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CCTV Script 05/08/16

– This is the script of CNBC's news report for China's CCTV on August 5, Friday.

Any chance the Federal Reserve had of raising rates this year may have been quashed Thursday, with the impetus coming not from home but from the other side of the Atlantic.

The Bank of England's decision to not only cut interest rates but to restart its money-printing program makes the corner in which the Fed had found itself even more claustrophobic.

That's because the U.S. central bank will find it even harder to tighten monetary policy as one of its closest peers loosens.

"Given the role of the Fed and its global positioning with regard to the dollar, can it be the one central bank that starts to raise rates?" asked Quincy Krosby, market strategist at Prudential Financial. "It's highly unlikely, given their focus on keeping the U.S. dollar in a range."

Fed officials worry that raising interest rates will strengthen the greenback and make financial conditions tighter.

The interconnected nature of the global economy has unequivocally spread to monetary policy. Central banks around the world have been racing to ease in hopes that low and sometimes negative interest rates, coupled with asset purchases, can spur growth and keep their respective currencies weak.

However, the Fed's problem is the slow-moving economy, and that plan to raise rates steadily has been abandoned. U.S. growth averaged just 1 percent in the first half of 2016, and an expected second-half pickup may not be enough to justify tightening.

Fed officials publicly are professing that hiking rates is still an option in 2016. But the markets aren't buying it anymore.

In fact, the CME's FedWatch tracker looks all the way out to July 2017 and sees only a 41.4 percent chance of a rate hike by then.

Rate-hike chances declined Thursday following the BOE decision. The latest developments are rekindling frustration on Wall Street that central banks continue to believe they can save the world, even though the evidence is to the contrary.

As part of its policy easing, it also announced an expansion of quantitative easing, and like the European Central Bank, it included corporate bonds in its plans.

That brings a big new buyer to an already hot corporate debt market, and its program and the programs of other central banks put downward pressure on global interest rates, even as the Federal Reserve hopes to tighten sometime later this year.

U.S. corporate debt has already been a magnet for investors seeking better yield than they can get overseas, and the Bank of England just helped accelerate that trend with its rate cut and easy policy. Negative yields in Europe and Japan have created a bonanza for U.S. fixed income.

The bank surprised the market by boosting its government bond-buying program by 60 billion pounds and adding the purchase of 10 billion pounds in U.K. corporate bonds.

"Ten billion (pounds) is tiny. It's a modest amount but it leads to obviously a rally in the entire space," said Peter Boockvar, chief market strategist The Lindsey Group.

"It'll trigger probably more issuance but by continuing to compress yields, you're making this appear less and less attractive to buy. Very unattractive."

"Buying it directly or buying it indirectly has the same affect. If you have a U.K. pension manager and as corporate bonds there get ridiculously expensive, he's going to sell those and buy U.S. corporates - the Microsofts, the Apples," Brenner said. "Corporate spreads are going to stay tight. That's what we've seen from the ECB."

So far this year, investment grade corporations have issued more than $850 billion in debt in the U.S. market and are on track to hit at least $1 trillion by year end, according to Informa Global Markets. Last year, they issued $1.25 trillion, topping the record $1.1 trillion in 2014.

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