Weekly News Letter Macro w40

Finance Society,
Föreningen Ekonomerna at
Stockholm Business School
Weekly Newsletter, Macro
Week 40
Bank of England policy makers meet in
London after Sterling touched the lowest
level in almost five months against the
euro after the report showing U.S.
employers added fewer jobs in September
than analysts forecast. U.K. government
bonds climbed for the first time in four
weeks, pushing the 10-year gilt yield to the
least since April. The pound declined for a
second week versus the euro, sliding 0.4
percent to 74.11 pence. The PMI-index in
the Eurozone decreased from 52.3 to 52.0
and the export orders rose for the 27th
consecutive month.
The Malaysian ringgit fell and stocks
retreated due to concerns that Malaysia
may miss its target of balancing the budget
by 2020. The currency is already reeling
from a worsening slowdown in China and
allegations of corruption against Prime
Minister Najib Razak. The ringgit fell 1.2
percent before closing 0.3 percent down at
4.4152 a dollar in Kuala Lumpur.
This Tuesday Chinese economist Yu
Yongding claimed, during a speech in
Washington, that the Chinese authorities
deliberately caused the great fall in the
Chinese stock market. Yongding predicts
that the Chinese firms’ debts will reach
200 percent of GDP by 2020. The PMI
index for China dropped from 47.3 in
August to 47.2 in September. This is well
under the 50-stroke that generally marks
the boundary between growth and decline.
Index has not been above the level of 50
since February this year.
New York Fed President William Dudley
announced this Monday that a rate hike
would likely come before 2016. The
employment report from the US that was
published Friday afternoon, described the
not so cheerful picture of the work
situation in the country. The number of
people employed outside the agricultural
sector increased by 142,000 compared to
the expected 201,000. U.S. stocks staged
the biggest intraday turnaround from a loss
of more than 1.5 percent in four years, as a
weakening dollar fueled a rally in
commodity producers. Treasuries surged
on the speculations that the Federal
Reserve will keep rates lower for longer
after the disappointing job reports.
Ludvig Almbladh,
3rd of October, 2015