Central Bank

China’s central bank, the People’s Bank of China (PBoC), is working on a prototype of a cryptocurrency that it could end up in circulation in the near future. Hovewer, there is currently no timetable for this, and the bank seems to be proceeding cautiously. It would be introduced alongside the China’s primary currency the renminbi. China will be simulating possible scenarios and running mock transactions using the cryptocurrency with some commercial Chinese banks.

This Newsletter has predicted a stock market correction at the least if not a crash in the near future and favors gold as an investment. What has happened is that the FAANG stocks continue to ride high while the rest of the market generally limps along. The gold price suffers a setback every time it strikes northwards. If that was not enough to make one suspicious, inflation remains low despite huge injections of capital into the economy.

This Newsletter has suggested in the past that investors avoid bonds, and it is likely that bonds will become even worse investments in the near future. The geniuses at central bank headquarters in the US, EU and Japan have created a situation that makes it extremely risky and unprofitable to put money in bonds.

Not only have bond purchases by central banks distorted the bond market but the ZIRP and NIRP implementation has resulted in central banks not being in a position to combat the next recession. The present policy of the Fed to raise interest rates in a sluggish economy will only hasten the arrival of the next downturn which has already started in some sectors.

The European Central Bank (ECB) said it will set up an instant payment system across the eurozone allowing consumers and firms to send money "within a matter of seconds".

The new service, TARGET instant payment settlement (TIPS), will enable citizens and firms to transfer money between each other in real time and will be available around the clock, 365 days a year.
It said the new network "will allow citizens and firms to make payments via their bank anywhere in the euro area within a matter of seconds", and is scheduled to come into operation in November 2018.

Now is not the time to raise interest rates, Bank of England Governor Mark Carney said on Tuesday, warning that already weak wage growth risked a further loss of momentum as Britain prepares to leave the European Union.

In a speech to London’s banking community a day after Brexit talks started, Carney dashed any prospect that he might be close to joining the three BoE policymakers who last week unexpectedly voted to raise rates from their record low of 0.25 per cent.

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Technically speaking, the US 30 years government bond yields curve, from a long term point of view, is still in a bear market. But looking on a short and medium term basis, we must consider some elements to understand if prices could be in a retracement phase of a potential short term rising trend.

First of all, the 30 years Treasury curve, the week that Trump was elected, advanced with the most highly percent daily change in 30 years (1). The price broke the medium term downtrendline (2) but was not able to overcome the previous high around 3,25 of June 2015 (3).

Greece’s international lenders prepared on Thursday to unblock as much as €8.5 billion in loans that Athens desperately needs next month to pay its bills, and to give some idea of what debt relief they may offer over the long-term.

One of the reasons why Greece’s bailout program has stalled over the past few months has been a disagreement between the eurozone and the International Monetary Fund on debt relief. The IMF, which has contributed financially to Greece’s first two bailouts but not the third, has wanted more information about what debt relief Greece may get before it gets more involved in the current program, which is due to end in the summer of next year.