US stocks rally most in 2014 as Fed bets spur rebound

The  Federal  Reserve’s  hint  that  interest  rates  will  stay  near  zero  sent investors  rushing  back  to  the  stock  market,  igniting  the  biggest  rally  this year for the Standard & Poor’s 500 Index.  The S&P 500 surged 1.7%  to 1,968.89. The Dow climbed 274.83 points (1.6%) to 16,994.22.

Fed officials saw global slowdown among risks to outlook

Fed  policy  makers  last  month  worried  that  slowing  global  growth  and  a stronger dollar posed risks to the US economy as they decided to maintain a  pledge  to  keep  interest  rates  low  for  a  “considerable  time”  after  it concludes  the  asset purchase program that’s due to end after its October meeting.  A  number  of  officials  said  the  US  expansion  “might  be  slower than  they  expected  if  foreign  economic  growth  came  in  weaker  than anticipated,” according to minutes of the Sept. 16-17 FOMC meeting.

Fed’s Evans says unemployment remains too high at 5.9%

US  unemployment  remains  too  high  and  a  stronger  dollar  could  hurt  the country’s  exports  while  preventing  inflation  from  rising  to  the  Fed’s  goal, Chicago Fed President Charles Evans said.  “At 5.9%, the unemployment rate remains above what most people think of as its long-run neutral level.” Evans  also  repeated that officials should be “exceptionally patient” before they  start  to  raise  rates  and  said a stronger  dollar  could  sap  growth.  He has previously said that he favors holding rates near zero until the 1Q16.

Banks need overhaul to resume lending to boost growth, IMF says

Some large banks are not profitable enough to increase lending, hindering the flow of credit needed to lift economic growth particularly in Europe, the IMF  said  in  its  Global  Financial  Stability  Report.  Benefits  of  record-low interest rates are being felt unevenly across advanced economies, helping boost corporate investment in the US while it remains weak in parts of the euro  area.  More  policies  are  needed  to  ensure  monetary  stimulus buttresses  household  spending  and  corporate  hiring  at  a  time  when  it’s also encouraging riskier investment, according to the IMF.

Constancio sees US$1.3trn limit for ECB asset program

ECB  Vice  President  Vitor  Constancio  said  €1trn  (US$1.26trn)  of  assetbacked  securities  and  covered  bonds  are  eligible  for  the  institution’s purchase  program.  Asset  purchases  are  the  latest  addition  to  the  ECB’s medley of unconventional tools that also includes targeted long-term loans and a negative deposit rate.

China’s Li pledges targeted steps to cut financing costs

China’s  Premier  Li  Keqiang  said  the  government  will  use  “targeted measures”  to  tackle  financing  costs  and  difficulties  in  order  to  support economic  growth.  The  Chinese  government  has  been  reluctant  to  use broad  stimulus  to  prop  up  growth  as  it  seeks  to  curb  debt  risks,  instead taking targeted steps such as easing mortgage-lending policies to aid the housing market.  China will start some key projects in some areas this year and will seek to boost consumption, Li said.

Brent falls into bear market as supply outpaces demand

Brent crude slid into a bear market on concern rising global supplies will be more  than  enough  to  meet  slowing  demand.  Brent  for  November settlement slid US$0.73 (0.8%) to US$91.38 a barrel.

Source: Bloomberg