Press Review: Forget Interest Rates, the Fed Has Another Big Decision to Make in the Next Year

BLOOMBERG

Forget Interest Rates, the Fed Has Another Big Decision to Make in the Next Year

In case exiting years of zero interest rates won't be hard enough, Federal Reserve officials have another challenge approaching quickly: when to begin unwinding trillions of dollars of bond purchases that constitute the world's largest fixed-income portfolio.

Less than a year from now, the Fed must decide whether to reinvest $216 billion of proceeds from Treasury debt maturing in 2016, or shrink its balance sheet by allowing it to expire. By not reinvesting, the Fed would increase the supply of securities available to investors and put upward pressure on yields.

Shrinking the $4.2 trillion portfolio will add to the monetary tightening from increases in the benchmark interest rate officials envision for this year. That would mark a reversal of the easing the Fed achieved when it bought bonds to speed a recovery from the worst recession since the 1930s.

Source: http://www.bloomberg.com/news/articles/2015-04-08/2016-fed-balance-sheet-decision-looms-beyond-rate-liftoff

REUTERS
Oil down on U.S. stock build, record Saudi output

(Reuters) - Oil prices fell more than a percent on Wednesday as industry data showed a larger-than-expected weekly increase in U.S. stockpiles and as Saudi Arabia reported record output in March.

The decline in prices followed a rally on Tuesday, when U.S. crude approached 2015 highs following strong jobs data and government forecasts for lower U.S. crude production growth and higher global demand for oil.

"We're going to need to see a very big uptick in demand to offset that supply," Ben Le Brun, analyst at OptionsXpress in Sydney said. "There is a glut of supply in oil at the moment."

Source: http://www.reuters.com/article/2015/04/08/us-markets-oil-idUSKBN0MZ03320150408

BLOOMBERG

Shell Will Buy BG Group for $70 Billion in Cash and Shares

Royal Dutch Shell Plc agreed to buy BG Group Plc for about 47 billion pounds ($70 billion) in cash and shares, the oil and gas industry's biggest deal in at least a decade.

The acquisition is the most significant response yet to the slump in oil prices and could set in motion a series of mergers as the largest energy companies look to cut costs and restore profits.

Shell will pay 383 pence in cash and 0.4454 of Shell's B shares for each BG share, BG said in a statement today. That's equal to about 1,367 pence a share and gives BG a market value of about 47 billion pounds. It's a premium of about 50 percent on BG's closing share price yesterday.

Source: http://www.bloomberg.com/news/articles/2015-04-08/shell-will-buy-bg-group-for-70-billion-in-cash-and-shares