WASHINGTON (MNI) - The following are events and news reported
Wednesday ET related to the ongoing crisis in the global financial
system:
* The Federal Reserve's Open Market Committee Wednesday left
official interest rates near zero but suggested the economy is on more
stable ground. Information "suggests that economic activity is leveling
out," the Fed statement said. Still, officials said they would
"gradually slow" their plans to buy up to $300 billion of Treasury
securities in order to provide a smooth transition in those markets.
"The Committee has decided to gradually slow the pace of these
transactions and anticipates that the full amount will be purchased by
the end of October," it said. [14:16 ET Wednesday]
* The U.S. government ran a budget deficit of $180.6 billion in
July, marking the 10th straight month of deficits, the Treasury
Department reported Wednesday. The monthly deficit pushed the cumulative
deficit so far this year up to $1.26 trillion. Outlays amounted to $332
billion last month, the Treasury said, up 26% from July 2008. Receipts
were $151 billion, down from $215 billion in June and 6% lower than a
year ago. For the year to date, total receipts hit $1.7 trillion, down
17% from a year ago, while outlays stood at about $3 trillion, up 21%.
[14:00 ET Wednesday]
* Existing-home sales in the second quarter showed healthy
gains from the first quarter in the vast majority of states, and price
declines have increased affordability in most metro areas, according to
the latest survey by the National Association of Realtors. Total state
existing-home sales, including single-family and condo, rose 3.8 percent
to a seasonally adjusted annual rate1 of 4.76 million units in the
second quarter from 4.58 million units in the first quarter, but remain
2.9 percent below the 4.90 million-unit pace in the second quarter of
2008. [10:00 ET Wednesday]
* Remarks by Bank of England Governor Mervyn King Wednesday have
fueled speculation the BOE could cut reserve remuneration, although his
actual comments were guarded. At the Inflation Report press conference,
King was asked about the Riksbank model of charging banks for holding
reserves with the aim of pressuring them into investing in other assets
and thus boosting the effectiveness of monetary easing. King said the
BOE would look at the idea, but stressed banks can do nothing to alter
aggregate reserves. [11:16 ET Wednesday]
* Positive growth can be expected earlier than previously
thought in the eurozone, European Central Bank Executive Board member
Juergen Stark said in an interview released Wednesday. Stark told
Germany financial daily Boersen-Zeitung that dangers of deflation in the
eurozone are very low, given how well expectations are anchored.
[Updated 10:41 ET Wednesday]
* U.S. Trade Representative Ron Kirk Wednesday welcomed the
results of a World Trade Organization (WTO) dispute settlement panel
report made public today. The report found that major Chinese
restrictions on the importation and distribution of copyright-intensive
products such as theatrical films, DVDs, music, books and journals are
inconsistent with China's WTO obligations. [10:28 ET Wednesday]
* The U.S. trade deficit in June was again in the moderated
range of the last several months, at $27 billion, not even half of its
peak less than a year ago, the Commerce Department reported Wednesday.
Imports rose compared to May to $152.8 billion, but are still running
way behind a year earlier, a symptom of the severe compression of trade
flows since the financial crisis began. Exports also rose somewhat
compared to May, to $125.8 billion but January's had been higher, at
$126.4 billion. Without counting oil, the overall deficit in goods and
services was just $20 billion, the lowest since January 1999. The
largest bilateral deficit, with China, increased in June to $18.4
billion, the biggest since January. [08:30 ET Wednesday]
* The Mortgage Bankers Association (MBA) today released its
Weekly Mortgage Applications Survey for the week ending August 7, 2009.
The Market Composite Index, a measure of mortgage loan application
volume decreased 3.5 percent on a seasonally adjusted basis from one
week earlier. On an unadjusted basis, the Index decreased 3.7 percent
compared with the previous week and increased 16.1 percent compared with
the same week one year earlier. [07:00 ET Wednesday]
* The rate of UK unemployment hit its highest level for thirteen
years in the three months to June while employment posted the largest
fall since records began, according to figures released by National
Statistics Wednesday. The level of unemployment, based on the
International Labour Organisation standard measure, rose 220,000 in the
three months to June causing the unemployment rate to increase to 7.8%,
up from 7.1% previously. This was the highest rate of unemployment since
Oct-Dec 1996. The level of ILO unemployment now stands at 2.43 million
the highest since Jul-Sep 1995. [04:30 ET Wednesday]
* Inflation will come in clearly below its 2.0% target if
interest rates rise in line with market expectations, the Bank of
England revealed in its August Inflation Report. The report showed CPI
coming in around 1.5% in two years' time based on market rate
expectations, but rising to just above 2.0% on unchanged Bank Rate. The
report implies market expectations for fairly rapid monetary tightening
by the BOE should be scaled back. The implied market rates in the
Inflation Report were for Bank Rate to hold at 0.5% this year, before
rising to 0.7% in Q1 2010 and then steadily upwards to 2.7% in Q1 2011
and 4.0% in Q1 2012. [05:31 ET Wednesday]
* The Bank of England's surprise stg50 billion increase in
quantitative easing in August was fully justified by the projections in
the August Inflation Report, Bank of England Governor Mervyn King said
Wednesday. Speaking at a press conference following the publication of
the August Inflation Report, King was critical of markets and pundits
for not expecting the increase in QE. He also said unemployment is set
to keep rising for the foreseeable future and a margin of spare capacity
will remain for a long time. [Updated 07:11 ET Wednesday]
* Ex-Bank of England Monetary Policy Committee Member David
Blanchflower said today that he agreed with the BOE's recent steps to
boost its quantitative easing programme. Speaking on BBC Radio 4,
Blanchflower said that the UK remained in the "biggest financial crisis
in over 100 years". [08:42 ET Wednesday]
* The Bank of Japan said in a monthly report for August on
Wednesday that overseas economic conditions have improved, a new factor
that is believed to support demand for Japanese cars, consumer
electronics and general machinery. "Exports and production are expected
to continue recovering, mainly due to progress in inventory adjustments
both at home and abroad as well as improvement in overseas economic
conditions," the bank said, adding the part about reviving demand from
overseas, particularly in Asia. [Repeated 07:12 ET Wednesday]
* Norway's central bank left its key interest rate unchanged at
1.25% Wednesday, in line with market expectations. Norway - one of the
world's main oil-producing countries - has been hit by the global
economic crisis and the Norges Bank has responded by slashing interest
rates by 475 basis points in total to 1.25%. [08:00 ET Wednesday]
** Market News International Washington Bureau: 202-371-2121 **
