U.S.:
New York Fed President Dudley to Retire in Mid-2018
Federal Reserve Bank of New York President William Dudley plans to retire in the middle of next year, signaling the departure of an influential, crisis-tested policy maker that will widen the leadership overhaul at the U.S. central bank. The New York Fed said in a statement Monday that his decision will “ensure that a successor is in place well before the end of his term.” Dudley’s term ends in January 2019, when he reaches the 10-year limit in the role. President Donald Trump announced on Nov. 2 that Fed Governor Jerome Powell will be nominated, subject to Senate confirmation, to replace Chair Janet Yellen when her term expires in February. Vice Chairman Stanley Fischer retired in mid-October. That leaves Trump with three open slots on the seven-seat Board in Washington, plus a fourth if Yellen decides to resign her seat as governor, as is widely expected. “Beyond the chair, the two most important people on the committee are the vice chair and the head of the New York Fed. Now both are unknown,’’ said Mark Spindel, the author of a 2017 book about the Fed’s relationship with Congress. “The unwinding of the balance sheet makes that job hugely vital.’’
Europe:
Sterling bounce checked as Brexit, scandal in focus
The pound bounced on Monday after three consecutive weeks of losses, though signs of instability in Britain’s governing Conservative party and uncertainty around Brexit negotiations checked gains. Following Thursday’s quarter percent interest rate rise by the Bank of England – its first in over a decade – investors have been watching closely for any developments that could affect the bank’s plans for further rate hikes. The biggest factor is the outcome of Brexit talks, BoE governor Mark Carney said last week. “Brexit news is still a depressant on sterling. It’s a reason people aren’t going into sterling because they’re still worried about what it really means,” said Jeremy Cook, head of currency strategy at WorldFirst. Sterling was up 0.2 percent against the dollar on Monday at $1.3112, having fallen for three straight weeks.
Asia:
China’s Central Bank Chief Warns of ‘Sudden, Contagious and Hazardous’ Financial Risks
China’s financial system is becoming significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who has made a series of blunt warnings in recent weeks about debt levels in the world’s second-largest economy. Latent risks are accumulating, including some that are “hidden, complex, sudden, contagious and hazardous,” even as the overall health of the financial system remains good, Zhou wrote in a lengthy article published on the People’s Bank of China’s website late Saturday. The nation should toughen regulation and let markets serve the real economy better, according to Zhou. The government should also open up markets by relaxing capital controls and reducing restrictions on non-Chinese financial institutions that want to operate on the mainland, he wrote. “High leverage is the ultimate origin of macro financial vulnerability,” wrote Zhou, 69, who is widely expected to retire soon after a record 15-year tenure. “In sectors of the real economy, this is reflected as excessive debt, and in the financial system, this is reflected as credit that has been expanding too quickly.”
