More policy stimulus

Tuesday 21 October 2008 - UBS Morning Economic Comment: More policy stimulus

Presented by amit kara




+ Money markets appear to be thawing. Interbank lending rates have eased across a range of currencies. Although comforting, it is important to note that even after this narrowing spreads still remain well in excess of the historical average and also that there is little if no trading happening beyond the shortest maturity.


+ Keynesian-style fiscal injections have been announced by various governments including the French, British and the German. Yesterday Fed Chairman Bernanke made the case for more government spending.


+ The data calendar is light today. We get UK CBI industrial trends report for October and the headline balance is expected to point to further deceleration. Domestic and export orders have fallen in spite of a weaker currency. Looking ahead we expect sterling to depreciate further, to 1.55 against the dollar and to 0.84 against the euro by end-2009.


+ Elsewhere, BoE Governor Mervyn King, Minneapolis Fed's Stern and ECB's Gonzalez-Paramo speak at various events. The emphasis is likely to be on GDP growth fears and on regulation rather than on inflation.

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• economics
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• kara
• financial
• credit
• crisis
• market
• interbank
• lending
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• keynes
• bernakne
• boe
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• gdp
• inflation