› News for April 23.

News for April 23.

European Central Bank President Mario Draghi expressed doubts about the US Federal Reserve’s independence. He joined hot debates about whether US President Donald Trump is trying to intervene the regulator’s work and influence monetary policy of the leading world’s economy. Hosting a press conference during International Monetary Fund’s session in Washington on Saturday, Draghi said that he is ‘certainly worried about central banks’ independence’, and especially ‘in the most important jurisdiction in the world’. Draghi’s comments are exceptional as central banks officials usually do not talk about monetary policy in other regions. Journalists noticed him later in the IMF headquarters talking with the Fed Chairman Jerome Powell, who has been blamed by US President that the US economy does not get enough stimulus. “If a central bank does not have enough level of independence, then people might decide that monetary decisions are made with influence from politicians but not an objective assessment of the current economic situation”, - Draghi said. “Central banks have to have an opportunity to choose how to implement their mandates in the best way”, - he added.

Morgan Stanley is cautious about upcoming liquidity due to several reasons. Low liquidity together with vast carelessness of the market means that historically low level of volatility is coming to an end. "Two more factors do not speak in favour of the correctness or sustainability of current volatility levels," Andrew Sheets, a mixed assets strategist, said in an interview on Friday. “Firstly, market liquidity is still small. Secondly, I’m not sure that the market has reached logical conclusions in its newly acquired optimism about the direction in which asset prices move, he said. Price fluctuations in the markets for currencies, bonds and other asset classes have declined amid the pigeon reversal of the central banks of the world, increasing economic incentives in China and easing trade tensions. Since the beginning of the year, the volatility index CBOE dropped more than 50% and closed on Friday at the minimum level in six months. Compiled by Bank of America Corp., the MOVE index, which reflects the volatility of US treasuries, returns to its all-time low. The volume of the financial market over the past decade has grown faster than the ability of banks to absorb risks, and this may aggravate a possible sell-off, warns Sheets. The carelessness of market players who link low volatility with the Fed pause is also a problem, and large price fluctuations may soon be a surprise, he said. “If the Fed keeps its pigeon mood, and the data worsens, volatility will increase,” he said. “If central banks said they’re not going to tighten monetary policy in the light of improved performance, then that would encourage much more risk appetite. Such a scenario will also be volatile”.

The European Union is preparing to retaliate import tariffs by the United States for subsidising Boeing Co., contributing to a significant escalation of transatlantic trade tensions several hours after Washington promised to impose new tariffs. The measures planned by both parties are another turn in the 14-year-long dispute that the United States and the EU have been conducting within the framework of the World Trade Organization: the parties accuse each other of illegally subsidising leading aircraft companies. The administration of US President Donald Trump said Monday that it would impose import tariffs for EU goods worth $11 billion.
Announcing new measures targeting European products, including jets, cheese, wine, and motorcycles, the US Trade Representative said that EU support for Airbus had "adverse consequences" for the United States. The European Union called the amount of $11 billion as "greatly overestimated" and said that the response is being prepared. Although the EU did not disclose information about the value of the American goods, Airbus reported that the unit would respond to the United States with "much more extensive countermeasures." Tensions are intensifying just at the time when the EU is preparing to approve a mandate for the European Commission to discuss industrial tariff cuts with the Trump administration.

The future of the oil market may resemble the past, especially the 1990s, says Goldman Sachs Group Inc. Prices were in a tight sideways range then, a situation when the future short-term contracts cost more than longer-term agreements, reflecting the current supply shortage and expectations of more than enough supply level in the future, analysts wrote, including Damien Curvalen, in a review of April 8. Such a market structure may persist, while OPEC will curtail the current strategy to reduce production, designed to prevent oversupply, and return volumes to the market, which should put pressure on long-term contract quotes, says Goldman. This will promote backwardation and induce US shale producers to limit activity, the bank expects. “We consider this as the most attractive option for OPEC, and this market structure is likely to be sustainable,” analysts write in a review. “However, although we expected such a shift from 2016, we are still not ready to consider it a baseline scenario, even though the development of shale deposits will ultimately contribute to achieving this.”

Source: vestikavkaza.ru

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