Meanwhile, downbeat US economic data overnight including August retail sales dialed back investors expectations for an early rate increase by the Federal Reserve.
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“I think it’s a very unsafe time in the global economy and financial markets”, he told a conference in NY.
Futures on the S&P 500 Index slipped 0.2 percent. Now they’re left holding the securities most vulnerable in a selloff.
“How can banks hope to move on from the crisis?” The energy index rose 1.09 percent as crude prices increased.
However, while there are concerns about monetary policy, a report in the respected Nikkei business daily said BoJ policymakers were considering cutting borrowing costs further into negative territory, sending banking shares tumbling in Tokyo. The TAIEX closed 0.4 percent lower at 8,902.30 on Wednesday.
With the dollar index up 0.2 per cent most emerging currencies slipped, with rand the biggest casualty with a 0.35 per cent loss.
“I think what makes it hard for everybody is if you go through the speeches, and see who has come out among the voters and said they’re ready to raise rates, the majority of the voters have articulated that they are comfortable with rates going higher, but I still think the committee will not do that”, Rieder said.
“With higher yields and lower equities it has felt like there is no place to hide”.
Already, the USA yield curve, reflected in the gap between five and 30-year yields, is near its steepest since July 1, while Japan’s two-year/30-year spread rose this week to 86 basis points, the steepest curve since mid-March.
Financial markets are pricing in a roughly 12-percent probability of a Fed rate hike next week, down from 15 percent before the data, according to the CME FedWatch tool. An appearance by Mark Carney and colleagues in parliament last week suggested the Bank would look through an improvement in some economic data which has given the pound support since it cut interest rates to record lows and reintroduced an asset-purchase programme in August.
Commodities markets saw wide divergences.
Brent crude slid 0.5% to $46.33 a barrel, extending losses for the week to 3.5%. US crude retreated 0.6 percent to $43.66, poised to end the week down 4.8 percent. The Treasury Department is scheduled to report foreign ownership of USA assets for July.
Last Friday proved to be one of the most revealing trading sessions since the world’s main central banks introduced their ultra-loose monetary policies in the wake of the 2008 financial crisis. Industrial production declined 0.4 percent, worse than economists’ forecast of a 0.2 percent drop.
Encouraging signals out of China’s housing market and indications of a revival in its factory sector over the summer have stoked views that demand is quietly cranking up for the third quarter.
Looking at Japan’s economic data, the economy continues to perform much better than most anticipated.
Prices are also being pressured by traders’ lack of conviction that any deal will emerge from a closely watched meeting between OPEC and Russian Federation next week aimed at addressing the global glut that has hammered prices for two years.
The euro was also flat at $1.1243, poised for a 0.1% weekly gain.
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But the Bank of Japan is another story, and it’s expected to take some action, which will be announced in the early morning hours of Wednesday.
