Singapore Policy Unchanged
The Monetary Authority of Singapore kept policy unchanged at its semi-annual policy meeting overnight, despite market expectations for a modest reduction in the allowed pace of currency appreciation. The decision not to ease gave AUD and NZD a modest boost. IMF Managing Director Lagarde again advocated giving Greece an extra two years to meet its deficit reduction targets, despite the fact that IMF officials have yet to complete their review of Greek progress to date. So it seems that at least one of the three troika members is willing to show leniency. We expect European governments and the ECB will eventually come on board too, and that Greece will receive the next installment of external aid before yearend. ECB Executive Board member Coeure implied though that an expansion of Greece’s T-bill program to bridge any financing gap in the interim may not be possible in future. Referring to the Emergency Liquidity Assistance program, he said “if further emergency loans to banks are purely for buying government bonds, then the ECB Council should not approve it”. In the US, initial jobless claims fell sharply to their lowest level since early 2008 at 339k (cons. 370k). Our US economics team are sceptical however – due to the start of a new quarter, and the expiration of federal emergency benefits in some states. In his first keynote speech since becoming a Fed Governor in May, Stein supported the QE3 programme noting that the benefits of MBS purchases outweigh the risks involved. Today, the University of Michigan confidence index for October is due along with the monthly budget statement. Chinese lending data may also be released
– if not today then at some point over the coming days.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank