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European markets rattled after Fed leaves US interest rates unchanged - live updates European markets rattled after Fed leaves US interest rates unchanged - live updates
(35 minutes later)
10.12am BST10:12
Traders need to fasten their seat belts for a period of high volatility, warns Ipek Ozkardeskaya of London Capital Group.
She explains that economic data will be scrutinised more tightly than ever, thanks to the Fed’s new concern about the global economy.
The inflation in China and the unemployment in the Eurozone will be as important as onion prices in India and dairy product sales volume in New Zealand. Given the dull economic fundamentals across the globe, it may be hard for the Fed to take the first step before the end of the year.
It will be even harder for the market to assess a consensus and to come up with expectations.
#Fed inaction adds nothing but turbulence to the market: $TRY $BIST #EM http://t.co/rQnoPTxO8f
9.57am BST09:579.57am BST09:57
Gold miners are benefitting from the Fed’s reluctance to raise interest rates, reports my colleague Nick Fletcher:Gold miners are benefitting from the Fed’s reluctance to raise interest rates, reports my colleague Nick Fletcher:
Janet Yellen’s concerns about the Chinese economy has undermined leading shares, despite the Federal Reserve chair announcing on Thursday that US interest rates would remain on hold.Janet Yellen’s concerns about the Chinese economy has undermined leading shares, despite the Federal Reserve chair announcing on Thursday that US interest rates would remain on hold.
The worries about the outlook for the global economy have pushed mining shares lower, although precious metal miners are shining on hopes that the Fed decision will weaken the dollar - which is already happening - and lift gold prices.The worries about the outlook for the global economy have pushed mining shares lower, although precious metal miners are shining on hopes that the Fed decision will weaken the dollar - which is already happening - and lift gold prices.
So Randgold Resources has risen 118p to £38.47 and Fresnillo is 17p better at 607p.So Randgold Resources has risen 118p to £38.47 and Fresnillo is 17p better at 607p.
Related: FTSE falters after Fed but gold shines as dollar fallsRelated: FTSE falters after Fed but gold shines as dollar falls
9.51am BST09:519.51am BST09:51
HSBC’s chief economist reminds us that we’ve been expecting a US rate rise “soon” for a long time.HSBC’s chief economist reminds us that we’ve been expecting a US rate rise “soon” for a long time.
Remember the beginning of the year when everyone said US rates would definitely rise in June? And then September? Still waiting....Remember the beginning of the year when everyone said US rates would definitely rise in June? And then September? Still waiting....
9.46am BST09:469.46am BST09:46
The German stock market is continuing to weaken, now down around 1.3% today.The German stock market is continuing to weaken, now down around 1.3% today.
DAX looking ugly. A break below 10068 could have major bearish implications pic.twitter.com/ZQog7mg0WyDAX looking ugly. A break below 10068 could have major bearish implications pic.twitter.com/ZQog7mg0Wy
Updated at 9.46am BSTUpdated at 9.46am BST
9.28am BST09:289.28am BST09:28
Britain’s interest rates could now remain lower for longer, thanks to the Fed, argues RBS’s economics team.Britain’s interest rates could now remain lower for longer, thanks to the Fed, argues RBS’s economics team.
They point out that the two policy rates usually rack each other quite closely, due to a) the amount of trade between the two countries, and b) the US’s pre-eminent position.They point out that the two policy rates usually rack each other quite closely, due to a) the amount of trade between the two countries, and b) the US’s pre-eminent position.
The Bank of England is also likely to favour waiting for the Fed to hike first.The Bank of England is also likely to favour waiting for the Fed to hike first.
Why yesterday's #Fed decision not to raise rates matters for the UK. Read: http://t.co/E3IIQqLkPr pic.twitter.com/qN0fs5gkbzWhy yesterday's #Fed decision not to raise rates matters for the UK. Read: http://t.co/E3IIQqLkPr pic.twitter.com/qN0fs5gkbz
RBS also pulled together four charts to explain why the Fed didn’t hike (from this Powerpoint presentation):RBS also pulled together four charts to explain why the Fed didn’t hike (from this Powerpoint presentation):
9.21am BST09:219.21am BST09:21
When China sneezes, the US catches a cold and Europe gets the flu. #Fed #PBoCWhen China sneezes, the US catches a cold and Europe gets the flu. #Fed #PBoC
9.10am BST09:109.10am BST09:10
The Federal Reserve has knocked confidence in the global economy by leaving interest rates unchanged and sounding so cautious, argues Jameel Ahmad, FXTM chief market analyst.The Federal Reserve has knocked confidence in the global economy by leaving interest rates unchanged and sounding so cautious, argues Jameel Ahmad, FXTM chief market analyst.
The indication from the Federal Reserve that global economic weakness played a major factor in delaying a US interest rate rise strongly weakens the possibility of an interest rate rise at all this year.The indication from the Federal Reserve that global economic weakness played a major factor in delaying a US interest rate rise strongly weakens the possibility of an interest rate rise at all this year.
Global growth concerns are a reoccurring theme as current suggestions strongly point towards economic momentum in China continuing to slow even further next year. Both the Bank of Japan (BoJ) and European Central Bank (ECB) are going to find themselves under increasing pressure to reinvigorate economic momentum, and the emerging markets remain vulnerable to further weakness.Global growth concerns are a reoccurring theme as current suggestions strongly point towards economic momentum in China continuing to slow even further next year. Both the Bank of Japan (BoJ) and European Central Bank (ECB) are going to find themselves under increasing pressure to reinvigorate economic momentum, and the emerging markets remain vulnerable to further weakness.
8.57am BST08:578.57am BST08:57
Marc Ostwald of ADM Investor Services is fuming about the Federal Reserve’s decision to leave rates unchanged, and sound rather dovish about inflation and China.Marc Ostwald of ADM Investor Services is fuming about the Federal Reserve’s decision to leave rates unchanged, and sound rather dovish about inflation and China.
He points out that the Fed raised its growth forecasts, and lowered its unemployment projection, clearing the way for a rate hike. Instead, weaker global conditions were cited as a reason to ignore these forecasts.He points out that the Fed raised its growth forecasts, and lowered its unemployment projection, clearing the way for a rate hike. Instead, weaker global conditions were cited as a reason to ignore these forecasts.
Ostwald says:Ostwald says:
If the FOMC’s objective was to convey confusion, it has succeeded, thereby ploughing a deep furrow of instability and destabilization, and shining a very bright light on the large debt and liquidity trap it and other G7 central banks have spent 7 years crafting.If the FOMC’s objective was to convey confusion, it has succeeded, thereby ploughing a deep furrow of instability and destabilization, and shining a very bright light on the large debt and liquidity trap it and other G7 central banks have spent 7 years crafting.
Fed no longer a cen bank, just source of confusion, ploughing deep furrow of instability & destabilization, and nightmare of liquidity trapFed no longer a cen bank, just source of confusion, ploughing deep furrow of instability & destabilization, and nightmare of liquidity trap
8.50am BST08:508.50am BST08:50
Eurozone stock markets are suffering because the euro has rallied against the dollar overnight.Eurozone stock markets are suffering because the euro has rallied against the dollar overnight.
That’s bad for exporters in France and Germany.That’s bad for exporters in France and Germany.
It may also have spoiled Mario Draghi’s breakfast. The ECB president managed to weaken the euro earlier this month by hinting at further stimulus measures. Maybe he’ll have to deliver soon.It may also have spoiled Mario Draghi’s breakfast. The ECB president managed to weaken the euro earlier this month by hinting at further stimulus measures. Maybe he’ll have to deliver soon.
Question now, how long can the ECB afford to wait?Question now, how long can the ECB afford to wait?
8.33am BST08:338.33am BST08:33
The dollar has just hit a three-week low against major currencies, down 0.2%.The dollar has just hit a three-week low against major currencies, down 0.2%.
That reflects the chance that US interest rates may not rise until next year.That reflects the chance that US interest rates may not rise until next year.
8.25am BST08:258.25am BST08:25
European markets hit by Fed fearsEuropean markets hit by Fed fears
Germany and France’s main stock indices have both fallen over 1% in early trading, echoing the selloff in London.Germany and France’s main stock indices have both fallen over 1% in early trading, echoing the selloff in London.
Investors in Frankfurt and Paris aren’t impressed by Janet Yellen’s dovish performance last night, where the Fed chief warned that the slowing Chinese economy could “restrain US economic activity somewhat”.Investors in Frankfurt and Paris aren’t impressed by Janet Yellen’s dovish performance last night, where the Fed chief warned that the slowing Chinese economy could “restrain US economic activity somewhat”.
That’s encouraging investors to sell shares, and pile into safe assets including German bunds (see 7.55am)That’s encouraging investors to sell shares, and pile into safe assets including German bunds (see 7.55am)
Here’s the damage across Europe’s stock markets this morning:Here’s the damage across Europe’s stock markets this morning:
Updated at 8.25am BSTUpdated at 8.25am BST
8.14am BST08:148.14am BST08:14
You might think that ultra-low interest rates would boost stock markets in Europe.You might think that ultra-low interest rates would boost stock markets in Europe.
But traders are worried that Janet Yellen sounded quite concerned about low inflation and the global economy at last night’s press conference.But traders are worried that Janet Yellen sounded quite concerned about low inflation and the global economy at last night’s press conference.
Mike van Dulken of Accendo Markets explains:Mike van Dulken of Accendo Markets explains:
Markets had anticipated either a dovish hike (easy does it) or a hawkish hold (be prepared) [but got neither].Markets had anticipated either a dovish hike (easy does it) or a hawkish hold (be prepared) [but got neither].
While markets had desired clarity, it appears that uncertainty (and volatility) may be here to stay (December hike, Jan, later?).While markets had desired clarity, it appears that uncertainty (and volatility) may be here to stay (December hike, Jan, later?).
Updated at 8.14am BSTUpdated at 8.14am BST
8.08am BST08:088.08am BST08:08
And we’re off! Europe’s stock markets are open, allowing traders to give their verdict on last night’s Federal Reserve decision.And we’re off! Europe’s stock markets are open, allowing traders to give their verdict on last night’s Federal Reserve decision.
As predicted, shares are dropping in London, with the FTSE 100 losing 33 points or 0.5% to 6153.As predicted, shares are dropping in London, with the FTSE 100 losing 33 points or 0.5% to 6153.
Other European indices are also dipping, as the relief rally that began in Asia peters out....Other European indices are also dipping, as the relief rally that began in Asia peters out....
Updated at 8.09am BSTUpdated at 8.09am BST
7.59am BST07:597.59am BST07:59
Wendell Perkins, senior portfolio manager for Manulife Asset Management, reckons US interest rates will probably remain at their record lows until next year.Wendell Perkins, senior portfolio manager for Manulife Asset Management, reckons US interest rates will probably remain at their record lows until next year.
Perkins also predicts more volatility as the markets react to last night’s Fed decision.Perkins also predicts more volatility as the markets react to last night’s Fed decision.
Investors need to consider a) When are they going to raise, b) what are they afraid of, and c) how worried are they about conditions in the global economy, he told Bloomberg TV.Investors need to consider a) When are they going to raise, b) what are they afraid of, and c) how worried are they about conditions in the global economy, he told Bloomberg TV.
7.55am BST07:557.55am BST07:55
Money is pouring into German government bonds this morning.Money is pouring into German government bonds this morning.
This is pushing down the yield (or interest rate) on debt issued by Europe’s largest member. That’s often a sign of anxiety in the markets.This is pushing down the yield (or interest rate) on debt issued by Europe’s largest member. That’s often a sign of anxiety in the markets.
Big moves in European #bond yields following US...German debt rallying, yield dropping 9bps on 10yer pic.twitter.com/St3WcgBPjJBig moves in European #bond yields following US...German debt rallying, yield dropping 9bps on 10yer pic.twitter.com/St3WcgBPjJ
7.46am BST07:467.46am BST07:46
Good morning all. There’s a subdued feel in the City today, after the Fed disappointed those hoping that the Federal Reserve would raise interest rates last night.Good morning all. There’s a subdued feel in the City today, after the Fed disappointed those hoping that the Federal Reserve would raise interest rates last night.
The decision wasn’t a shock (as we blogged yesterday, the markets suggested only a 32% chance of a hike).The decision wasn’t a shock (as we blogged yesterday, the markets suggested only a 32% chance of a hike).
But some investors are now fretting about why Janet Yellen and the rest of the FOMC held borrowing costs at record lows again.But some investors are now fretting about why Janet Yellen and the rest of the FOMC held borrowing costs at record lows again.
It’s slightly ironic. Traders don’t want the flow of cheap money to end, but they’re also worried that central bankers feel the need to keep replenishing the punchbowl.It’s slightly ironic. Traders don’t want the flow of cheap money to end, but they’re also worried that central bankers feel the need to keep replenishing the punchbowl.
As London CapitalGroup dealer Jonathan Sudaria puts it:As London CapitalGroup dealer Jonathan Sudaria puts it:
“Yes, we’ve got a reprieve on an immediate interest rate hike, but thereason for the stay of execution is rather bearish itself.”“Yes, we’ve got a reprieve on an immediate interest rate hike, but thereason for the stay of execution is rather bearish itself.”
And that’s why the main European stock markets are expected to dip in early trading.And that’s why the main European stock markets are expected to dip in early trading.
Seems Europe gonna follow US equities lower...US on hold highlight risks to global economy&just postpones inevitable? pic.twitter.com/2grwHY02m2Seems Europe gonna follow US equities lower...US on hold highlight risks to global economy&just postpones inevitable? pic.twitter.com/2grwHY02m2
Updated at 7.48am BSTUpdated at 7.48am BST
7.27am BST07:277.27am BST07:27
I’m handing over now to my colleague Graeme Wearden who is poised at his work station in London. Thanks for joining me.I’m handing over now to my colleague Graeme Wearden who is poised at his work station in London. Thanks for joining me.
7.13am BST07:137.13am BST07:13
7.07am BST07:077.07am BST07:07
Back in Asia, the Nikkei is still in the doldrums while the other major bourses perform pretty well on the prospect of cheaper money.Back in Asia, the Nikkei is still in the doldrums while the other major bourses perform pretty well on the prospect of cheaper money.
But in Japan a delay in the US hike has served to strengthen the yen, which is bad for exports and for stock markets.But in Japan a delay in the US hike has served to strengthen the yen, which is bad for exports and for stock markets.
Only a weakening yen will bring relief to the Nikkei according to Capital Economics’ Julian Jessop, who said in a note:Only a weakening yen will bring relief to the Nikkei according to Capital Economics’ Julian Jessop, who said in a note:
The single most important driver of equity performance in the next year or so is likely to be renewed weakness in the yen.The single most important driver of equity performance in the next year or so is likely to be renewed weakness in the yen.
He sees the prospect of more QE from the Bank of Japan and a rate hike by the Fed as the two main factors to that situation around.He sees the prospect of more QE from the Bank of Japan and a rate hike by the Fed as the two main factors to that situation around.
Updated at 7.07am BSTUpdated at 7.07am BST
6.41am BST06:416.41am BST06:41
IG seeing European markets opening down, but only slightly.IG seeing European markets opening down, but only slightly.
6.26am BST06:266.26am BST06:26
China selloff was a 'necessary correction' – French finance ministerChina selloff was a 'necessary correction' – French finance minister
The French finance minister, Michel Sapin, is in Beijing and he’s being polite about the state of the Chinese economy.The French finance minister, Michel Sapin, is in Beijing and he’s being polite about the state of the Chinese economy.
It’s a real concern for a lot of people, including America’s finest economic brains. But Sapin said he sees no particularly significant risk from recent stock market turbulence and the recent fall was a “necessary correction”, Reuters reports.It’s a real concern for a lot of people, including America’s finest economic brains. But Sapin said he sees no particularly significant risk from recent stock market turbulence and the recent fall was a “necessary correction”, Reuters reports.
Updated at 6.26am BSTUpdated at 6.26am BST
6.21am BST06:216.21am BST06:21
Opinion still mixed on whether the Fed move was the correct one.Opinion still mixed on whether the Fed move was the correct one.
6.12am BST06:126.12am BST06:12
Chris Weston from IG in Melbourne has delivered his verdict on the day’s events and his view is that the Fed was as dovish as it could possibly have been and would have gone for a rise if it had not been for the August turmoil in China.Chris Weston from IG in Melbourne has delivered his verdict on the day’s events and his view is that the Fed was as dovish as it could possibly have been and would have gone for a rise if it had not been for the August turmoil in China.
It seems logical the central bank would have raised rates if it weren’t for recent international developments, but they tried desperately to buy themselves flexibility.It seems logical the central bank would have raised rates if it weren’t for recent international developments, but they tried desperately to buy themselves flexibility.
And as he says in conclusion, it could get interesting in Europe today despite the fairly muted response in Asia:And as he says in conclusion, it could get interesting in Europe today despite the fairly muted response in Asia:
It promises to be a very interesting session in Europe and the US, as traders have time to really assess the Fed’s view and what it means for markets. As always, the first move might not be the right move and cooler heads should prevail.It promises to be a very interesting session in Europe and the US, as traders have time to really assess the Fed’s view and what it means for markets. As always, the first move might not be the right move and cooler heads should prevail.
Updated at 6.13am BSTUpdated at 6.13am BST
6.03am BST06:036.03am BST06:03
SummarySummary
Time for a quick recap on the day’s main news here in Asia Pacific:Time for a quick recap on the day’s main news here in Asia Pacific:
5.48am BST05:485.48am BST05:48
As dawn breaks over Europe this is a good time to see what’s happening with the futures markets.As dawn breaks over Europe this is a good time to see what’s happening with the futures markets.
And it looks like the main markets will be up with FTSE predicted to open up 0.32%, the DAX in Germany up 0.26% and the CAC in paris up 0.32%.And it looks like the main markets will be up with FTSE predicted to open up 0.32%, the DAX in Germany up 0.26% and the CAC in paris up 0.32%.
5.26am BST05:265.26am BST05:26
Looks like the jury is still well and truly out on whether China’s economy is going to have a hard or soft landing as it decends from the heights of double digit growth. One of the reasons the Fed gave for keeping on hold were “heightened concerns” about the global economy in the wake the sharp selloff on Chinese stock markets in August and whether that means China can keep driving global growth as it has helped to do since the GFC.Looks like the jury is still well and truly out on whether China’s economy is going to have a hard or soft landing as it decends from the heights of double digit growth. One of the reasons the Fed gave for keeping on hold were “heightened concerns” about the global economy in the wake the sharp selloff on Chinese stock markets in August and whether that means China can keep driving global growth as it has helped to do since the GFC.
Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns.Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns.
If you want to see her full press conference, here it is:If you want to see her full press conference, here it is:
5.14am BST05:145.14am BST05:14
Chinese house prices riseChinese house prices rise
Today’s most interesting data comes from China where home prices inched upwards for a fourth consecutive month in August.Today’s most interesting data comes from China where home prices inched upwards for a fourth consecutive month in August.
Average new home prices inched up 0.3% in August from the previous month, according to Reuters calculations based on data released by the national statistics bureau on Friday, the same pace as in July.Average new home prices inched up 0.3% in August from the previous month, according to Reuters calculations based on data released by the national statistics bureau on Friday, the same pace as in July.
But Reuters reported that the Chinese property market – source of many concerns about the health of the economy – would not be booming again any time soon.But Reuters reported that the Chinese property market – source of many concerns about the health of the economy – would not be booming again any time soon.
Analysts do not expect a full-blown turnaround any time soon, as a huge overhang of unsold homes discourages new construction and investment in all but the biggest cities.Analysts do not expect a full-blown turnaround any time soon, as a huge overhang of unsold homes discourages new construction and investment in all but the biggest cities.
5.04am BST05:045.04am BST05:04
Back to the markets then and the Japanese stock market has started up again after the lunch break. The Nikkei is still down though at 18,170, a fall of -1.4%.Back to the markets then and the Japanese stock market has started up again after the lunch break. The Nikkei is still down though at 18,170, a fall of -1.4%.
Elsewhere it seems reasonably calm. In fact you could say the S&P/ASX200 here in Australia is having a good day. It is standing at 5,189 points, a rise of 0.8% on the day.Elsewhere it seems reasonably calm. In fact you could say the S&P/ASX200 here in Australia is having a good day. It is standing at 5,189 points, a rise of 0.8% on the day.
The Shanghai Composite in China is up 0.4% at lunch.The Shanghai Composite in China is up 0.4% at lunch.
4.50am BST04:504.50am BST04:50
Stevens’ testimony before the House of Representatives economics committee was wide-ranging. he also spoke about how he thinks the Australian economy will weather the headwinds facing China which Janet Yellen is so concerned about.Stevens’ testimony before the House of Representatives economics committee was wide-ranging. he also spoke about how he thinks the Australian economy will weather the headwinds facing China which Janet Yellen is so concerned about.
Whether that financial volatility itself will serve further to dampen global growth prospects remains to be seen. Sometimes such events portend a wider set of economic events, but just as often, they don’t.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.Whether that financial volatility itself will serve further to dampen global growth prospects remains to be seen. Sometimes such events portend a wider set of economic events, but just as often, they don’t.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.
4.40am BST04:404.40am BST04:40
US Fed will raise rates before Christmas – RBA chiefUS Fed will raise rates before Christmas – RBA chief
Glenn Stevens, the governor of the Reserve Bank, has weighed into the debate today. Despite suggestions that the Fed might now not raise until 2016, he thinks it will raise rates before Christmas. That means either at its October meeting or in December.Glenn Stevens, the governor of the Reserve Bank, has weighed into the debate today. Despite suggestions that the Fed might now not raise until 2016, he thinks it will raise rates before Christmas. That means either at its October meeting or in December.
Speaking at a parliamentary hearing in Canberra, he said:Speaking at a parliamentary hearing in Canberra, he said:
I would still think an increase in the Fed funds rate is probably going to happen this year. The majority of FOMC [Federal Open Market Committee] members still think that they’re likely to start raising this year, there’s two meetings left.I would still think an increase in the Fed funds rate is probably going to happen this year. The majority of FOMC [Federal Open Market Committee] members still think that they’re likely to start raising this year, there’s two meetings left.
4.35am BST04:354.35am BST04:35
Australia can weather global turmoil – RBAAustralia can weather global turmoil – RBA
Glenn Stevens, the governor of the Reserve Bank of Australia, has been giving evidence today to a parliamentary committee. He has an optimistic view of the economy and thinks it can weather the headwinds threatening China and which are worrying Janet Yellen so much.Glenn Stevens, the governor of the Reserve Bank of Australia, has been giving evidence today to a parliamentary committee. He has an optimistic view of the economy and thinks it can weather the headwinds threatening China and which are worrying Janet Yellen so much.
Stevens told the House of Representatives economics committee in Canberra:Stevens told the House of Representatives economics committee in Canberra:
There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.
In the period ahead if we can get the non-resources part of the economy to keep improving gradually, build some confidence ... then we’ll get the unemployment rate to come down.We ought be looking to get back into the fives over time, and given enough time I think we will, unless we’re hit by a bad shock somewhere [NB it’s currently 6.2%].In the period ahead if we can get the non-resources part of the economy to keep improving gradually, build some confidence ... then we’ll get the unemployment rate to come down.We ought be looking to get back into the fives over time, and given enough time I think we will, unless we’re hit by a bad shock somewhere [NB it’s currently 6.2%].
4.24am BST04:244.24am BST04:24
Nine years is a long time in global economics. Check out that gold price.Nine years is a long time in global economics. Check out that gold price.
4.21am BST04:214.21am BST04:21
As mentioned below, the Australian dollar has benefited from the expectation that US borrowing costs would stay on hold and rein in the long march of the greenback. As a result it has rallied around 2c in the past week or so since sinking to a new six-year low and this afternoon is buying US71.95c.As mentioned below, the Australian dollar has benefited from the expectation that US borrowing costs would stay on hold and rein in the long march of the greenback. As a result it has rallied around 2c in the past week or so since sinking to a new six-year low and this afternoon is buying US71.95c.
Early on Friday it spiked to US72.76c, its highest level since August 24.Early on Friday it spiked to US72.76c, its highest level since August 24.
Updated at 4.22am BSTUpdated at 4.22am BST
4.11am BST04:114.11am BST04:11
Here’s some more reaction.Here’s some more reaction.
4.03am BST04:034.03am BST04:03
It is not in doubt that the Fed intends to raise rates, but the question that has obsessed economists and investors for the past couple of years has always been the timing.It is not in doubt that the Fed intends to raise rates, but the question that has obsessed economists and investors for the past couple of years has always been the timing.
For Larry Elliott, the Guardian’s economics editor, Thursday night’s decision shows that the Fed has become ultra-cautious and does not want to risk hiking rates if it has to reduce them again because the recovery is not strong enough. You can read his full article here but this is the main thrust:For Larry Elliott, the Guardian’s economics editor, Thursday night’s decision shows that the Fed has become ultra-cautious and does not want to risk hiking rates if it has to reduce them again because the recovery is not strong enough. You can read his full article here but this is the main thrust:
This is the weakest recovery the world’s biggest economy has experienced in modern times and even now, more than six years after the trough of the recession, there are mixed signals. The Fed is not entirely convinced that it is party time for the US economy.The Fed is also weighing up the implications of a US interest rate increase on emerging markets, and in particular whether the prospect of higher US yields will intensify capital flows out of countries such as China and Brazil.So when will rates rise? When there is a further improvement in the jobs market and when the Fed is “reasonably confident” that inflation is on course to move back up to 2%. Not yet, in other words.This is the weakest recovery the world’s biggest economy has experienced in modern times and even now, more than six years after the trough of the recession, there are mixed signals. The Fed is not entirely convinced that it is party time for the US economy.The Fed is also weighing up the implications of a US interest rate increase on emerging markets, and in particular whether the prospect of higher US yields will intensify capital flows out of countries such as China and Brazil.So when will rates rise? When there is a further improvement in the jobs market and when the Fed is “reasonably confident” that inflation is on course to move back up to 2%. Not yet, in other words.
3.58am BST03:583.58am BST03:58
Markets-wise it has been a bit mixed. The expectation was for a hold so the semi-rally in stocks and currencies suchas the Australian dollar in recent days showed that the decision has been priced in.Markets-wise it has been a bit mixed. The expectation was for a hold so the semi-rally in stocks and currencies suchas the Australian dollar in recent days showed that the decision has been priced in.
However, there has still been a bit of action, notably in Japan where the Nikkei plunged on the opening before fighting back.However, there has still been a bit of action, notably in Japan where the Nikkei plunged on the opening before fighting back.
Here are the scores so far:Here are the scores so far:
3.35am BST03:353.35am BST03:35
Good afternoon/morning and welcome to the markets live blog following the Fed’s decision to keep rates near zero.Good afternoon/morning and welcome to the markets live blog following the Fed’s decision to keep rates near zero.
You can read how the action unfolded here as relayed by my colleagues Graeme Wearden and Jane Kasperkevic. But the main takeaway seems to be that the very dovish comments from Fed chair Janet Yellen suggests that she and her fellow committee members might wait until next year to increase borrowing costs.You can read how the action unfolded here as relayed by my colleagues Graeme Wearden and Jane Kasperkevic. But the main takeaway seems to be that the very dovish comments from Fed chair Janet Yellen suggests that she and her fellow committee members might wait until next year to increase borrowing costs.
here’s the verdict of the world’s biggest bond trading company, Pimco.here’s the verdict of the world’s biggest bond trading company, Pimco.