Morgan Stanley Clashes With Goldman on Jobs Data Traders Ignored
The divide has grown between Goldman Sachs Group Inc. and Morgan Stanley over the likelihood of higher U.S. interest rates this month thanks to a payrolls report that failed to sway traders either way.
Goldman analysts Jan Hatzius and Zach Pandl saw the 151,000 jobs added in August as enough to boost the chances of action at the Federal Reserve’s Sept. 20-21 meeting to 55 percent. Morgan Stanley strategists led by Matthew Hornbach say they’re staying bullish on government bonds on the view that continued slack in the U.S. labor market and an absence of inflationary pressures will stay the central bank’s hand.
For investors, the lukewarm report gave no clear signals on timing, with market-implied odds of a rate increase this month holding at about one-in-three. Futures signaled 32 percent odds of tighter policy this month, according to data compiled by Bloomberg.
Japan's Central Bank Should Wait for the Fed, Abe Advisor Says
The Bank of Japan should wait until after the U.S. Federal Reserve decides on interest rates before acting itself, said Koichi Hamada, an economic adviser to Prime Minister Shinzo Abe.
Hamada said the BOJ risks having its efforts overshadowed if it expands monetary stimulus at its policy meeting on Sept. 21 and the Fed then just hours later decides to keep U.S. interest rates unchanged.
“The BOJ should wait for the Fed,” said Hamada, in an interview in Tokyo on Monday. “The present focus of attention is on the U.S. exit policy.”
A Fed decision to raise borrowing costs would do more to weaken the yen than anything the BOJ would do, according to Hamada, a retired Yale University professor.
The yen has advanced about 16 percent versus the U.S. dollar this year, undercutting one of the most significant benefits of BOJ policy for the Japanese economy.
Oil extends gains after Russia, Saudi Arabia sign pact
Oil prices extended gains on Tuesday, buoyed after top producers Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market, but a lack of immediate action to rein in output capped gains.
London Brent crude for November delivery was up 22 cents at $47.85 a barrel by 0643 GMT (0243 ET), after settling up80 cents on Monday.
Reference : Reuters, Bloomberg
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