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ECB seen keeping option to prolong bond-buying again in 2018 – sources

European Central Bank policymakers disagree on whether to set a definitive end-date for their money-printing programme when they meet in October, raising the chance that they will keep open at least the option of prolonging it again, six sources told Reuters. A stubbornly strong euro, with its dampening effect on inflation, is driving a rift among ECB policymakers, the sources on the ECB’s Governing Council with direct knowledge of its thinking said. The split is between ‘hawks’ — led by richer, northern countries such as Germany — who are ready ...

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EU Chamber warns China: Open economy faster or risk backlash

A business group urged China on Tuesday to carry out promises to open its economy and warned that inaction might fuel a backlash against free trade amid mounting U.S. and European criticism. The European Union Chamber of Commerce said in a report that Beijing is backtracking in some areas, including by imposing new restrictions on food imports, express delivery and legal services. It proposed hundreds of possible changes to open the state-dominated economy wider or simplify rules in fields from cosmetics to medical devices. “The current lack of reciprocity in ...

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Italy’s Current Account Surplus Remains Broadly Unchanged

Italy’s current account surplus remained virtually unchanged in July compared to a year ago, data from the Bank of Italy showed Tuesday. The current account surplus came in at EUR 8.63 billion in July, down fractionally from EUR 8.64 billion in the corresponding month last year. The surplus on trade in goods rose to EUR 8.47 billion in July from EUR 8.31 billion in the same month of 2016. Similarly, services surplus increased slightly from EUR 1.03 billion to EUR 1.17 billion. At the same time, the primary income surplus ...

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Japan firms see U.S., China economies expanding at a healthy clip

A vast majority of Japanese firms are upbeat about the outlook for the U.S. economy, a Reuters poll found, a reassuring sign after some market concern earlier this year that the pace of U.S. growth could be slowing. Most also had a generally positive outlook for China’s economy even if the number of companies somewhat pessimistic about prospects was higher than for the U.S. economy. The Reuters Corporate survey showed 64 percent of Japanese companies thought the U.S. economy would keep growing at around its current pace while another 19 ...

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U.S. Housing Starts Fell, Permits Rose in August

U.S. single-family housing starts continued to edge higher in August, in what could be the last snapshot of the market’s health before the cleanup from major hurricanes begins to skew construction activity. Overall housing starts slipped 0.8% in August from the prior month to a seasonally adjusted annual rate of 1.18 million, driven by continued steep declines in multifamily building, the Commerce Department said Tuesday. Single-family starts, however, rose 1.6% in August, even as starts for buildings with two or more units and fell 6.5%. The report offers a mixed ...

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BRICS investment to boost regional ties

Investment in infrastructure and manufacturing will continue to be the key engine for the BRICS countries – Brazil, Russia, India, China and South Africa – to enhance regional connectivity and stimulate trade activities, business leaders said. Concerning the asset amount, it may be a bit difficult for countries like India and South Africa to be very big investors. China, which accounts for two-thirds of the total economic aggregate among the five countries, should enlarge the investment scale to lay a solid basis for establishing the BRICS economic belt, Zhu Xian, ...

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Borrowing bonds may get harder as Fed pares holdings

The Federal Reserve hopes to pull off the wind-down of its massive balance sheet with minimal market impact, but even a slow withdrawal may increase strains in a crucial section of the bond market. Any reduction in the U.S. central bank’s balance sheet could make it harder for banks and investors to borrow certain Treasuries in the repurchase agreement market, making it more difficult and expensive to bet on or protect against interest rate increases. The Fed is widely expected to announce on Wednesday that it will begin paring its ...

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German Investor Confidence Surges as Concerns Over Euro Fade

German investor confidence rose for the first time in four months in a sign that concern over the risk to growth from the strengthening euro is subsiding. The ZEW Center for European Economic Research’s index of investor expectations rebounded to 17.0 in September from 10.0 in August. The reading, days before the region’s largest economy holds elections, compares with a median estimate in a Bloomberg survey for an increase to 12.0. The euro is showing signs of stabilizing after climbing 14 percent against the dollar since the start of the ...

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France Cuts Deficit Forecasts as Growth Improves

The French government Tuesday cut its budget deficit forecasts for this year and next after taking austerity measures over the summer and as economic growth is stronger than initially expected. The finance ministry said it targets a deficit of 2.9% of economic output this year and 2.6% in 2018, instead of 3% and 2.7% it forecast shortly after President Emmanuel Macron took office in May. After an improvement in economic growth over the past three quarters, the government also revised up its gross domestic product forecast to 1.7% this year ...

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U.S. Import Prices Rose in August

Overall prices for foreign goods shipped to the U.S. rebounded in August, buoyed in part by a rise in fuel prices. Import prices increased 0.6% in August from a month earlier, following declines in the prior three months, the Labor Department said Tuesday. Economists surveyed by The Wall Street Journal expected a 0.5% increase in import prices last month. Data on import prices are not adjusted for seasonality. The Labor Department noted Hurricane Harvey did not affect the collection of import-price data for August. Over the past year, overall import ...

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U.S. Current-Account Deficit Widened in Second Quarter

The U.S. current account deficit, a measure of the nation’s trade and financial flows with foreign countries, widened to $123.14 billion in the second quarter, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal had forecast a deficit of $118.0 billion. The $9.6 billion widening from the first quarter reflected an increase in the secondary-income deficit, a decrease in the surplus on primary income and an increase in the goods-trade deficit, the government agency said. The deficit increased to 2.6% of current-dollar gross domestic product, versus 2.4% ...

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Eurozone Current Account Surplus Rises In July

The euro area current account surplus increased in July on higher primary income, the European Central Bank reported Tuesday. The current account surplus increased to a seasonally adjusted EUR 25.1 billion in July from EUR 22.8 billion in June. The primary income more than doubled to EUR 10.9 billion from EUR 5.1 billion in June. However, the deficit on secondary income widened to EUR 14.8 billion from EUR 12.9 billion. The surplus on trade in goods fell to EUR 26.4 billion from EUR 28.1 billion a month ago. Meanwhile, the ...

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Don’t Worry About ECB Stimulus Even After Bond Buying Stops

As the European Central Bank brainstorms scenarios for winding down its 2.3 trillion-euro ($2.8 trillion) asset-purchase program, there is what may sound like a chicken-and-egg problem to solve. It goes as follows: when the central bank buys bonds and its balance sheet grows, is it the former or the latter that gives policy makers more bang for their buck? And what happens when the balance sheet stops growing and the ECB just continues reinvesting income from maturing bonds as it has pledged to do? Will the stimulus continue to work? ...

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Don’t Worry About ECB Stimulus Even After Bond Buying Stops

As the European Central Bank brainstorms scenarios for winding down its 2.3 trillion-euro ($2.8 trillion) asset-purchase program, there is what may sound like a chicken-and-egg problem to solve. It goes as follows: when the central bank buys bonds and its balance sheet grows, is it the former or the latter that gives policy makers more bang for their buck? And what happens when the balance sheet stops growing and the ECB just continues reinvesting income from maturing bonds as it has pledged to do? Will the stimulus continue to work? ...

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The Fed, a Decade After the Crisis, Is About to Embark on the Great Unwinding

The Federal Reserve resorted to a series of shock-and-awe stimulus campaigns to stabilize the economy after the financial crisis. Now the Fed is preparing the final move to unwind its support — and it wants to be as boring as possible. The central bank is likely to announce Wednesday it will start slowly shrinking its $4.2 trillion portfolio of mortgage and Treasury bonds purchased during and after the financial crisis. It will do so passively by allowing some bonds to mature without replacing them. The markets haven’t blinked at Fed ...

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