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[Quick Facts]

1. Fed's Logan says restrictive financial conditions will be needed for some time.

2. BOE's Mann calls for an "aggressive" policy to tackle inflation.

3. Israel says it has "cleared" unidentified forces in the Lebanon-Israel border firefight.

4. The Russian ruble falls to an 18-month low against the dollar.

5. The U.S. prepares to crack down on violations of sanctions imposed on Russia.

[News Details]

Fed's Logan says restrictive financial conditions will be needed for some time

Dallas Fed President Lorie Logan said on Monday that recent long-term U.S. bond yields have been spiking. "Higher term premiums result in higher term interest rates for the same setting of the fed funds rate, all else equal. Thus, if term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening" (meaning less need for the Fed to raise rates again), said Logan.

Inflation is still too high and the labor market remains strong, with output, consumer spending, and job growth all exceeding expectations. Logan argued that "we have more work to do, and I think restrictive financial conditions will be needed for some time."

BOE's Mann calls for an "aggressive" policy to tackle inflation

Bank of England (BOE) MPC member Catherine Mann said on Monday that the current prolonged period of above-target inflation could fuel expectations of future price increases. There is a need to take "aggressive" measures to tackle inflation to stop price pressures becoming embedded.

"Going forward, a very important ingredient for my decision-making is the duration of inflation, and how long it is exceeding target," Mann said. "As that duration exceeding target lengthens, medium-term expectations do have a tendency to drift." Monetary policy will have to be more aggressive because it will have to address both the deviations in expectations and the above-target inflation.

Inflation was likely to show an "upward bias" in future shocks, meaning a higher neutral rate of interest is "a very plausible outcome."

Israel says it has "cleared" unidentified forces in the Lebanon-Israel border firefight

Some Lebanese armed forces crossed the temporary border between Lebanon and Israel (the "Blue Line"), and exchanged fire with Israeli soldiers, according to Israeli media on October 9, local time. A media under Lebanese Hezbollah confirmed that gunfire was heard at the temporary border. In addition, the Israel Defense Forces (IDF) announced on the same day that it had "cleared" the unidentified armed forces who "infiltrated" Israel from Lebanon. The Lebanese National News Agency reported that Israel expanded its shelling of southern Lebanon, and the Israeli army shelled the town of Aita al-Shaab in the Bint Jbeil area of Nabataean province in southern Lebanon on that day. Besides, Israeli reconnaissance aircraft flew intensively over southern Lebanon.

The Russian ruble falls to an 18-month low against the dollar

The Russian ruble fell to more than an 18-month low against the dollar on Monday, dropping through the 102 mark. As the Israeli conflict undermined risk appetite, the ruble remained weighed down by dwindling foreign exchange supplies and struggled to capitalize on rising oil prices. The last time the USDRUB broke through the 100 mark was in August, which led to an emergency 350 basis point hike in interest rates to 12% by Russia's central bank. Now Russian authorities are also talking about introducing measures to prop up the ruble, but this time, any intervention, verbal or otherwise, will have limited effect.

The U.S. prepares to crack down on violations of sanctions imposed on Russia

The U.S. side is preparing to crack down on violations of sanctions imposed on the Russian oil industry, a move aimed at bolstering a price-cap system whose effectiveness has waned, according to the Wall Street Journal. U.S. Treasury Secretary Janet Yellen said in an interview that the U.S. was "likely" to take steps to enforce the $60-a-barrel price cap imposed by the U.S. and its partners on Russian oil sales. This came after the price of Russian crude oil managed to exceed the $60-a-barrel cap for several weeks, with the benchmark price once rising to $85 a barrel at the end of September. This raised questions about whether companies were cheating the price cap mechanism. We are looking at enforcement very carefully and we want to make sure that market participants are aware we take this price cap seriously, Yellen said. She did not describe any specific enforcement actions, however.

[Focus of the Day]

UTC+8 17:30 The Bank of England releases the minutes of its financial policy meeting

UTC+8 21:30 Atlanta Fed President Bostic speaks

UTC+8 23:15 ECB Governing Councilor Villeroy delivers a speech

UTC+8 01:00 Next Day: Federal Reserve Governor Waller gives a speech on monetary policy

UTC+8 03:00 Next Day: Minneapolis Fed President Kashkari delivers a speech

UTC+8 06:00 Next Day: San Francisco Fed President Daly delivers a speech