First Impressions

China Needs a Grown-Up Central Bank
Bloomberg View
Zhou Xiaochuan is governor of the People’s Bank of China. But among some financial types, he’s earning another, less enviable title: the killer of weekends.
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Fed policy is trickle-down on steroids: Economist
CNBC
The Federal Reserve’s near-zero interest rate policy amounts to trickle-down economics and will not fix the U.S. economy, Mark Vitner, senior economist at Wells Fargo Securities said on Tuesday.
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Bundesbank Sees IMF Decision as Key to Yuan as Reserve Currency
Bloomberg
The International Monetary Fund holds the key to the Chinese yuan becoming an international reserve currency through a review of its Special Drawing Rights basket, according to Bundesbank board member Joachim Nagel.”If the renminbi will be included in the IMF’s SDR basket, every IMF member is indirectly invested in renminbi,” he said in an interview, referring to the currency’s official name. “This will increase the probability of holding renminbi as a reserve currency in general. If you’re already exposed to something, then the decision to broaden your exposure is an easier one to take.”
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Quote of the Day

Even if the BOJ eases again, consumer inflation is unlikely to rise as fast as the central bank expects

Masamichi Adachi, senior economist at JPMorgan Securities and a former BOJ official, quoted in the Reuters story “Bank of Japan seen easing again after pushing back inflation goal timing”

Lead Stories

St. Louis Federal Reserve URLs hijacked
USA Today
Parts of the St. Louis Federal Reserve’s website were hijacked last month, sending users to fake websites set up by cyber crooks. The St. Louis Fed sent a message to users on Thursday saying it became aware of the hijacking on April 24 and that they should reset their passwords.
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E.C.B. Said to Be Unlikely to Cut Greece Loose
NYTimes.com
The European Central Bank is not ready to pull the plug on Greece — not yet at least. Members of the central bank’s Governing Council are scheduled to meet in Frankfurt on Wednesday and are expected to conduct an intense discussion about the life support they are providing to Greek banks.
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Bank of Japan seen easing again after pushing back inflation goal timing: Reuters poll
Reuters
The Bank of Japan is expected to expand its already-massive stimulus program in October, the majority of economists polled by Reuters found – even though Governor Haruhiko Kuroda has repeatedly said there is no need to do so.
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European Central Bank’s Peter Praet Warns Unemployment Will Remain High Without More Reforms
WSJ
Europe’s economic recovery won’t reduce unemployment much below double-digit rates unless governments step up efforts to overhaul their economies, European Central Bank executive board member Peter Praet warned, underscoring the toll of years of stagnation since the global financial crisis.
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HSBC to charge for euro deposits
Telegraph
HSBC is to start charging other banks for depositing money in currencies of countries that have negative interest rates. Europe’s biggest bank will join a number of other US and European lenders to charge their peers for holding deposits – effectively passing on the cost of holding money where interest rates have turned negative.
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Central Banks

ECB to Front-Load on Bond Purchases Ahead of Summer Liquidity Lull
WSJ
The European Central Bank will front-load bond purchases under its EUR1.1 trillion program in the coming weeks ahead of an expected summer lull in markets, a top ECB official said, underscoring the bank’s resolve in meeting its stimulus goals and sending the euro reeling.
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E.C.B. Said to Be Unlikely to Cut Greece Loose
NYTimes.com
The European Central Bank is not ready to pull the plug on Greece — not yet at least. Members of the central bank’s Governing Council are scheduled to meet in Frankfurt on Wednesday and are expected to conduct an intense discussion about the life support they are providing to Greek banks.
jlne.ws/1PUz4J9

Australia’s Central Bank Hints Rates Can Drop
WSJ
More interest rate cuts remain on the table in Australia after the country’s central bank clearly articulated an easing bias on Tuesday, sweeping aside recent speculation that it was done lowering rates.
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China’s erratic central bank could improve its reputation
Australian Financial Review
Zhou Xiaochuan is governor of the People’s Bank of China. But among some financial types, he’s earning another, less enviable title: the killer of weekends. On May 10, Zhou announced a surprise interest rate cut, forcing anyone with a stake in the Chinese economy to put a premature end to what had likely otherwise been a day off.
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India’s Central Bank Chief Wants More Central-Bank Coordination
WSJ
Reserve Bank of India governor Raghuram Rajan said Tuesday that global financial institutions like the International Monetary Fund need to do a better job at mediating between the policies pursued by the world’s major central banks.
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Nigerian interbank rates spike as central bank plans cash withdrawal
Reuters
Nigeria’s overnight lending rates rose sharply on Friday to 27 percent from 10.25 percent last week following a scramble for funds as lenders sought to meet a central bank cash reserve requirement.
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Currencies

Equities up and euro sags as ECB eyes faster bond buys
Reuters
U.S. and European equities traded near record highs on Tuesday, and the euro tumbled on signals the European Central Bank may accelerate its 1 trillion euro bond-buying program over the next two months.The dollar gained 1.6 percent against the euro and was broadly ahead for a second day, while U.S. Treasuries prices fell, pulling down yields after data showed that U.S. housing starts in April rose to the highest in nearly 7-1/2 years
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Weak Yen Fuels Record Profits in Japan
WSJ
Japanese companies made record profits in the latest financial year at a rate not seen since before the global financial crisis, thanks partly to a weaker yen that fattened earnings of big exporters.
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Pound retreats as UK slips into deflation
Financial Times
Sterling declined and the UK bond market moderated expectations for higher borrowing rates from the Bank of England on Tuesday after the economy slipped into deflation for the first time in 55 years.
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Stiglitz says Greek euro exit would be ‘really serious’ for Europe
ekathimerini.com
Greece’s giving up the euro would be “really serious” for Europe, Nobel laureate Joseph Stiglitz said. “If Germany and the rest of Europe refuses to change the program, I think there’s no alternative” to Greece pulling out of the single currency, Stiglitz told Francine Lacqua in a Bloomberg Television interview on Tuesday.
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Indexes & Index Products

LSEG Launches New FTSE Russell Brand
Plan Sponsor
Combined elements of Russell Investments and the London Stock Exchange Group (LSEG) will operate under a newly established brand, FTSE Russell. The launch of FTSE Russell is “an important milestone in the integration of FTSE and Russell Indexes,” the firm notes. The announcement follows the 2014 acquisition of the Russell Investment businesses by the London Stock Exchange Group.
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PUT Index Hits All-time Daily Closing High, with Less Volatility
Matthew Moran, via LinkedIn
On Monday, May 18, the CBOE S&P 500 PutWrite Index (PUT(SM)) closed at 1507.95, its highest all-time daily closing value. PUT is an award-winning benchmark index that measures the performance of a hypothetical portfolio that sells S&P 500 Index (SPX) put options against collateralized cash reserves held in a money market account. The PUT Index is the leading benchmark index for the cash-secured put writing strategy.
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Euronext and Shenzen Stock Exchange Announce Partnership on Exchange Traded Funds and Indices
Euronext
Euronext and the Shenzhen Stock Exchange (SZSE) today announced the signing of a Memorandum of Understanding (MOU) to enhance the development of Exchange Traded Products (ETPs) in the Republic of China and the Euronext markets. The MOU is the starting point for collaboration on joint development, research, marketing and specialized trading technology, as well as co-branding of indices and Exchange Traded Products.

Xetra/Börse Frankfurt: New PIMCO Source Active ETF Launched On Xetra
Press Release
A new active ETF issued by PIMCO Fixed Income Source has been tradable on Xetra since Tuesday. This is a new asset class for the PIMCO Euro Short Maturity Source UCITS ETF, which is already tradable on Xetra. The only difference is that the income is not distributed but accumulated.
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Gold

Investors Turn To Gold ETF Options As Hedges
WSJ
Investors seeking to protect their portfolios against recent swings in currencies and government bonds are snapping up options on a gold exchange-traded fund. The activity started back during the rout in government bonds, which sent German 10-year yields surging from record lows, and has continued as currencies continue to swing.
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India Moves a Step Closer to Tapping 20,000-Ton Gold Hoard
Bloomberg
India will allow citizens to deposit gold with banks to earn interest as the world’s second-biggest consumer seeks to cut reliance on imports by tapping idle bullion lying with households. Individuals and institutions can deposit a minimum of 30 grams in the form of bullion or jewelry under a so-called gold monetization scheme, according to a draft document released by the government on Tuesday. The banks can set the interest rate on the deposits and the metal mobilized may be loaned to jewelers, the government said.
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Traders warn on gold liquidity
Financial Times
few years ago London’s precious metals traders would arrive at their desks to find the phones flashing. On the other end of the line were rival banks looking to buy and sell gold. Today, the trading floors are a lot quieter.Not only is most trading screen-based but there has been a decline in bank-to-bank activity — the anchor of the over-the-counter (OTC) bullion market — as many institutions have scaled back or exited commodities.
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