FED’S EVANS SAYS RATES SHOULD BE AT ROCK BOTTOM UNTIL 2015

Federal Reserve Bank of Chicago President Charles Evans said that raising interest rates would not be the answer to preventing another round of instability within the financial markets. Considered one of US Federal Reserve’s most dovish policy makers, Evans said that the central bank will probably raise interest rates in the second half of next year and the timing would depend largely on the pace of inflation. The Chicago Fed President has in recent years played a central role in FOMC deliberations. Evans was the first Federal Reserve official to propose a link between policy and numerical economic thresholds, and was also an early proponent for the current round of asset purchases, which began in September 2012.

Asian markets shrug-off weak U.S. cues

Markets in Asia erased early morning losses to rise on the final day of the trading week. Japan’s benchmark Nikkei rebounded from lows made earlier in the session after data showed that consumer price inflation in the country for February rose at an annual 1.3 percent pace, in line with estimates. Retail sales grew 3.6 percent from the year earlier, topping expectations for a 3.2 percent rise. But household spending declined more than expected. Analysts said that following these reports, the hopes for a near-term stimulus from the Bank of Japan have dimmed. Shares in mainland China snapped their two-day losing streak, helped by some better than expected corporate earnings. Lenovo Group Limited (HKG:0992) is up a percent in Hong Kong despite the computer maker recalling some 37,400 battery packs, included in ThinkPad notebooks, sold in North America from October 2010 through April 2011, due to potential fire hazard. Australia’s benchmark S&P ASX 200 edged higher in a subdued session of trade, while the Australian dollar touched a fresh four-month high of $0.9293 against the greenback.

WTI Crude poised for biggest weekly gain in almost two months on Cushing stockpiles

West Texas Intermediate headed for its biggest weekly gain in nearly two months amid shrinking stockpiles at Cushing, Oklahoma, the main U.S. oil storage hub, and investor concern that the crisis in Ukraine threatens supplies from Russia. U.S. President Barack Obama said sanctions against Russia over its annexation of Crimea could include measures against the country’s energy industry. Meanwhile, protesters in Libya have blocked a pipeline carrying oil condensates from the al-Wafa oilfield to the Mellitah export port, Reuters reported late yesterday. The Mellitah complex is operated by state-owned National Oil Corp and Italy’s Eni SpA (BIT:ENI). Analysts expect WTI to rise next week as stockpiles at Cushing shrink further.

Strong demand for U.S. debt

A sale of U.S. seven-year Treasury paper drew strong demand, as direct bidders took a record share of the sale. The demand for U.S. debt has grown in recent weeks after data showed that  the amount of Treasuries that the Federal Reserve holds on behalf of foreign central banks, surged by a record $56 billion in the week to Thursday, following the $32 billion jump the week before. The increase in demand has helped lower the longer-term U.S. yields, with the spread between five-year notes and thirty-year bonds shrinking to its smallest in five years.

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