THE DAILY EDGE (14 December 2017):

Fed Raises Interest Rates as U.S. Economy Picks Up

(…) “The growth that we’re seeing, it’s not based on, for example, an unsustainable buildup of debt,” she added. “The global economy is doing well. We’re in a synchronized expansion. This is the first time in many years we’ve seen this.”

The Fed said it would increase its benchmark federal-funds rate Thursday by a quarter percentage point to a range between 1.25% and 1.5%, the fifth such increase in the past two years. Officials penciled in three quarter-point rate increases for next year, as they had in September, and two such increases each in 2019 and 2020. (…)

Fed officials projected the economy would grow 2.5% next year, up from the 2.1% they predicted in September. They also expect the unemployment rate will fall to 3.9% by the end of next year, down from their earlier forecast of 4.1%.

Officials didn’t project more interest-rate increases or higher inflation because price pressures have been surprisingly muted this year. They still project inflation to rise to their 2% target by 2019, the same as they expected in September. (…)

Fed officials’ projections show they don’t see the tax cut raising the economy’s long-run growth rate, which they left unchanged at 1.8%. (…)

“Taking what is already a significant [debt] problem and making it worse, it is a concern to me,” she said. (…)

Source: Natixis (via The Daily Shot)

• Yellen Tells Investors Not to Fear the Flattening Yield Curve

China Raises Market Rates Hours After Fed Move

The Chinese central bank raised the rates it charges commercial banks on seven-day and 28-day loans by 0.05 percentage point each. It also raised rates for a medium-term liquidity instrument. The increases were smaller than 0.10 percentage-point moves in the first quarter, and the bank left the benchmark policy rates unchanged. (…)

World Oil Supply Hits Year High, Boosted by U.S. Shale Surge Shale producers are roaring back to life, pushing the global oil supply to its highest level in a year and undermining OPEC’s efforts to rebalance the market, the International Energy Agency said.

In its closely watched monthly oil market report, the IEA said the amount of crude oil on the global market rose by 170,000 barrels a day in November to 97.8 million barrels a day. The agency cited a surge in U.S. shale production and increased drilling and completion activity. (…)

OPEC crude oil supply fell in November for the fourth straight month, to 32.36 million barrels a day on the back of lower output from Saudi Arabia, Angola and Venezuela and overall higher compliance with the accord, the IEA said.

However, the agency said next year “might not be quite so happy for OPEC producers,” forecasting total supply growth could exceed demand growth in the first half of 2018 by 200,000 barrels a day.

The IEA raised its forecast for U.S. crude production growth to 390,000 barrels a day in 2017 and 870,000 barrels next year.

However, the agency said commercial petroleum stocks in the Organization for Economic Cooperation and Development—a group of industrialized, oil-consuming nations that includes the U.S.—fell to the lowest level since 2015 in October, at 111 million barrels above OPEC’s target of the average of the last five years.

The IEA left its forecasts for global demand growth in 2017 and 2018 unchanged, at 1.5 million barrels a day and 1.3 million barrels a day, respectively.

Nearly 5 Million Americans in Default on Student Loans The number of Americans severely behind on payments on federal student loans reached 4.6 million in the third quarter, a doubling from four years ago, despite a historically long stretch of U.S. job creation and steady economic growth.

In the third quarter alone, the count of such defaulted borrowers—defined by the government as those who haven’t made a payment in at least a year—grew by nearly 274,000, according to Education Department data released Tuesday.

The total number of defaulted borrowers represents about 22% of the Americans who were required to be paying down their federal student loans as of Sept. 30. That figure has increased from 17% four years earlier. (…)

Defaulted student loans totaled $84 billion at the end of the quarter, or 13% of the roughly $631 billion that borrowers were required to be paying down.

The government’s student-loan portfolio now totals $1.37 trillion. (…)

FYI:

Source: RealClear Politics (via The Daily Shot)

• The betting markets’ probability of the GOP retaining control of the House of Representatives after next year. (The Daily Shot)

Initial Coin Offerings Surge Past $4 Billion—and Regulators Are Worried Money raised from initial coin offerings has surged past $4 billion for the first time, even as regulators world-wide have escalated warnings about the new form of corporate funding.

From German Faucets to Italian Chocolate, Trade Barriers Are Rising Again in Europe The rise of economic nationalism is clashing with the open-market ideals of the EU’s original founders. Member states, including France and some in the east, are introducing new rules to favor domestic production and labor.