Daily Archives: August 16, 2010

The seasonal discount rate has again been cut, confirming the trend reversal started in July.

Seasonal credit is extended to relatively small depository institutions that have recurring intra-year fluctuations in funding needs, such as banks in agricultural or seasonal resort communities. The latter have presumably been hard hit by the oil spill. Read more

China continues to divest its dollar holdings of US debt, latest data show. Mainland China, Hong Kong and Taiwan all reduced their net holdings during June. Between them, at the peak they held $363bn in May 2009; as of June they hold less than half that amount, $170bn. Germany, France and the UK also divested during the month.

It’s a great time to sell for those with risk appetite. High demand has pushed yields to record lows (and prices, correspondingly, to highs) as widespread risk aversion makes US debt attractive to many. Read more

Both sides of the pond, rising energy prices have pushed up the general costs to consumers – giving relief on the headline numbers, at least, given deflation worries. Eurozone inflation stands at 1.7 per cent, up from 1.4 per cent last month; the ECB’s target is 2 per cent.

But before we celebrate, July inflation excluding energy ran at just 1 per cent, a marginal increase on June’s 0.9 per cent. The aggregate figure can be misleading. Inflation is rising, but is it the right kind of inflation?

At least the headline numbers are representative of member countries. Of the 16 euro countries, only Belgium and Portugal reported price falls. The average was a 0.4 percentage point increase. Read more

Japan’s economy grew by just 0.1 per cent in the second quarter, a sharp slowdown on the 1.2 per cent growth in Q1. Hurt by a strengthening yen, annualised, seasonally-adjusted Q2 growth is now 0.4 per cent, against last quarter’s (revised) 4.4 per cent.

The slowdown means China’s economy was larger than Japan’s during the second quarter. From the paper: Read more