Markets cheer the Fed, Argentina drops the peg and Putin calls an end to Russia's economic crisis. Here are some of the things people in markets are talking about today.
Ding dong, the ZIRP is dead
Markets around the world have reacted very positively to the U.S. Federal Reserve's expertly-managed rate rise. The word of the day is "gradual" as the question quickly moved on from "when?" to "how fast?" the Fed would be raising rates. The famous dot-plot is pointing to four 0.25 percent rate rises in 2016, while the derivatives market is only pricing in a total increase of 0.5 percent next year.
One of the things that is now certain is that global central banks are diverging. This morning the spread between German and U.S. two-year yields is almost the highest since 2006 as the European Central Bank maintains its easing bias while the Fed tightens. In Taiwan, the central bank took things a step further by cutting rates by 0.125 percent at its scheduled meeting. The Norwegian central bank kept rates unchanged this morning, but did signal a possible cut to 0.5 percent in the first half of 2016.
Argentina drops currency peg
Argentina's new president, Mauricio Macri has wasted no time in fulfilling one of his campaign pledges as his administration announces the lifting of currency controls from this morning. Finance Minister Alfonso Prat-Gay indicated he anticipates the peso could plunge by about 30 percent when markets open in Buenos Aires.
Putin on Russia
In his annual televised press conference, President Vladimir Putin said that Russia has passed the peak of the economic crisis which hit the country in the aftermath of the collapse in oil prices. In the marathon press conference, that was still in progress at 11:15 a.m. London time, Putin also damped hopes of a fast resolution to the stand-off with Turkey over the downing of a Russian plane on Nov. 24.
One currency that is worth watching is the Chinese yuan, which weakened again overnight, for a record 10th day. Expectations are mounting that weakening the yuan will continue to be policy well into 2016, which increases risks in the wider Asian currency market as higher volatility in the Chinese currency could increase volatility across the region.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Martin Shkreli arrested on securities fraud charges.
- The biggest irony of ending the U.S. oil export ban: Rising imports.
- Boeing wins $10 billion plane order from South China Air..
- ...While China is unhappy over U.S. arms sales to Taiwan.
- The business of death is booming, in Japan.
- The accidental distressed debt fund.
- Blackrock's hedge fund problem.
- The $500 million battle over princesses.
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