Brazil’s inflation falls below 6 pct in mid-January
Brazil’s inflation rate slowed more than expected in mid-January, falling below 6 percent for the first time in nearly three years and reinforcing market bets on steep interest rate cuts by the central bank. Consumer prices as measured by the IPCA-15 index rose 5.94 percent in the 12 months to mid-January, slowing from an increase of 6.58 percent in mid-December, government statistics bureau IBGE said on Thursday. The official inflation target is 4.5 percent, with a tolerance margin of plus or minus 1.5 percentage points. Economists in a Reuters poll had expected a median inflation rate of 6.06 percent. Prices rose 0.31 percent from mid-December, up from an increase of 0.19 in the previous month. That was the lowest monthly rate for mid-January since 1994. Yields on rate futures fell as traders saw an increasing likelihood that the central bank will continue cutting interest rates at a brisk pace this year, sending them to single digits from the current 13 percent.