In line with broad market expectations, the U.S Federal Reserve cut interest rates by 25 basis points to a range of 1.5% to 1.75%, in response to continued slowdown in the U.S economy amid ongoing trade disputes and weak global growth. Notably, this represents the third cut in four months, as concerns about the impact of the trade war-on the world’s largest economy and by extension the global economy- have increased over the past months.
The decision of the U.S Fed came at a time when the US Commerce department reported a GDP growth of 1.9% in Q3, the first time since Q4 2018 in which the US economy has grown at a rate slower than 2%.
The Chairman of the U.S Federal Reserve, Jerome Powell however indicated that the Fed would hold rates steady for the foreseeable future. According to him, the current level is “likely to remain appropriate” given the Fed’s economic outlook of moderate economic growth, a strong labour market and inflation growing at around 2%. Interestingly, the FOMC also removed a key clause that had appeared in prior post-meeting statements since June saying it was committed to “act as appropriate to sustain the expansion”.
In our view, we believe the body language of the U.S Fed suggests that the path of the target range for the federal funds rate would be more reliant on data emanating from labour market conditions, inflation expectations as well as developments in the financial markets. Moreover, less uncertainty on trade, as the US was close to a “phase one” deal with China, could help to improve business confidence.
Given the deceleration in the global economy (IMF recently cut its growth forecast for the global economy to 3.0%, the slowest pace since the global financial crisis), we believe the global monetary stance will remain accommodative in the short-term, leaving global interest rates low. Therefore, we expect carry trade to remain attractive.
However, we think appetite for EMs assets will remain capped by lingering trade doubts which may continue to stoke the demand for the U.S dollar as a safe-haven asset. We highlight that a trade deal between the U.S and China remains the biggest catalyst for emerging markets assets as reduced uncertainty will support a risk-on environment.
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Reasons why a record number of people are giving up their US citizenship
These citizens complain of the current political climate while others attributed their decision to taxes.
A new report that was published on Sunday, August 10, 2020, has shown that a record number of people are giving up their United States citizenship. The report suggests that Americans are continuing to renounce their citizenship at the highest levels on record.
This information is contained in a research report that was conducted by Bambridge Accountants, a New York-based firm that specializes in US expatriate tax, UK expats, actors, and other creatives in the US and the UK.
According to the report, more than 5,800 American citizens gave up their citizenship in the first six months of 2020, compared to the 2,072 Americans who renounced their citizenship throughout 2019. The report also noted that the Coronavirus pandemic had motivated US expats to cut ties and avoid the current political climate and onerous tax reporting.
A partner at Bambridge Accountants, Alistair Bambridge, in his conversation with CNN, said, “These are mainly people who already left the US and just decided they’ve had enough of everything. What we’ve seen is people are over everything happening with President Donald Trump, how the coronavirus pandemic is being handled, and the political policies in the US at the moment.”
Bambridge, in its report, also stated that while many people who renounced their citizenship complain of being unhappy with today’s current political climate in the US, others attributed their decision to taxes.
He disclosed that US citizens living abroad are still required to file tax returns every year, report their foreign bank accounts, investments, and pensions. Although these citizens benefited from the $1,200 stimulus checks and $500 for each child, many of them felt that the annual US tax reporting is just too much.
The report also stated that Americans who want to relinquish their citizenship are required to pay $2,350 and appear in person at the US embassy in their resident country if they are not in America.
There are currently about 9 million US expats across the world, even as trends have shown a sharp decline over the last few years of US citizens expatriating.
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Despite the risks that come with giving up US citizenship, Bambridge predicts that the trend will only continue going up.
He said, “A lot of people are waiting for the November election to see what’s going to happen. If President Trump is reelected, we believe there will be another wave of people who will decide to renounce their citizenship.”
IMF assessing additional tools to provide aid to pandemic-hit countries
The IMF had earlier noted that the Nigerian economy would witness a deeper contraction of 5.4%.
The International Monetary Fund (IMF) noted that it is reviewing additional tools to help provide financing to poorest countries of the world as well as others that have been hit hard by the coronavirus pandemic. This was noted by the Fund’s Managing Director, Kristalina Georgieva.
The IMF had reduced its projections for the world economy, projecting a GDP growth of 5.4% in 2021 compared to 5.8% in its earlier forecasts as a result of the expected challenges to global value chains due to the coronavirus pandemic which has affected the global demand for goods and services. It had also reviewed its projection for Nigeria, noting that the Nigerian economy would witness a deeper contraction of 5.4% and not the 3.4% that it has projected in April 2020.
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Georgieva explained to finance ministers and central bank governors from the Group of 20 major economies in the world that they should consider extending a freeze in the official bilateral debt service payments that have been offered to the poorest countries beyond the end of 2020, and seek out better ways to promote private-sector participation.
She also noted that there is ardent need to think about “more comprehensive debt relief for many countries,” as a result of the severity of the crisis as well as the already high debt load that many of the respective countries already had to deal with.
UK and allies accuse Russia of hacking and stealing COVID-19 vaccine data
UK said that vaccine and therapeutic sectors in multiple countries have been targeted by Russian state intelligence.
The UK and its allies have accused Russian state intelligence of hacking international research centres that are in a race to develop a vaccine for COVID-19. The UK, US and Canada on Thursday, said that Russian intelligence is attempting to steal information on those vaccines through irresponsible cyberattacks.
It is, however, unclear if the research facilities have been damaged or if the vaccine programmes have been set back as a result of the hacks but the officials warned that the cyber-attacks are ongoing.
UK’s National Cyber Security Centre (NCSC), said that vaccine and therapeutic sectors in multiple countries have been targeted by a group known as APT29, which it said is almost certainly part of Russian state intelligence. Security agencies in the U.S. and Canada later issued their own statements backing up the findings. Russia denied involvement.
The British Foreign Secretary, Dominic Raab, said, ‘’It is completely unacceptable that the Russian intelligence services are targeting those working to combat the coronavirus pandemic. While others pursue their selfish interests with reckless behaviour, the U.K. and its allies are getting on with the hard work of finding a vaccine and protecting global health.”
The Russians have however denied the allegations by the UK and its allies.
In an explanation to Bloomberg, the Russian spokesman said, ‘’We don’t know who may have hacked pharmaceutical companies and research centers. We can only say Russia has nothing to do with these attempts. We don’t accept such accusations.’’
The NCSC said APT29, which is also known as Cozy Bear or The Dukes, has targeted U.K., U.S. and Canadian vaccine research and development organizations. They said the campaign of malicious activity is ongoing, predominantly against government, diplomatic, think-tank, healthcare and energy targets to steal valuable intellectual property.
A cybersecurity firm, Carbon Black, in a published analysis in March, said researchers have long linked APT29 to Russian intelligence agencies as for more than a decade, the group has carried out hacking campaigns that have targeted dozens of governments, research institutes, and corporations around the world.
The British claims were supported by partners at the Canadian Communications Security Establishment (CSE), the US Department for Homeland Security (DHS), Cybersecurity Infrastructure Security Agency (CISA) and the National Security Agency (NSA).
The NSA said organizations in the U.S. involved in vaccine development were also targeted by the hackers with the objective of the hacking and stealing information and intellectual property relating to the development and testing of Covid-19 vaccines.
The Canadian government said they are working with Westminster and Washington to stop these cyber-attacks.