Thursday, December 01, 2016

Today's Headlines

  • China's Central Bank Is Facing a Major New Headache. People’s Bank of China Governor Zhou Xiaochuan already has one policy headache with the currency falling to near an eight-year low. He could have an even bigger one next month. That’s when a $50,000 cap on how much foreign currency individuals are allowed to convert each year resets, potentially aggravating capital outflow pressures that are already on the rise. If just 1 percent of China’s almost 1.4 billion people max out those limits, that’s an outflow of about $700 billion -- more than the estimated $620 billion that Bloomberg Intelligence estimates indicate has already flowed out in the first 10 months of this year.
  • China's Spending Spree Is Making the World Nervous. (video)
  • Rogoff: China Risks Crisis Without Currency Flexibility. (video)
  • Hollande Takes Himself Out of France’s 2017 Presidential Race. French President Francois Hollande said he won’t run for re-election, stunning the nation and opening the way for his more popular prime minister to enter the 2017 presidential race. Hollande made the announcement in a televised address on Thursday evening, saying that his lack of support opened the country to the risk of extremist movements. He becomes the first president since the Fifth Republic began in 1958 not to seek re-election.
  • Treasuries Drop Before Jobs Data as Oil Gains; Tech Shares Sink. (video) Financial markets started the month with continued confidence in economic growth, with Treasuries extending losses, the dollar sitting near a decade high and cyclical shares accelerating gains against safety stocks. Declines in Treasuries extended the biggest increase in 10-year yields since 2009 before a payrolls report on Friday. Energy shares rallied globally for a second day as oil topped $50 a barrel. Rising rates boosted financial shares while hurting dividend stocks. Technology shares fell as the only group that’s left out of the rotation to economic-sensitive stocks. The Nasdaq Composite Index sank 1.1 percent, poised for the biggest two-day slide since September. The S&P 500 500 lost 0.2 percent, hovering near an all-time high.
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