Fed’s Bullard Says Central Bank May Raise Rates Sooner Than Many Now Think Federal Reserve Bank of St. Louis President James Bullard said Monday if the economy performs as he expects over the remainder of the year, it is likely the central bank will increase short-term rates earlier than most officials now expect.
Price rises threaten China’s easing Li comments add to belief that more easing is to follow
The headline consumer price index rose 2.5 per cent from a year earlier, compared with a 1.8 per cent increase in April, but remained well below the government’s “upper limit” target of 3.5 per cent for the year. Producer prices also ticked higher but remained in deflationary territory, where they have been for more than two years. (…)
In comments released by state media on Tuesday, Chinese Premier Li Keqiang exhorted officials to prioritise continued rapid growth with “a sense of responsibility and urgency”.
“We said in the past that government officials should not be evaluated only by GDP growth, but that doesn’t mean we don’t need to keep reasonable growth,” he said. “The whole Communist party, central as well as local government, should take responsibility for ensuring the [government’s economic] targets are achieved successfully.”
The comments were the strongest from China’s top leaders on the importance of growth so far this year and have been interpreted as a signal of further easing to come.
As Bond Markets Twist, Investors Shout Some Spanish government bond yields dipped below U.S. Treasurys, adding another wrinkle to a year of surprises for the world’s bond markets.
Yields on the 10-year Spanish bond fell to 2.579% Monday, according to Tradeweb, lower than the 2.615% yield on the 10-year Treasury TWE.AU -0.61% note for the first time since April 2010, before the euro zone tumbled into its debt crisis. (…)
The demand for Spanish bonds has coincided with broad demand for debt of other troubled European countries, some of which were on the brink of default just a few years ago. While many investors anticipated a rebound in the debt of these nations, the strong gains have taken many by surprise. (…)
Spain is rated Baa2 by Moody’s Investors Service, and its 10-year bond yielded 4.152% at the end of last year.
Germany carries the highest rating, triple-A, and its 10-year debt yielded 1.927% at the end of 2013. It now yields 1.330%, according to Tradeweb. The U.S. is rated Aaa by Moody’s and AA-plus by Standard & Poor’s.
Spain joins several other European countries, including Ireland, France and Germany, whose debt has lower yields than that of the U.S. Canada’s 10-year government debt yields less than 10-year Treasurys.
The 10-year bonds of Australia, Portugal, Italy and U.K. yield more. (…)