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Traders Doubt Yellen’s December Resolve as Credibility Attacked

Treasury yields have fallen across maturities since the central bank left rates unchanged at its Sept. 21 meeting, while signaling that the case to hike had strengthened on brightening U.S. economic data. The bullish comments paired with no policy action left bond traders wondering how good conditions need to be for the Fed to move, particularly as officials pared projections for the future path of tightening.

“They say they’re data-dependent but in September they couldn’t even point to any data that suggest they should stand pat,” Charles Plosser, former president of the Philadelphia Fed, said in an interview on Bloomberg Television Wednesday. “That does damage, I think, to their credibility about them being data-dependent.”

Kuroda says BOJ will pursue appropriate yield curve to hit price goal

Bank of Japan Governor Haruhiko Kuroda said on Thursday the central bank will pursue the most appropriate yield curve to achieve its 2 percent inflation target.

He also said the central bank is ready to ease policy further by cutting its short- and long-term interest rate targets, or expanding risky asset purchases.

If necessary, the BOJ can also choose to expand the monetary base faster, Kuroda said.

OPEC Agrees to First Oil Output Cut in Eight Years

OPEC agreed to the outline of a deal that will cut production for the first time in eight years, surprising traders who had expected a continuation of the pump-at-will policy the group adopted in 2014 at the instigation of Saudi Arabia.

Oil jumped more than 5 percent in New York after ministers said the group agreed to limit production to a range of 32.5 to 33 million barrels a day.

The deal will reverberate beyond the Organization of Petroleum Exporting Countries. It will brighten the prospects for the energy industry, from giants like Exxon Mobil Corp. to small U.S. shale firms, and boost the economies of oil-rich countries such as Russia and Saudi Arabia. For consumers, however, it will mean higher prices at the pump.

The agreement was possible because Iran will be exempt from capping production, a major concession by Saudi Arabia, the group’s dominant producer. Still, many of the details remain to be worked out and the group won’t decide on targets for each country until its next meeting at the end of November.

Goldman says OPEC deal to add as much as $10 to H1 2017 oil prices

Goldman Sachs said the deal reached by OPEC crude producers on Wednesday to curb output should add $7 to $10 to oil prices in the first half of next year.

Members of the Organization of the Petroleum Exporting Countries (OPEC) agreed on Wednesday to modest oil output cuts in the first such deal since 2008, with group leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.

"Strict implementation of today's deal in 2017 would represent 480,000 to 980,000 barrels per day less output," Goldman analysts said in a note dated Wednesday.

Reference: Bloomberg,Reuters