October 31, 2023
United States:
Credit Strength Is Baffling Fed Watchers Ahead of Rate Decision
To have a shot at taming inflation, the Federal Reserve is intent on tightening financial conditions across the economy. But they haven’t made much of a dent in corporate America yet.
The extra yield investors demand for risk in the US investment-grade and high-yield bond markets has remained below their 20-year averages and well under levels seen during historical times of stress in the economy. Borrowing remains robust, one measure of credit quality is improving at a record rate and recent earnings reports for some of the nation’s most indebted companies have come in stronger than expected.
Europe:
Euro-Zone Inflation Sinks to 2-Year Low as Economy Contracts
Euro-area inflation eased to its lowest level in more than two years as the bloc’s economy shrank following an unprecedented ramp-up in interest rates.
Consumer prices rose 2.9% in October — down from the previous month’s 4.3% and better than the 3.1% median estimate in a Bloomberg survey analysts. In a separate release, Eurostat said third-quarter gross domestic product fell 0.1% — missing estimates for stagnation.
Asia:
BOJ Is Handing Back the Japanese Bond Market to Investors
The Bank of Japan is bringing an end to its near monopoly of control over the nation’s bond market.
Japan’s central bank has tightly overseen the government debt market since it introduced yield-curve control in September 2016, with its ownership of outstanding bonds surpassing 50%. But with the authority now suggesting it’s ready to let the benchmark 10-year yield rise beyond 1%, investors look set to take back the helm.
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