European Debt Crisis Proliferation Concerns Lingering
Despite the recent series of economic data showed the U.S. economy is accelerating the pace of recovery, but the Fed still insist on the implementation plan to buy 600 billion U.S. dollars debt and interest rate at close to zero.
Some analysts believe the Fed’s statement played down the market for the third round of the quantitative easing policy expectations, the market focus will shift back the debt crisis in Europe. Yesterday, the rating agency Moody’s cut the Spanish sovereign debt rating on watch list, re-ignited the market worried about the spread of the debt crisis.
Needed to power the U.S. economy
Local 14, the U.S. Commerce Department data showed that consumers shopping enthusiasm, in November than the first five months of U.S. retail sales growth in Central, an increase of 0.8%, higher than analysts expected. At the same time, two months before retail data also were adjusted upward accordingly, the fourth quarter boosted investor confidence in the overall U.S. economic growth, consumer spending growth to the U.S. stock market rose to a new high of nearly two years.
Despite the continuation of strong U.S. economic recovery, unemployment is still close to 10% worried about the threat of high unemployment and low inflation, the Fed chose to continue the implementation of the second round of quantitative easing monetary policy to boost economic recovery.
Day, the Fed said in a statement after the regular meeting, the slow pace of U.S. economic recovery not significantly lower the unemployment rate, the Fed will continue to buy 600 billion U.S. dollars of treasury bonds plan to stimulate the U.S. economy more robust recovery. At the same time, the Fed’s economic development based on the actual situation of the United States to the second round of the quantitative easing monetary policy rate and the total size of the regular assessment.
It should be noted that the Fed statement did not talk about recent economic data essential to a good situation, but rather focuses on high unemployment. Nevertheless, the Fed is only reiterating the same scale purchase bonds, the market for the third round of the quantitative easing policy is expected to fall, the dollar also got a boost from.
Kansas Fed Xihuolige against the Fed’s monetary policy actions. Given the economic situation is improving, Huo Lige loose monetary policy or worried about the long-term inflation expectations push, which will shake the stability of the U.S. economy. High-frequency U.S. economic research institutes expect the economy, chief U.S. economist Xie Fude, full implementation of the Federal Reserve may not be 600 billion U.S. dollars debt purchase plan.
Spain or lower rating
The Fed’s statement did not bring to the market, “surprises”, while rating agencies Moody’s debt crisis once again to return to the spotlight in Europe. In a warning to the United States after the credit rating, Moody’s sovereign debt rating yesterday and then included in the Spanish lower watch list.
Affected by the general decline in the stock market yesterday, the Asia-Pacific region, China, Hong Kong stock market plunge in late afternoon, the Hang Seng Index fell below the 23,000 point mark. European stock markets opened lower as the Bank of Spain fell the hardest hit stocks, State Bank of Spain and BBVA intraday decline of more than 3% of the euro against the dollar also briefly fell below the 1.3300 level.
Although Moody’s does not expect Spain to the EU requesting assistance, but investors worried about Europe’s lingering debt crisis spread, O’Neill, chairman of Goldman Sachs Asset Management, said yesterday that efforts to eliminate the region with the euro area member states between Member States economic imbalances, debt crisis in Europe next year, will continue to plague the market.
Starting Thursday, EU leaders will hold a two-day summit, focusing on how to modify the “Lisbon Treaty” and the establishment of a permanent relief mechanism. The European Central Bank also said that members buy bonds in order to avoid any loss suffered by the bank is considering increasing the size of capital held.
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