FT News Briefing Bond investors and central banks
Nov 5, 2021
The White House warns that OPEC+ is jeopardizing the global economic recovery by stalling oil production increases. SoftBank faces pressure for a stock buyback to stabilize its share price. Rising inflation complicates the bond market’s relationship with central banks, as they balance investor expectations with economic stability. The discussion offers insights into energy market dynamics and the evolving financial landscape influenced by fossil fuel demand and changing central bank policies.
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OPEC+ and US Oil Production
- OPEC+ is increasing oil production by 400,000 barrels/day, but not at the rate the US desires.
- The US might use its strategic reserves or a new Iran nuclear deal to lower prices.
Market Reactions to Central Bank Decisions
- Investors expected the Bank of England to tighten monetary policy, but the BOE kept rates steady, causing a rally in government debt.
- The Federal Reserve, however, announced its stimulus pullback as planned, and markets remained calm.
Central Bank Influence and Market Expectations
- Since 2008, investors have become accustomed to central banks' guidance on bond markets.
- Current inflation is hard to predict, making central bank communication difficult and leading to market speculation.