A surprise drop in German business confidence – the first decline in 11 months – caused the euro to fall and pushed European stocks into negative territory. The Dow Jones Stoxx 600 Index lost 0.5 percent at 1:45 p.m. in London, while futures on the Standard & PoorÃ¢â‚¬â„¢s 500 Index retreated 0.4 percent. Oil prices also slid 2.4 percent as investors turned to the dollar as a safe haven.
Yesterday’s unexpected increase to the Discount Rate is not seen as an indication that the Fed will increase its Federal Funds Rate in the near-term. The popular consensus remains that the Fed will maintain 0.25 percent as the benchmark interest rate at least until the end of the year.
Ã¢â‚¬Å“Growth is recovering, but itÃ¢â‚¬â„¢s not recovering too fast to have the major central banks tighten monetary policy,Ã¢â‚¬Â Rajeev de Mello, the Singapore-based head of Asian investment at Western Asset Management Co. said in an interview on Bloomberg Television. Ã¢â‚¬Å“We donÃ¢â‚¬â„¢t think that the FedÃ¢â‚¬â„¢s going to tighten until very late this year, if at all. We donÃ¢â‚¬â„¢t think the ECB is going to tighten.Ã¢â‚¬Â
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