The International Monetary Fund warned that the global economy would remain stagnant in 2013, whereas the Eurozone’s economy would remain in recession till the end of this year. Whereas, on the other hand it predicts that the U.S economy that is currently growing by 1.75% would witness a boom next year that could take its growth level to 2.75%.
Key Threats to the Global Economy
On the other surface, the IMF warns that there are three main threats to the global economy. First, the misbalance between the investment and consumption, where increased consumption and lower investment could cause the growth to fall and as a result many other countries could get affected. Secondly, the radical measures that are being used by the Japanese monetary policy makers to shape its economic growth that may lead to crisis due to its uncertainty about success. And finally, the huge bond buying plan by the FED in the U.S that may create a bubble in the near future.
Oil Prices Soar as Inventories Decline
The oil prices surged on Wednesday after the commercial oil inventories declined by 9.9 million barrels from the previous weeks, hence taking the U.S crude oil prices to cross the level of $106 a barrel and test the $106.52 area. Whereas, Brent Oil moved above $108.2 a barrel as the tensions remain there in the Egypt and Libyan area, as riots are going on and many people are being killed on a daily basis.
Goldman Sachs Predicts
Goldman Sachs predicts that the 10-year treasury yields that breached 2.7% last Friday is just the start of a long-term bullish trend that would take it further up till 4% in near future. Moreover, it predicts that gold prices could fall as low to $1050 by the end of this year, as the overall outlook remains bearish on the metal.
Bernanke’s Speech Invited Bulls
FED chairman, Ben Bernanke gave a speech in the FOMC meeting minutes where he pointed out that the unemployment level is still not satisfactory and the bond buying measures would continue and the monetary policy would be highly accommodative in the near future. According to him, easing measures would continue until the economy reaches the unemployment level down to 6.5% that could be considered as satisfactory to the overall economy. U.S. dollar weakened against the majors, whereas gold and U.S. stocks witnessed a sharp upward move in the U.S. session on Wednesday.