Fed Likely to Push Back on Market Expectations of Rate Increase (WSJ)
“The market is saying, ‘The fundamental economic outlook really hasn’t changed much, but we are getting more worried about Fed policy,’” says Jan Hatzius, chief economist at Goldman Sachs. Since last December the Fed has been promising to keep short-term interest rates near zero until the jobless rate reaches 6.5%, as long as inflation doesn’t take off. Most forecasters don’t see the jobless rate reaching that threshold until mid-2015. At the same time, however, the Fed is talking about pulling back on its $85 billion-per-month bond-buying program. The chatter about pulling back the bond program has pushed up a wide range of interest rates and appears to have investors second-guessing the Fed’s broader commitment to keeping rates low. This is exactly what the Fed doesn’t want.
Bank of England Official to Leave (DealBook)
The Bank of England said Friday that Paul Tucker would resign as deputy governor. The announcement comes two weeks before Mark Carney takes over as the governor of the central bank. Mr. Tucker, who has spent 33 years at the Bank of England, was also a candidate for the top job at the central bank. Mr. Tucker said that he planned to stay through the summer to help Mr. Carney, the former governor of the Bank of Canada, settle in to his new role.
China debt auction failure raises liquidity fears (FT)
The Chinese government failed to sell all its bonds at an auction on Friday, a sign of how cash has become increasingly tight in the slowing economy. The finance ministry sold only Rmb9.5bn ($1.5bn) of the Rmb15bn in government debt on offer, the first time in nearly two years that Beijing has fallen short of its target bond sale. The failure stemmed from a jump in money market rates that has occurred because the central bank has refused to pump liquidity into the economy despite signs of stress in the banking system.
Cameron Says Return on RBS More Important Than Timing (Bloomberg)
Prime Minister David Cameron said U.K. voters are more interested in getting their money back from Royal Bank of Scotland Group Plc than in its quick return to the private sector. “It will take time, because this is a bank that is still healing,” Cameron said in an interview in his London office late yesterday. “As for when we get it back into the private sector, I just have two very simple concerns -- one is we must make sure this bank contributes to the recovery of the U.K. economy. Secondly, people put their money in. I want them to get their money out.”
Teen allegedly bullied for being Canadian quits U.S. school (CBC)
A 15-year-old boy in Upstate New York alleges that two of his teachers teased him so much about being Canadian that he became depressed, prompting his mother to pull him out of school. “They’d say things like ‘Canada’s full of communists. They club baby seals. That my opinion doesn’t really matter because I’m a Canadian,’” Noah Kilpatrick said by phone from Watertown, N.Y.
Refinancings Plunge as Bond Yields Rise (WSJ)
The average rate on a 30-year mortgage rose to 4.15% last week, a 14-month high and up sharply from 3.59% in early May, according to the Mortgage Bankers Association. A separate survey released Thursday by Freddie Mac FMCC -5.56% said the rate this week was at 3.98%, up from 3.35% last month. Refinancing applications last week were down 36% from the first week of May, before rates began climbing, according to the bankers association.
Euro zone inflation off three-year lows, fall in employment deepens (Reuters)
Economic recovery in the euro area is expected to kick in later this year, but risks to the growth are on the downside as governments continue with painful fiscal consolidation and companies struggle to access credit in banks. Consumer prices rose by 0.1 percent on the month in May, the EU statistic agency Eurostat said, putting the annual inflation rate at 1.4 percent compared to 1.2 percent in April. Inflation in the euro zone's strongest economy, Germany, jumped to 1.6 percent on the year in May from 1.1 percent in April, while France recorded only a small increase and Italy stayed flat at 1.3 percent. Euro zone inflation has declined markedly over the last few months and is well under the European Central Bank's (ECB) target of close to, but below 2 percent. The bank said in June it sees inflation risks as broadly balanced.
India is Asia's weakest link in QE-driven rout (Reuters)
As financial markets sell off on concerns over rising U.S. rates, what happens in India, an economy with slowing growth and a heavy dependence on foreign money, could well determine if this is merely a short-term rout or a full-blown crisis. India's rupee currency has weakened the most among emerging markets after the South African rand since May as investors flee assets most vulnerable to the end of super-loose U.S. monetary policy.
Questions Linger in Case of Copied Code (WSJ)
Nearly four years after Mr. Aleynikov's first arrest, two big questions remain: How much is the allegedly purloined computer code really worth? And what does it do? Few people even know exactly what Mr. Aleynikov took with him when he quit Goldman. At the first trial, a federal judge closed the courtroom to observers whenever portions of the code were discussed or shown in detail. The move was made at the request of Goldman, which said the code was too valuable to show to the public, according to court documents. Goldman declined to provide the code to The Wall Street Journal, and the judge hasn't unsealed the evidence.
Bloomberg Reporters’ Practices Become Crucial Issue for Company (NYT)
“We were told again and again and again, find ways to use what’s on the terminal to write stories,” said one former Bloomberg reporter who, like most employees, was required to sign a strict nondisclosure agreement that prohibits them from speaking about the company. “They never said ‘Oh, please be careful and don’t breach any kind of privacy,’ ” the former reporter said. A senior Bloomberg executive not authorized to speak for attribution confirmed the reporter’s account. “It’s not like this was some deep Bloomberg secret,” this executive said. “If it’s on the terminal, we’d say go for it.”
Hedge Fund Manager Browder: If I Get Assassinated… (CNBC)
Bill Browder, chief executive and founder of Hermitage Capital Markets, told CNBC the Russian government is "apoplectic" over sanctions imposed on Russian officials that he has campaigned for, and if he gets assassinated, "everyone would know who did it." The well-known critic of the Kremlin has been living in London since he was kicked out of Russia for accusing Russian tax officials of embezzlement, in 2007.
Lawsuit: Man allowed to curse on NY ticket payment (AP)
A 22-year-old Connecticut man who wrote obscenities and "Tyranny" on his speeding ticket payment claims in a federal lawsuit that his free speech rights were violated when he was arrested. William Barboza is suing two police officers in the Catskill-area village of Liberty over the arrest. Barboza had replaced the word "Liberty" with "Tyranny" and added an obscenity-laced insult on the payment form accompanying an August 2012 ticket.