GEITHNER TO CONSIDER LEAVING TREASURY AFTER BUDGET DEAL?
Thursday, June 30, 2011
Bank of America (BAC)
Bank of America is imploding and even hedge fund manager Paulson is selling out of the stock. Will the stock break even $10. Something is wrong there. Yesterday Bank of America was saying that their book value is $20 per share. I don't believe them.
Lloyds Banking Group to cut 15,000 jobs in effort to save £1.5bn
The chief executive of Lloyds Banking Group has put the lender on a collision course with workers unions after saying the bank would have to cut 15,000 jobs if it is to return to profitability, while HSBC also announced a cut of 700 jobs.
Greek debt crisis
German banks agree €3bn debt rollover. Pledge from German finance minister Wolfgang Schäuble puts pressure on other EU countries to pitch in with new bailout for Greece
IMF warns USA
The IMF has warned of a “severe shock” to global financial markets if the US does not move quickly to increase its borrowing authority.
U.S. Bonds
Treasury prices eased on Thursday, pushing yields up for a fourth straight day, as the Federal Reserve conducted its last bond buyback, bringing an end to its second round of quantitative easing through which it injected liquidity into the economy. However, month-end demand for bonds is helping some debt to recover.
BofA, Goldman Among Banks Cutting Jobs
Bank of America (BAC) and Goldman Sachs Group Inc. (GS) are among financial firms cutting more than 1,300 workers in an effort to trim expenses and match revenue as equity and bond trading slows
U.S. caught China buying more debt than disclosed
The Treasury had concluded that China was buying much more in U.S. government debt than was being disclosed, potentially in violation of auction rules, and it wanted to bring those purchases into the open - all without ruffling feathers in Beijing.
U.S. Data
Factory activity in the U.S. Midwest accelerated in June, fostering hopes for a pick-up in economic growth in the third quarter, despite signs of lingering weakness in the labor market.
End of QE2
Today is the last day of QE2. Last POMO has been commenced for the day. Let's see how the market reacts tommorow. In addition, FED's Hoenig said that monetary policy by itself can not solve all the problems of the economy.
Trichet Signals July Rate Rise
The ECB president stressed that he is against any involvement of the private sector in a "debt action" that isn't purely voluntary. He also indicated that interest rates are very likely to rise at the ECB's upcoming meeting.
Germany's major banks agreed to aid Greece
Germany's major banks agreed to take part in a new aid program for Greece by accepting longer maturities on bonds falling due by 2014, the country's finance minister said. -WSJ
This is the fourth big upside day in a row and the action is extremely onesided and does not allow for moving in and out of positions. It doesn't pay to fight momentum even though it looks and feels too extreme. You may want to take some profits. The nature of momentum is for it to continue longer than most people think it will.
Obama rejects Republican's offer to meet on debt
The White House rejected an invitation to President Barack Obama from Senate Republican Leader Mitch McConnell to meet at the Capitol on Thursday to talk about deficit reduction. White House spokesman Jay Carney said the administration knows Republican positions about taxes and spending and has met repeatedly with Republicans including McConnell. Obama insists that revenues be part of a deal to cut the deficit and raise the U.S. debt ceiling. Hearing Republicans repeat their opposition is "not a conversation worth having," Carney said. -MarketWatch
Marc to Market: Now What?
Marc to Market: Now What?: "As had been anticipated, the Greece parliament approved the austerity measures along party lines.That it had been anticipated in the currenc..."
Jim Rogers Blog: Bloomberg Video: Let Greece Go Bankrupt
Jim Rogers Blog: Bloomberg Video: Let Greece Go Bankrupt: "June 29 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy. Rogers also discusses Europe's soverei..."
Wednesday, June 29, 2011
EU Tragedy
ECB'S BINI SMAGHI SAYS STILL NEEDS TO BE VERIFIED THAT FRENCH GREEK DEBT PROPOSAL DOES NOT CONTSTITUTE A CREDIT EVENT - LES ECHOS
This is getting hilarious at least.
This is getting hilarious at least.
Euro Crisis 9
ECB'S ORPHANIDES - EUROZONE DEBT CRISIS REMAINS IN "QUITE DANGEROUS TERRITORY" AND VIGILANCE REQUIRED
Greek Tragedy 3
Another building on fire at Panepistimiou Street near Syntagma Square. This looks like war.
Greek Tragedy 2.
Roumors of many injured people in Athens. Doctors at Syntagma square are begging for drugs to treat injured demonstrators.
Banks Proprietary Profits
Under Italy austerity package profits from banks' proprietary trading to be taxed separately at 35% per draft law???-from Zerohedge
Commodities- Oil
Crude oil back at $96 a barrel. The strategic petroleum reserve release was not very effective!!!!!
Obama talks
OBAMA SAYS UNDERSTANDS THAT MANY AMERICANS ARE STILL STRUGGLING, WORRIED ABOUT JOB LAYOFFS
THERE ARE MORE STEPS WE CAN TAKE RIGHT NOW TO CREATE JOBS
CONGRESS CAN ALSO ACT NOW TO BOOST JOBS, CITES ACTION ON PATENTS, CONSTRUCTION
CONGRESS COULD ALSO ADVANCE FREE TRADE PACTS WITH SOUTH KOREA, PANAMA AND COLOMBIA
THERE ARE MORE STEPS WE CAN TAKE RIGHT NOW TO CREATE JOBS
CONGRESS CAN ALSO ACT NOW TO BOOST JOBS, CITES ACTION ON PATENTS, CONSTRUCTION
CONGRESS COULD ALSO ADVANCE FREE TRADE PACTS WITH SOUTH KOREA, PANAMA AND COLOMBIA
Euro Crisis 8
GERMANY'S MERKEL SAYS GREECE HAS SHOW IT IS READY TO TAKE A DIFFICULT PATH
GREECE HAS NO ALTERNATIVE BUT TO BECOME MORE COMPETITIVE
GREEK DECISION IS IMPORTANT STEP FOR STABILISING EURO
GREECE HAS NO ALTERNATIVE BUT TO BECOME MORE COMPETITIVE
GREEK DECISION IS IMPORTANT STEP FOR STABILISING EURO
Global central banks keep dollar-swap lines open
The Federal Reserve, the European Central Bank and other key central banks announced Wednesday they have extended existing dollar-lending arrangements for another year.
Under the swaps program, the Fed swaps dollars for euros, yen, pounds, Swiss francs or Canadian dollars to give five foreign central banks access to U.S. dollars demanded by banks in their countries.
At maturity, the dollars will be returned, with interest. -MarketWatch
Euro Crisis 7
COMMERZBANK CEO BLESSING SAYS ~ GREEK RESCUE IS ABOUT WINNING TIME SO GREECE CAN GET BACK ON GROWTH PATH
ARE READY TO CONTRIBUTE TO GREEK RESCUE
FRENCH MODEL ON GREECE HAS SOME ISSUES BUT IS GOOD BASIS FOR NEGOTIATION
RATING EFFECTS MUST BE INVESTIGATED BEFORE GREEK AID
BANKS' NEED FOR WRITE DOWNS IN GREEK SOLUTION SHOULD BE AVOIDED, WOULD HURT GREEK BANKS IN PARTICULAR
ARE READY TO CONTRIBUTE TO GREEK RESCUE
FRENCH MODEL ON GREECE HAS SOME ISSUES BUT IS GOOD BASIS FOR NEGOTIATION
RATING EFFECTS MUST BE INVESTIGATED BEFORE GREEK AID
BANKS' NEED FOR WRITE DOWNS IN GREEK SOLUTION SHOULD BE AVOIDED, WOULD HURT GREEK BANKS IN PARTICULAR
Euro Crisis 6
EU'S BARROSO SAYS GREEK VOTE IS A VITAL STEP BACK FROM THE VERY GRAVE SCENARIO OF DEFAULT
EU'S BARROSO, VAN ROMPUY: SECOND POSITIVE GREEK VOTE WILL PAVE THE WAY FOR RELEASE OF NEXT TRANCHE OF EU/IMF AID
SECOND POSITIVE VOTE WILL ALSO ALLOW FOR RAPID WORK ON SECOND AID PACKAGE FOR GREECE
EU'S BARROSO, VAN ROMPUY: SECOND POSITIVE GREEK VOTE WILL PAVE THE WAY FOR RELEASE OF NEXT TRANCHE OF EU/IMF AID
SECOND POSITIVE VOTE WILL ALSO ALLOW FOR RAPID WORK ON SECOND AID PACKAGE FOR GREECE
Euro Crisis 4
GERMANY'S MERKEL SAYS WEDNESDAY'S GREEK VOTE IS EXCEPTIONALLY COURAGEOUS, REGRETTABLE THAT OPPOSITION DOES NOT SUPPORT GREEK REFORM MEASURES
EUROPE IS WHERE GERMANY NEEDS TO SEEK ITS FUTURE
IT'S OUR POLITICAL CHANCE THAT THE EURO EXISTS ALONGSIDE U.S. DOLLAR
EUROPE IS WHERE GERMANY NEEDS TO SEEK ITS FUTURE
IT'S OUR POLITICAL CHANCE THAT THE EURO EXISTS ALONGSIDE U.S. DOLLAR
Euro Crisis 3
German finance minister Schaeuble says financial markets crises is not over, Greek crisis must be solved before that can happen.
Euro Crisis 2
Deutsche Bank chief Ackermann says question of voluntary contribution to Greek bailout is complicated due to risk of contagion.
Euro Crisis
GERMANY'S MERKEL SAYS FINANCIAL CRISIS MUST NOT REPEAT IN FORESEEABLE FUTURE OR IT WOULD BE TOUGH TO MAINTAIN POLITICAL STABILITY
GERMANY ACCEPTS DISADVANTAGES FOR ITS FINANCIAL SECTOR AS IS CONVINCED OF SEVERAL PIECES OF REGULATION
TRANSPARENCY OF CREDIT DEFAULT SWAPS MARKET MUST BE INCREASED
GERMANY ACCEPTS DISADVANTAGES FOR ITS FINANCIAL SECTOR AS IS CONVINCED OF SEVERAL PIECES OF REGULATION
TRANSPARENCY OF CREDIT DEFAULT SWAPS MARKET MUST BE INCREASED
Commodities- Oil
I find it embarrassing that they did it, and I find it embarrassing that the press even reported it. The world uses 86 million barrels of oil every day. So releasing 60 million barrels of oil is, what, two-thirds of a day of consumption? I kept thinking: This must be a typo! - Jim Rogers
One In Three Chance Of A "Perfect Storm" -N.Roubini
There is a one in three chance a "perfect storm" of fiscal woe in the United States, a slowdown in China, European debt restructuring, and stagnation in Japan will converge to stunt global economic growth beginning in 2013.
China's inflation
China’s June consumer price index inflation is set to hit 6.2%, as food prices continued to rise, said a report released Monday by China International Capital Corp.
Euro Crisis
-(Dow Jones)- Private sector involvement in a Greek rescue package must be "absolutely" voluntary and cannot lead to a credit event, Deutsche Bundesbank board member Joachim Nagel said in an interview published Wednesday.
Fundamentally, "private creditor participation is in order" as long as it meets the aforementioned conditions, Nagel told Germany's Sueddeutsche Zeitung. Furthermore, under no circumstances can "the participation of private creditors lead to a higher burden" for public budgets, he said.
Nagel told the paper the euro would indeed survive a Greek bankruptcy, though this is not a desirable outcome.
He also said that paper viewed as worthless by the market cannot be accepted by a central bank as collateral. "We cannot arbitrarily change our rules," he says, otherwise "monetary policy would lose its foundation."
Traders seem quite unconcerned about the possibility of any negative news out of Greece, although I think the mid-term plan will be voted. The euro strengthened against the U.S. dollar and that helped a lot.
I don't expect a straight-up recovery like the ones in March or April. There is a very different fundamental environment out there now.
Enjoy the bounce while it lasts, but be careful. After two days of gains, the talking heads are going to start getting louder about how the worst is over and a bottom is in. I wouldn't bet on it yet.
I don't expect a straight-up recovery like the ones in March or April. There is a very different fundamental environment out there now.
Enjoy the bounce while it lasts, but be careful. After two days of gains, the talking heads are going to start getting louder about how the worst is over and a bottom is in. I wouldn't bet on it yet.
Tuesday, June 28, 2011
U.S. Financials
Goldman Sachs at new year low. All financials are trading mostly lower. Are they telling as something about the broader market?
U.S. bonds
| The yield on the 10-year U.S. note just hit 3.05%. |
P.S. I had some technical problems with my computer today.
Czech central banker calls for Greek restructuring
European authorities must stop dithering and commit to a restructuring of Greek debt before the sovereign crisis sparks a “disorderly meltdown” in other countries, the governor of the Czech National Bank said Tuesday.
Miroslav Singer said Europe must pick one of two tough options for Greece — either allow it to restructure while remaining part of the euro zone, or opt for Greece to leave the euro and restructure its debt in conjunction with currency devaluation. -MarketWatch
Miroslav Singer said Europe must pick one of two tough options for Greece — either allow it to restructure while remaining part of the euro zone, or opt for Greece to leave the euro and restructure its debt in conjunction with currency devaluation. -MarketWatch
EU- Cacophony
DUTCH FINMIN DE JAGER SAYS FRENCH PLAN FOR GREEK DEBT IS COMPLEX, STILL STUDYING THEM AND DOES NOT WANT TO BE TOO ENTHUSIASTIC.
Euro crisis -European banks
UP TO 15 OF 91 BANKS EXPECTED TO FAIL EU-WIDE STRESS TESTS - EURO ZONE SOURCES-
FIRST OPTION IS 30-YEAR FINANCING TO GREECE WITH PRINCIPAL GUAR-
ANTEED BY SPV -DRAFT FRENCH PROPOSAL
CONDITIONAL ON INFORMAL CLEARANCE FROM RATING AGENCIES THAT THE
PROPOSAL WILL NOT TRIGGER DOWNGRADE TO DEFAULT OR SIMILAR ON THE
HELLENIC REPUBLIC, EXISTING OR NEW BONDS -DRAFT FRENCH PROPOSAL
GREEK DEBT PLAN MUST HAVE FLEXIBILITY TO MAXIMIZE INVESTOR
PARTICIPATION, OFFER MULTIPLE OPTIONS TO BONDHOLDERS -DRAFT
FRENCH PROPOSAL
FIRST OPTION IS 30-YEAR FINANCING TO GREECE WITH PRINCIPAL GUAR-
ANTEED BY SPV -DRAFT FRENCH PROPOSAL
CONDITIONAL ON INFORMAL CLEARANCE FROM RATING AGENCIES THAT THE
PROPOSAL WILL NOT TRIGGER DOWNGRADE TO DEFAULT OR SIMILAR ON THE
HELLENIC REPUBLIC, EXISTING OR NEW BONDS -DRAFT FRENCH PROPOSAL
GREEK DEBT PLAN MUST HAVE FLEXIBILITY TO MAXIMIZE INVESTOR
PARTICIPATION, OFFER MULTIPLE OPTIONS TO BONDHOLDERS -DRAFT
FRENCH PROPOSAL
ECB'S TRICHET SAYS IT IS RESPONSIBILITY OF GOVERNMENTS TO NEGOTIATE WITH PRIVATE SECTOR ON GREECE
ECB'S POSITION ON EURO ZONE DEBT PROBLEMS HAS NOT CHANGED DUE TO FRENCH PLAN
ECB WILL TAKE POSITION AFTER GOVERNMENTS PRESENT THEIR PLANS ON GREECE
ECB'S WELLINK SAYS ON PREVENTING HOUSING BUBBLES LOAN-TO-VALUE RATIOS ARE IMPORTANT INSTRUMENTS
SAYS TALKS WITH DUTCH BANKS ON GREECE ARE THE RESPONSIBILITY OF THE DUTCH GOV'T
ECB'S TRICHET SAYS IMPORTANT THAT GREEK DEMOCRACY TAKES APPROPRIATE ACTION ON AUSTERITY MEASURES AND CREATING GROWTH
SAYS WHEN WE HAVE A PROPOSAL FROM GOVT'S ON GREECE WE WILL COMPARE WITH EARLIER STANCE OF ECB COUNCIL
REITERATES WE ARE IN STRONG VIGILANCE MODE ON INFLATION
ECB IS IN STRONG VIGILANCE MODE
BANK OF KOREA GOVERNOR KIM SAYS MOST EMEA COUNTRIES FACING INFLATIONARY PRESSURES
ECB'S TRICHET SAYS WE ARE VERY UNITED ON GOAL OF SOLIDLY ANCHORING INFLATIONARY EXPECTATIONS AT GLOBAL LEVEL
ECB'S POSITION ON EURO ZONE DEBT PROBLEMS HAS NOT CHANGED DUE TO FRENCH PLAN
ECB WILL TAKE POSITION AFTER GOVERNMENTS PRESENT THEIR PLANS ON GREECE
ECB'S WELLINK SAYS ON PREVENTING HOUSING BUBBLES LOAN-TO-VALUE RATIOS ARE IMPORTANT INSTRUMENTS
SAYS TALKS WITH DUTCH BANKS ON GREECE ARE THE RESPONSIBILITY OF THE DUTCH GOV'T
ECB'S TRICHET SAYS IMPORTANT THAT GREEK DEMOCRACY TAKES APPROPRIATE ACTION ON AUSTERITY MEASURES AND CREATING GROWTH
SAYS WHEN WE HAVE A PROPOSAL FROM GOVT'S ON GREECE WE WILL COMPARE WITH EARLIER STANCE OF ECB COUNCIL
REITERATES WE ARE IN STRONG VIGILANCE MODE ON INFLATION
ECB IS IN STRONG VIGILANCE MODE
BANK OF KOREA GOVERNOR KIM SAYS MOST EMEA COUNTRIES FACING INFLATIONARY PRESSURES
ECB'S TRICHET SAYS WE ARE VERY UNITED ON GOAL OF SOLIDLY ANCHORING INFLATIONARY EXPECTATIONS AT GLOBAL LEVEL
China about Euro crisis
CHINA'S WEN SAYS INFLATION NO LONGER PROBLEM OF JUST ONE COUNTRY BUT A WORLDWIDE PROBLEM
EURO ZONE PROBLEMS SHOW WORLD ECONOMY STILL IN STATE OF UNCERTAINTY AND INSTABILITY
IF EUROPE TAKES UP FINANCIAL SECTOR REFORMS IT CAN GRADUALLY RESOLVE PROBLEMS
CHINA WILL EXTEND A HELPING HAND TO EUROPE
WE HAVE FAITH IN EUROPEAN ECONOMY AND THE EURO
WE HAVE SAID WE WOULD BUY APPROPRIATE LEVELS OF DEBT OF EUROPEAN COUNTRIES IF NEEDED
WE MUST CONTINUE TO PRESS FOR FINANCIAL SYSTEM REFORMS
EURO ZONE PROBLEMS SHOW WORLD ECONOMY STILL IN STATE OF UNCERTAINTY AND INSTABILITY
IF EUROPE TAKES UP FINANCIAL SECTOR REFORMS IT CAN GRADUALLY RESOLVE PROBLEMS
CHINA WILL EXTEND A HELPING HAND TO EUROPE
WE HAVE FAITH IN EUROPEAN ECONOMY AND THE EURO
WE HAVE SAID WE WOULD BUY APPROPRIATE LEVELS OF DEBT OF EUROPEAN COUNTRIES IF NEEDED
WE MUST CONTINUE TO PRESS FOR FINANCIAL SYSTEM REFORMS
Euro Crisis More Confusion
IIF MANAGING DIRECTOR DALLARA SAYS GREEK SOVEREIGN DEBT CRISIS MOST COMPLEX HE HAS BEEN CONNECTED WITH
COMPLEXITY DUE TO LACK OF UNIFIED EUROPEAN VIEW, EXTRAORDINARILY SERIOUS WEAKNESSES OF GREEK ECONOMY
GREECE AT A CRUCIAL POINT, SAYS CONFIDENT GREEK PARLIAMENT WILL PASS AUSTERITY PLAN
IT IS EXCEPTIONALLY DIFFICULT TO ALIGN POLITICAL, ECONOMIC AND FINANCIAL STARS
AT SOME POINT EUROPEAN LEADERS MUST STOP BEING FRENCH, GERMAN OR GREEK AND BE EUROPEAN
THERE MUST BE A VOLUNTARY PARTICIPATION OF PRIVATE SECTOR
COMPLEXITY DUE TO LACK OF UNIFIED EUROPEAN VIEW, EXTRAORDINARILY SERIOUS WEAKNESSES OF GREEK ECONOMY
GREECE AT A CRUCIAL POINT, SAYS CONFIDENT GREEK PARLIAMENT WILL PASS AUSTERITY PLAN
IT IS EXCEPTIONALLY DIFFICULT TO ALIGN POLITICAL, ECONOMIC AND FINANCIAL STARS
AT SOME POINT EUROPEAN LEADERS MUST STOP BEING FRENCH, GERMAN OR GREEK AND BE EUROPEAN
THERE MUST BE A VOLUNTARY PARTICIPATION OF PRIVATE SECTOR
Euro Crisis-Confusion
EU COMMISSION: WE HAVE INFORMAL CONTACTS, DECENTRALISED ONES, WITH PRIVATE SECTOR REGARDING GREECE
NO OFFICIAL NEGOTIATIONS WITH PRIVATE SECTOR ON GREECE
NO OFFICIAL NEGOTIATIONS WITH PRIVATE SECTOR ON GREECE
UBS-Commodities
According to UBS analyst Julien Garran, gold may outperform commodities and commodities may fall 10% in three months.
More on Euro Crisis
SLOVAK FINANCE MINISTER MIKLOS SAYS IF GREEK PARLIAMENT FAILS TO APPROVE NEEDED MEASURES THEN RESTRUCTURING SHOULD COME.
Bank of England about Euro Crisis
BOE'S KING SAYS THERE IS SUFFICIENT CONCERN IN MARKET ABOUT GREEK DEFAULT TO THINK CAREFULLY ABOUT CONTIGENCY PLANS.
Euro Crisis
EU'S REHN: THOSE WHO SPECULATE ABOUT OTHER OPTIONS, THERE IS NO PLAN B FOR GREECE
ONLY WAY FOR GREECE TO AVOID IMMEDIATE DEFAULT IS FOR PARLIAMENT TO PASS ECONOMIC PROGRAMME
ONLY WAY FOR GREECE TO AVOID IMMEDIATE DEFAULT IS FOR PARLIAMENT TO PASS ECONOMIC PROGRAMME
Euro crisis
EU's Almunia says the Greek crisis may seriously impact growth in Europe and Europe is in a period of Acute crisis.
Siemens Outlook
Siemens shares briefly touched session highs, however quickly reversed gains and came under heavy selling pressure after co.'s trade update. Siemens said that first signs of easing growth in H2 are on horizon, adding that healthcare is still dealing with difficult competitive, and technology conditions.
Microsoft- Cloud computing
Microsoft Corp is making its biggest move into the mobile, Internet-accessible world of cloud computing this week, as it takes the wraps off a revamped online version of its hugely profitable Office software suite.
The world's largest software company is heaving its two-decade old set of applications -- including Outlook email, Excel spreadsheets and SharePoint collaboration tools -- into an online format so that customers can use them on a variety of devices from wherever they can get an Internet connection.
It wants to push back against Google Inc, which has stolen a small but worrying percentage of its corporate customers with cheaper, web-only alternatives, which remove the need for companies to spend time on installing software or managing servers.-Reuters
The world's largest software company is heaving its two-decade old set of applications -- including Outlook email, Excel spreadsheets and SharePoint collaboration tools -- into an online format so that customers can use them on a variety of devices from wherever they can get an Internet connection.
It wants to push back against Google Inc, which has stolen a small but worrying percentage of its corporate customers with cheaper, web-only alternatives, which remove the need for companies to spend time on installing software or managing servers.-Reuters
Goldman Sachs downgrades U.K. life insurance sector
Goldman Sachs on Tuesday shook up its ratings on the U.K. life insurance sector, saying the industry could face a period of decline due to a trend towards simpler and cheaper savings products. "Insurers are likely to find their role in the savings industry reduced to administration and the provision of tax wrappers. And even here, outsourcers are encroaching.-MarketWatch
Marc to Market: US Money Markets--Another Channel of Contagion
Marc to Market: US Money Markets--Another Channel of Contagion: "New earlier this month that Moody's was placing 3 French banks on review for a possible downgrade renewed investors focus on the potential ..."
Marc to Market: Greece and the French Proposal
Marc to Market: Greece and the French Proposal: "When it comes to heading up the IMF, the French position is that Largarde should be supported not because of her nationality, but because of..."
The market has a number of positives going for it near term. There is the end of the quarter, oversold technical conditions, some nearby support, the potential for positive news out of Europe and a fairly high level of negativity. That may give us some additional upside. Treat it as a bounce and not as a major market turn for now.
The market rallied yesterday because there was confidence that the Greek situation would be resolved given French plans and perhaps more importantly behind the scenes support from China. Microsoft (MSFT) rose because a court decision voided a law requiring video game makers not to sell violent games to youngsters. Amazon (AMZN) rose sharply on an upgrade from Morgan Stanley (MS). Bank stocks rallied most likely because they were oversold, and were helped by a buy recommendation from analyst Dick Bove for Bank of America (BAC). Bank stocks also rose given stories from Basel that capital requirements for large banks would need to rise less than expected. The Fed gave trading desks another round of POMO($4.5B). Late in the day there was a comment that a debt ceiling deal was within reach but republicans had to compromise on taxes.
Commodities were weaker which was surprising. Bonds sold-off as they hit resistance.
Today we expect some housing data and Consumer Confidence data.
Commodities were weaker which was surprising. Bonds sold-off as they hit resistance.
Today we expect some housing data and Consumer Confidence data.
Marc Faber Blog: Short And Long Term Outlook On US Treasuries
Marc Faber Blog: Short And Long Term Outlook On US Treasuries: "We have to distinguish the short term and the long term. I think about two months ago, I turned quite positive for US Treasuries. But obvi..."
US$ Outlook by Jim Rogers
Jim Rogers Blog: When Everybody Is On One Side Of The Boat, You Sho...: "Mainly because everybody is so bearish on it, including me, I decided to go long the dollar. What I’ve found over the years of investing is ..."
Monday, June 27, 2011
GREECE
GREEK PM SAYS VOTE FOR AUSTERITY PLAN ONLY CHANCE FOR GREECE TO GET BACK ON ITS FEET
VOTING FOR MID-TERM PLAN WILL END UNCERTAINTY FOR ALL GREECE
VOTING FOR MID-TERM PLAN WILL END UNCERTAINTY FOR ALL GREECE
Gold falls below $1,500 an ounce
Gold futures traded lower Monday, trading below the psychologically important level of $1,500 an ounce as other commodities lost ground.
Gold for August delivery declined $4.40, or 0.3%, to $1,496.50 an ounce on the Comex division of the New York Mercantile Exchange.
“Gold as a commodity is going down,” said Frank Lesh, a broker and futures analyst with FuturePath Trading in Chicago. “The flight-to-safety trade is still alive and well, just being overtaken right now by the commodity-related selling.”
Gold and other metals pared losses and at times traded marginally higher as France’s President Nicolas Sarkozy on Monday endorsed a plan drafted by French banks to extend the maturity of Greek bonds, The Wall Street Journal reported.
In any case, prices are unlikely “to retreat much further” as uncertainty regarding Greece’s sovereign-debt crisis persists, analysts at Commerzbank said in a note to clients .
Traders this week will await for the debate and vote on a further round of austerity measures in Greece, with ratification a condition for the nation receiving additional financial support, they added.
“It is still uncertain whether parliament will give its approval,” the analysts said.
Also helping gold, money managers increased their net long positions, or bets that prices will go higher, to 206,300 contracts in the week ended June 21, according to data from the Commodity Futures Trading Commission.
Pimco sees rising inflation for 3 - 5 years.
- Inflation set to increase in next 3-5 years, says Pimco
- Rising commodity prices are not "transitory"
- By focusing on core inflation, Fed could risk making policy error
NEW YORK (MarketWatch) -- Prospects of higher commodity prices and currency shifts will drive global inflation higher in the next few years, according to a report released Monday by Pacific Investment Management Co., the world's largest bond fund.
The upward push from commodity prices also raises risks of a monetary-policy error by the U.S. Federal Reserve and other central banks.
Pimco expects inflation in the developed economies, including the U.S., "to average about 3% and developing market inflation to average about 5% over the secular horizon," which is generally considered the next three to five years.
"The Goldilocks days of the '90s where nations could have strong growth and low inflation simultaneously are gone," says portfolio manager and Managing Director Mihir Worah, who outlined Pimco's thinking in a Q&A article obtained exclusively by Dow Jones Newswires.
The two major catalysts will be rising commodity prices and shifts in exchange rates.
In Pimco's view, market imbalances will keep commodity prices rising generally in coming years, with more of the inflationary pressures hitting emerging markets since commodities are a bigger share of their consumption.
Emerging markets were once a source of disinflation for developed economies because cheap imports from nations such as China held down inflation in Europe and the U.S. Higher commodity prices will change that dynamic.
"Commodities trade on global markets and to the extent that emerging markets are going through a particularly commodity and energy intensive phase of growth, their consumption affects what U.S. consumers pay, for example, at the gas station," says Worah.
Currencies will also be a large driver of inflation.
"We anticipate policymakers in the developed world will attempt to make their economies more competitive via a cheaper currency, which likely will, for net importers like the U.S., lead to higher inflation," says Worah.
At the same time, he says, emerging economies that need to combat domestic inflation will let their currencies appreciate. According to Worah, "This is another channel by which emerging markets may export inflation to developed nations that buy their goods."
Pimco doesn't view the recent increases in commodity prices as "transitory." Total inflation rates could diverge from core rates that exclude food and energy--and core rates are the focus of central banks such as the Fed.
Consequently, Fed officials could make a policy error, says Worah.
"If, as we expect, headline inflation continues to outpace core inflation, or if the gap widens," he says, "there is a risk central bankers could lose credibility over time, causing an unanchoring of inflation expectations.
"That could raise the risk of monetary policy error" if the Fed "allows steady erosion in consumers' purchasing power," he says.
According to Worah, investors who want to guard against inflation eroding portfolios should consider investments in crude oil and copper as well as inflation-linked bonds.
Fed talk
Fed's Kocherlakota says fall in US land prices main cause of financial crisis, heavy financial, household debt makes system vulnerable.
EURO CRISIS
EU WORKING ON CONTINGENCY PLAN FOR GREECE IN CASE PARLIAMENT REJECTS AUSTERITY PLAN
SEVERAL OPTIONS FOR GREEK CONTINGENCY PLAN RULED OUT, INCLUDING EU BRIDGING LOAN
ONE OPTION IN CONTINGENCY PLAN WOULD BE FOR A THIRD PARTY TO EXTEND NEW LOAN TO GREECE
SEVERAL OPTIONS FOR GREEK CONTINGENCY PLAN RULED OUT, INCLUDING EU BRIDGING LOAN
ONE OPTION IN CONTINGENCY PLAN WOULD BE FOR A THIRD PARTY TO EXTEND NEW LOAN TO GREECE
EURO CRISIS
NEW GREEK BONDS COULD CARRY EUROPEAN INVESTMENT BANK (EIB) OR EFSF GUARANTEE UNDER FRENCH DEBT ROLLOVER PROPOSAL -SENIOR BANKING SOURCES
DEUTSCHE BANK CEO ON GREECE- EURO CRISIS
DEUTSCHE BANK CEO SAYS ON GREECE: IF CONTAGION SPREADS THE CRISIS COULD BE BIGGER THAN LEHMAN
NEED TO STABILISE GREEK DEFICIT BEFORE OTHER OPTIONS ARE CONSIDERED
NEED TO CONSIDER TAKING EQUITY STAKES AS PART OF A BAIL-IN SOLUTION FOR BANKS
SAYS LOOKING AT SOVEREIGN RISKS IS TOO NARROW A WAY OF LOOKING AT IT
SAYS NEED TO CONSIDER IMPLICATIONS VIA CREDIT DEFAULT SWAPS USED TO HEDGE EXPOSURE
SAYS WE DO NOT HAVE TRANSPARENCY OVER THE RISKS IN THE MARKET
WHETHER THE CDS RISKS ON GREECE OF AROUND 5 BLN ARE EVENLY DISTRIBUTED IS UNKNOWN
WOULD SUPPORT THE CREATION OF A EUROPEAN RATING AGENCY
NEED TO STABILISE GREEK DEFICIT BEFORE OTHER OPTIONS ARE CONSIDERED
NEED TO CONSIDER TAKING EQUITY STAKES AS PART OF A BAIL-IN SOLUTION FOR BANKS
SAYS LOOKING AT SOVEREIGN RISKS IS TOO NARROW A WAY OF LOOKING AT IT
SAYS NEED TO CONSIDER IMPLICATIONS VIA CREDIT DEFAULT SWAPS USED TO HEDGE EXPOSURE
SAYS WE DO NOT HAVE TRANSPARENCY OVER THE RISKS IN THE MARKET
WHETHER THE CDS RISKS ON GREECE OF AROUND 5 BLN ARE EVENLY DISTRIBUTED IS UNKNOWN
WOULD SUPPORT THE CREATION OF A EUROPEAN RATING AGENCY
MOODY'S ON GREEK BANKS
MOODY'S SAYS CONTINUED DEPOSIT OUTFLOWS ARE "KEY CREDIT NEGATIVE" FOR GREEK BANKS
ESTIMATES PRIVATE-SECTOR CUSTOMER DEPOSIT OUTFLOWS FROM GREEK BANKS AT 8 PCT SO FAR THIS YEAR
OUTFLOWS FROM GREEK BANKS ACCELERATED IN MAY, JUNE ON UNCERTAINTY REGARDING GREECE'S FUNDING
GREEK BANKS WOULD HAVE "SEVERE SHORTAGE" OF CASH IF DEPOSITS FALL BY MORE THAN 35 PCT.
ESTIMATES PRIVATE-SECTOR CUSTOMER DEPOSIT OUTFLOWS FROM GREEK BANKS AT 8 PCT SO FAR THIS YEAR
OUTFLOWS FROM GREEK BANKS ACCELERATED IN MAY, JUNE ON UNCERTAINTY REGARDING GREECE'S FUNDING
GREEK BANKS WOULD HAVE "SEVERE SHORTAGE" OF CASH IF DEPOSITS FALL BY MORE THAN 35 PCT.
Euro Crisis
ECB'S STARK SAYSSHOULD THINK TWICE BEFORE PUTTING FORWARD A SOFT RESTRUCTURING AS SOLUTION FOR GREECE
IRRITATED BY GREEK FINANCE MINISTER'S COMMENTS THAT CONDITIONS WILL NEED TO BE RENEGOTIATED AFTER DISBURSEMENT OF NEXT TRANCHE OF AID
SOVEREIGN DEBT CRISIS IN INDIVIDUAL EURO ZONE COUNTRIES CAN RESULT IN NATIONAL CRISES
ASKED ABOUT PLAN B ON GREECE, SAYS THERE IS ONLY IMPLEMENTATION OF GREEK PROGRAMMES, NOTHING ELSE
DO NOT SEE CHINA AS RESCUER OF EURO, EURO DOES NOT NEED TO BE RESCUED
IRRITATED BY GREEK FINANCE MINISTER'S COMMENTS THAT CONDITIONS WILL NEED TO BE RENEGOTIATED AFTER DISBURSEMENT OF NEXT TRANCHE OF AID
SOVEREIGN DEBT CRISIS IN INDIVIDUAL EURO ZONE COUNTRIES CAN RESULT IN NATIONAL CRISES
ASKED ABOUT PLAN B ON GREECE, SAYS THERE IS ONLY IMPLEMENTATION OF GREEK PROGRAMMES, NOTHING ELSE
DO NOT SEE CHINA AS RESCUER OF EURO, EURO DOES NOT NEED TO BE RESCUED
Japan’s Italian bond holdings could pressure euro
(MarketWatch) — The euro could face downside risks against the yen because of Japanese investors’ large holdings of Italian sovereign bonds, a Tokyo strategist said Monday.
“Contagion of the European debt crisis to Italy is one of the top concerns on every global investor’s mind. The Japanese are no exception, and especially so for investment trust fund managers since they hold a relatively large amount of exposure to Italy,” Tohru Sasaki, head of Japan rates and foreign-exchange research at J. P. Morgan Chase in Tokyo, said in a note to clients Monday.
“Contagion of the European debt crisis to Italy is one of the top concerns on every global investor’s mind. The Japanese are no exception, and especially so for investment trust fund managers since they hold a relatively large amount of exposure to Italy,” Tohru Sasaki, head of Japan rates and foreign-exchange research at J. P. Morgan Chase in Tokyo, said in a note to clients Monday.
EURO CRISIS
GERMAN DEPUTY FINMIN SAYS EURO ZONE IS PREPARED FOR FUTURE SOVEREIGN DEBT CRISES THROUGH RESCUE MECHANISMS
ESM IS VERY CLOSE TO IDEA OF EUROPEAN CURRENCY FUND
EXPECT GREEK PARLIAMENT WILL AGREE ADDITIONAL REFORM MEASURES THIS WEEK TO ENABLE A DECISION AT EURO ZONE FINANCE MINISTER MEETING ON JULY 3
EURO IS IN DANGER OF LOSING LEGITIMACY
EURO ZONE CRISIS MANAGEMENT CAN BUY TIME TO ANSWER FUNDAMENTAL QUESTIONS ON EUROPE
MUST BE PREPARED FOR LOSING GREEK PARLIAMENTARY VOTE ON REFORMS
ESM IS VERY CLOSE TO IDEA OF EUROPEAN CURRENCY FUND
EXPECT GREEK PARLIAMENT WILL AGREE ADDITIONAL REFORM MEASURES THIS WEEK TO ENABLE A DECISION AT EURO ZONE FINANCE MINISTER MEETING ON JULY 3
EURO IS IN DANGER OF LOSING LEGITIMACY
EURO ZONE CRISIS MANAGEMENT CAN BUY TIME TO ANSWER FUNDAMENTAL QUESTIONS ON EUROPE
MUST BE PREPARED FOR LOSING GREEK PARLIAMENTARY VOTE ON REFORMS
Euro crisis
FRANKFURT -(Dow Jones)- A trade group representing Germany's family-owned businesses has criticized the German government's role in supporting euro zone bailouts, and has called for new rules to allow the exclusion or withdrawal of certain euro zone members from the currency union, German newspaper Die Welt reported Monday.
"The German government has pursued a fatalistic path with its euro bailout politics," the trade group Stiftung Familienunternehmen wrote in a document delivered to the German parliament, according to Die Welt. "Withdrawal and exclusion must be permitted" under euro zone laws, the newspaper cited the document as saying.
The group argues that the "no bailout clause" included in the Lisbon Treaty is broken by aid measures for Greece and says the currency union has become a "transfer union," in which Germany carries the largest burden.
The document provided to the German parliament was signed by around 100 German companies, representing EUR38 billion in annual revenue and 200,000 employees, according to the Die Welt report.
Greek Debt Crisis Is Above All A Greek Issue
PARIS -(Dow Jones)- The head of the World Trade Organization, Pascal Lamy, said Monday that the sovereign debt crisis in Greece was above all a Greek issue and that he doubted it would spread to other European countries, provided that necessary actions were taken.
Speaking in an interview with French radio France Info, Lamy said one of the most crucial lessons from the crisis in Greece was that budgetary discipline was necessary in the entire euro zone and that part of the crisis was due to the laxity shown by Greece's European partners towards the country's lack of discipline.
Asked about the potential dangers stemming from a credit boom in big emerging countries such as Brazil, Lamy didn't show concern, noting that some of these countries were better managed than developed ones.
Threat of $100 Billion Hit if US Top Rating Lost-FT
Investors in the U.S. government bond market could face losses of up to $100 billion if the largest economy loses its triple A rating, according to a research arm of McGraw-Hill, the parent of Standard & Poor’s.
A ratings downgrade that results in higher bond yields and lower prices could also mean the U.S. Treasury paying $2.3-$3.75 billion a year more in interest on financing a $1,000 billion annual budget deficit.
“If Standard & Poor’s or any of the other major rating agencies downgrade the U.S., Treasuries would likely drop in value, possibly by as much as $100 billion,” said analysts at S&P Valuation and Risk Strategies, a research team separate from the agency.
Currently, Treasury yields do not reflect concern about the U.S. losing its top rating. The yield on 10-year Treasury notes fell to 2.85 percent on Friday, a low for the year. Investors are concerned about a weaker economy and financial contagion from the euro debt crisis. Yields on four-week Treasury bills have been driven below zero.
A ratings downgrade that results in higher bond yields and lower prices could also mean the U.S. Treasury paying $2.3-$3.75 billion a year more in interest on financing a $1,000 billion annual budget deficit.
“If Standard & Poor’s or any of the other major rating agencies downgrade the U.S., Treasuries would likely drop in value, possibly by as much as $100 billion,” said analysts at S&P Valuation and Risk Strategies, a research team separate from the agency.
Currently, Treasury yields do not reflect concern about the U.S. losing its top rating. The yield on 10-year Treasury notes fell to 2.85 percent on Friday, a low for the year. Investors are concerned about a weaker economy and financial contagion from the euro debt crisis. Yields on four-week Treasury bills have been driven below zero.
French Banks Said to Offer 70% Greek Government Debt Rollover
June 27 (Bloomberg) -- French banks, including BNP ParibasSA, have told the French government they are willing to partlyroll over maturing Greek government bonds in a bid to avoid adefault by the debt-laden nation, three people familiar with theplan said yesterday. Under the proposal discussed in recent days between theFrench Banking Federation and the French Treasury, bondholderswould re-invest about 70 percent of Greek sovereign debtmaturing from mid-2011 to mid-2014, said one of the peopledirectly involved with the talks. Fifty percent of the redemptions would go into 30-yearGreek securities, with the remaining 20 percent invested in afund made of “very-high quality” securities that would backthe 30-year bonds, that person said. The proposal may bealtered, he said. All three people spoke on condition ofanonymity because the talks are ongoing and private. European governments are seeking to persuade the region’sbanks to voluntarily participate in Greece’s second bailout tomake the country’s debt burden more sustainable. European banksheld about $52 billion of Greek sovereign debt at the end oflast year, according to Bank for International Settlements data,with French banks owning $15 billion, the second-largestposition after German banks, which owned $22 billion. European Union leaders at a Brussels summit that ended June24 backed a new aid program to stave off a Greek default so longas Greek Prime Minister George Papandreou shepherds 78 billioneuros ($111 billion) of austerity measures through parliament ina vote slated for June 29. Parallel Talks Parallel talks between financial companies and financeministries across Europe on the participation of private-sectorbondholders took place last week. French newspaper Le Figarofirst reported the French banks’ proposal on its Web site today. Spokespeople at the French Finance Ministry and the FrenchBanking Federation couldn’t be reached for comment by BloombergNews today. French President Nicolas Sarkozy told reporters in Brusselson June 24 that he had “no apprehensions or difficulties”about the discussions with banks, while Prime Minister Jose LuisRodriguez Zapatero said Spanish banks are “well disposed” toprivate-sector involvement as their positions are “small.”Talks are also under way in the Netherlands. German Chancellor Angela Merkel’s government said June 24banks and insurers will recognize their “very high interest”in sharing the burden of a Greek financial package and anagreement will be reached in the next nine days. European finance chiefs will decide on July 3 whetherGreece has met conditions for its next aid payment.
Spain Banks Hide EU50 Billion in Bad Assets
June 27 (Bloomberg) -- Spanish banks have 50 billion euros($70.7 billion) in unrecognised problematic real estate assets,El Confidencial reported, citing a report by the BostonConsulting Group. The consulting group estimates that Spanish banks needbetween 20 billion euros and 30 billion euros in additionalcapital and that Spain’s bank rescue fund, known as the FROB,could end up taking over 20 percent of the banking industry, ElConfidencial added.
Fed Seen Buying $300 Billion in Treasuries After QE2
June 27 (Bloomberg) -- The Federal Reserve will remain the
biggest buyer of Treasuries, even after the second round of
quantitative easing ends this week, as the central bank uses its
$2.86 trillion balance sheet to keep interest rates low.
While the $600 billion purchase program, known as QE2,
winds down, the Fed said June 22 that it will continue to buy
Treasuries with proceeds from the maturing debt it currently
owns. That could mean purchases of as much as $300 billion of
government debt over the next 12 months without adding money to
the financial system.
The central bank, which injected $2.3 trillion into the
financial system after the collapse of Lehman Brothers Holdings
Inc. in September 2008, will keep buying Treasuries to keep
market rates down as the economy slows. The purchases are
supporting demand at bond auctions while President Barack Obama
and Republicans in Congress struggle to close the gap between
federal spending and income by between $2 trillion and $4
trillion.
“I don’t think the Fed wants to remove accommodation in
any way, shape or form,” said Matt Toms, the head of U.S.
public fixed-income investments at Atlanta-based ING Investment
Management, which oversees more than $500 billion. “It’s quite
natural for them to reinvest cash,” he said. “That effectively
maintains the accommodative stance.”
Mortgage Debt
A total of $112.1 billion of the Fed’s government bond
holdings will mature in the next 12 months, 7 percent of the
$1.59 trillion in Treasuries held in its system open market
account, known to traders as SOMA. Replacing those securities
will require the Fed to buy an average of $9.4 billion of
Treasuries a month through June 2012.
The Fed also held $914.4 billion of mortgage-backed debt
and $118.4 billion of debentures, the debt of government
sponsored enterprises Fannie Mae and Freddie Mac, as of June 22.
UBS AG, Citigroup Inc., Bank of America Corp., JPMorgan Chase &
Co. and Royal Bank of Canada say $10 billion to $16 billion will
mature each month, depending on the pace of prepayments.
In a Bloomberg survey of 58 economists June 14-17, 79
percent said Fed Chairman Ben S. Bernanke will sustain the
central bank’s balance sheet at current levels until the fourth
quarter, compared with 52 percent in April. The Fed said June 22
its goal is to hold assets at $2.654 trillion.
Treasury 10-year yields fell as low as 2.85 percent June 24
after reaching 3.77 percent on Feb. 9. The two-year yield came
within one basis point of the record low, set November 2010,
reaching 0.32 percent on June 24.
Frustrated Fed
The yield on the benchmark 10-year note fell for a sixth
week to 2.87 percent, a decline of 8 basis points or 0.08
percentage point. The price of the 3.125 percent security due in
May 2021 rose 22/32 in the five days to June 24, or $6.88 per
$1,000 face amount, to 101 22/32, Bloomberg Bond Trader prices
show. Two-year yields dropped 5 basis points to 0.33 percent
last week after reaching 0.32 percent, the lowest since Nov. 4
when they marked the all-time low of 0.3118 percent.
Bernanke said at a press conference June 22 that progress
bringing down the 9.1 percent U.S. unemployment rate was
“frustratingly slow.”
Fed officials said the economy will expand 2.7 percent to
2.9 percent this year, down from forecasts ranging from 3.1
percent to 3.3 percent in April. It was the second time this
year Fed officials lowered growth estimates. Gross domestic
product expanded 3.1 percent last year.
Policy makers said they expect the world’s largest economy
to grow 3.3 percent to 3.7 percent in 2012, according to their
central tendency forecasts. In April, their predictions ranged
from 3.5 percent to 4.2 percent.
Fear Factor
Fed officials predict an average unemployment rate of 8.6
percent to 8.9 percent in the final three months of 2011,
compared with 8.4 percent to 8.7 percent projected in April.
Their estimate for unemployment at the end of 2012 was in a
range of 7.8 percent and 8.2 percent, compared with 7.6 percent
to 7.9 percent in April.
While the Fed didn’t start a third round of quantitative
easing, as some traders speculated was needed, Treasuries could
gain on weakening of the economy or the European sovereign debt
crisis. “What always moves the market is fear and greed, and
there’s a huge amount of fear on the economy,” said David
Brownlee, head of fixed income at Sentinel Asset Management in
Montpelier, Vermont, which manages $28 billion. “That’s where
you want to have Treasuries.”
The conflict between Obama’s administration and Congress
over increasing the government’s borrowing limit could lead to
higher yields as Moody’s Investors Service and Standard & Poor’s
said they may consider cutting the nation’s AAA credit rating
unless progress is made next month.
Debt Ceiling
Vice President Joseph R. Biden’s bi-partisan deficit-
reduction group has been meeting since May 5 to reach a
compromise that would trim long-term deficits by as much as $4
trillion and clear the way for a vote in Congress to raise the
$14.29 trillion debt ceiling. Treasury Secretary Timothy F.
Geithner has said the U.S. risks defaulting if the limit isn’t
increased by Aug. 2.
The 10-year Treasury note’s yield will reach 4 percent by
June 2012, according to the median of 64 forecasters in a
Bloomberg News survey. The last time it reached 4 percent was
April 2010. Should that happen, investors would lose 5 percent
on their investment, Bloomberg data show.
“Up until now, our assumption was that the risk is
virtually zero of them ever missing an interest payment,”
Steven Hess, Moody’s senior credit officer, said in an interview
June 21. “If they actually miss a debt payment, then it’s a
fundamental change.”
Record Auction Demand
So far, there’s been no lack of demand for government
securities even as public Treasury debt has grown to $9.26
trillion from $4.5 trillion at the start of the financial crisis
in August 2007, and $5.75 trillion when Obama took office in
January 2009.
Investors have bid a record $3.01 for every dollar of debt
sold by the Treasury this year, compared with $2.99 last year
and $2.50 in 2009. The average 10-year yield this year of 3.32
percent compares with a 20-year average of 5.17 percent.
The Fed won’t raise its zero to 0.25 percent target rate
for overnight loans between banks until the second quarter of
next year, according to the weighted average forecast of 71
analysts surveyed by Bloomberg.
“The economic recovery is continuing at a moderate pace,
though somewhat more slowly than the committee had expected,”
Fed policy makers said in a June 22 statement. While the labor
market has been “weaker than anticipated,” the impact of
higher food and energy prices on consumption is likely to be
“temporary,” officials said.
Inflation Expectations
Yields on 10-year Treasury Inflation Protected Securities
show bond traders project an average 2.1 percentage point
inflation rate during the life of the debt, up from 1.5
percentage points in August 2010, when Bernanke first indicated
the central bank might resume debt purchases to fight deflation.
QE2 also succeeded in driving investors into riskier assets, The
Standard & Poor’s 500 Index has gained 22 percent during the
period.
The Fed began its first round of quantitative easing in
November 2008 after the collapse of Lehman and the central
bank’s $85 billion bailout of insurer American International
Group Inc. with a program to buy $500 billion of mortgage
securities and $100 billion of agency debentures. In March 2009
it boosted planned purchases to include $300 billion of
Treasuries and raised its target for mortgage debt to $1.25
trillion and $200 billion of government agency bonds.
Asset purchases, even at a smaller scale, “still promotes
what the Fed was trying to accomplish,” said Tony Crescenzi, a
money manager and strategist at Newport Beach, California-based
Pacific Investment Management Co., which runs the world’s
biggest bond fund. “Even with the stoppage of QE2, the
fundamental forces remain intact.”
biggest buyer of Treasuries, even after the second round of
quantitative easing ends this week, as the central bank uses its
$2.86 trillion balance sheet to keep interest rates low.
While the $600 billion purchase program, known as QE2,
winds down, the Fed said June 22 that it will continue to buy
Treasuries with proceeds from the maturing debt it currently
owns. That could mean purchases of as much as $300 billion of
government debt over the next 12 months without adding money to
the financial system.
The central bank, which injected $2.3 trillion into the
financial system after the collapse of Lehman Brothers Holdings
Inc. in September 2008, will keep buying Treasuries to keep
market rates down as the economy slows. The purchases are
supporting demand at bond auctions while President Barack Obama
and Republicans in Congress struggle to close the gap between
federal spending and income by between $2 trillion and $4
trillion.
“I don’t think the Fed wants to remove accommodation in
any way, shape or form,” said Matt Toms, the head of U.S.
public fixed-income investments at Atlanta-based ING Investment
Management, which oversees more than $500 billion. “It’s quite
natural for them to reinvest cash,” he said. “That effectively
maintains the accommodative stance.”
Mortgage Debt
A total of $112.1 billion of the Fed’s government bond
holdings will mature in the next 12 months, 7 percent of the
$1.59 trillion in Treasuries held in its system open market
account, known to traders as SOMA. Replacing those securities
will require the Fed to buy an average of $9.4 billion of
Treasuries a month through June 2012.
The Fed also held $914.4 billion of mortgage-backed debt
and $118.4 billion of debentures, the debt of government
sponsored enterprises Fannie Mae and Freddie Mac, as of June 22.
UBS AG, Citigroup Inc., Bank of America Corp., JPMorgan Chase &
Co. and Royal Bank of Canada say $10 billion to $16 billion will
mature each month, depending on the pace of prepayments.
In a Bloomberg survey of 58 economists June 14-17, 79
percent said Fed Chairman Ben S. Bernanke will sustain the
central bank’s balance sheet at current levels until the fourth
quarter, compared with 52 percent in April. The Fed said June 22
its goal is to hold assets at $2.654 trillion.
Treasury 10-year yields fell as low as 2.85 percent June 24
after reaching 3.77 percent on Feb. 9. The two-year yield came
within one basis point of the record low, set November 2010,
reaching 0.32 percent on June 24.
Frustrated Fed
The yield on the benchmark 10-year note fell for a sixth
week to 2.87 percent, a decline of 8 basis points or 0.08
percentage point. The price of the 3.125 percent security due in
May 2021 rose 22/32 in the five days to June 24, or $6.88 per
$1,000 face amount, to 101 22/32, Bloomberg Bond Trader prices
show. Two-year yields dropped 5 basis points to 0.33 percent
last week after reaching 0.32 percent, the lowest since Nov. 4
when they marked the all-time low of 0.3118 percent.
Bernanke said at a press conference June 22 that progress
bringing down the 9.1 percent U.S. unemployment rate was
“frustratingly slow.”
Fed officials said the economy will expand 2.7 percent to
2.9 percent this year, down from forecasts ranging from 3.1
percent to 3.3 percent in April. It was the second time this
year Fed officials lowered growth estimates. Gross domestic
product expanded 3.1 percent last year.
Policy makers said they expect the world’s largest economy
to grow 3.3 percent to 3.7 percent in 2012, according to their
central tendency forecasts. In April, their predictions ranged
from 3.5 percent to 4.2 percent.
Fear Factor
Fed officials predict an average unemployment rate of 8.6
percent to 8.9 percent in the final three months of 2011,
compared with 8.4 percent to 8.7 percent projected in April.
Their estimate for unemployment at the end of 2012 was in a
range of 7.8 percent and 8.2 percent, compared with 7.6 percent
to 7.9 percent in April.
While the Fed didn’t start a third round of quantitative
easing, as some traders speculated was needed, Treasuries could
gain on weakening of the economy or the European sovereign debt
crisis. “What always moves the market is fear and greed, and
there’s a huge amount of fear on the economy,” said David
Brownlee, head of fixed income at Sentinel Asset Management in
Montpelier, Vermont, which manages $28 billion. “That’s where
you want to have Treasuries.”
The conflict between Obama’s administration and Congress
over increasing the government’s borrowing limit could lead to
higher yields as Moody’s Investors Service and Standard & Poor’s
said they may consider cutting the nation’s AAA credit rating
unless progress is made next month.
Debt Ceiling
Vice President Joseph R. Biden’s bi-partisan deficit-
reduction group has been meeting since May 5 to reach a
compromise that would trim long-term deficits by as much as $4
trillion and clear the way for a vote in Congress to raise the
$14.29 trillion debt ceiling. Treasury Secretary Timothy F.
Geithner has said the U.S. risks defaulting if the limit isn’t
increased by Aug. 2.
The 10-year Treasury note’s yield will reach 4 percent by
June 2012, according to the median of 64 forecasters in a
Bloomberg News survey. The last time it reached 4 percent was
April 2010. Should that happen, investors would lose 5 percent
on their investment, Bloomberg data show.
“Up until now, our assumption was that the risk is
virtually zero of them ever missing an interest payment,”
Steven Hess, Moody’s senior credit officer, said in an interview
June 21. “If they actually miss a debt payment, then it’s a
fundamental change.”
Record Auction Demand
So far, there’s been no lack of demand for government
securities even as public Treasury debt has grown to $9.26
trillion from $4.5 trillion at the start of the financial crisis
in August 2007, and $5.75 trillion when Obama took office in
January 2009.
Investors have bid a record $3.01 for every dollar of debt
sold by the Treasury this year, compared with $2.99 last year
and $2.50 in 2009. The average 10-year yield this year of 3.32
percent compares with a 20-year average of 5.17 percent.
The Fed won’t raise its zero to 0.25 percent target rate
for overnight loans between banks until the second quarter of
next year, according to the weighted average forecast of 71
analysts surveyed by Bloomberg.
“The economic recovery is continuing at a moderate pace,
though somewhat more slowly than the committee had expected,”
Fed policy makers said in a June 22 statement. While the labor
market has been “weaker than anticipated,” the impact of
higher food and energy prices on consumption is likely to be
“temporary,” officials said.
Inflation Expectations
Yields on 10-year Treasury Inflation Protected Securities
show bond traders project an average 2.1 percentage point
inflation rate during the life of the debt, up from 1.5
percentage points in August 2010, when Bernanke first indicated
the central bank might resume debt purchases to fight deflation.
QE2 also succeeded in driving investors into riskier assets, The
Standard & Poor’s 500 Index has gained 22 percent during the
period.
The Fed began its first round of quantitative easing in
November 2008 after the collapse of Lehman and the central
bank’s $85 billion bailout of insurer American International
Group Inc. with a program to buy $500 billion of mortgage
securities and $100 billion of agency debentures. In March 2009
it boosted planned purchases to include $300 billion of
Treasuries and raised its target for mortgage debt to $1.25
trillion and $200 billion of government agency bonds.
Asset purchases, even at a smaller scale, “still promotes
what the Fed was trying to accomplish,” said Tony Crescenzi, a
money manager and strategist at Newport Beach, California-based
Pacific Investment Management Co., which runs the world’s
biggest bond fund. “Even with the stoppage of QE2, the
fundamental forces remain intact.”
Sunday, June 26, 2011
Greek debt crisis: Jim O'Neill warns eurozone leaders 'be bold or the grand project of Europe faces serious trouble' - Telegraph.
http://t.co/FgesFpj
http://t.co/FgesFpj
Saturday, June 25, 2011
Federal Reserve Chairman Ben Dernanke’s standing with the public has slid to its lowest level in almost two years of polling on the issue, even as faith in the Federal Reserve holds up.
Bernanke is viewed favorably by 30 percent of those polled, compared with 26 percent who view him unfavorably; the remainder are unsure. In September of 2009, Bernanke enjoyed 41 percent approval and 22 percent disapproval. The Fed itself is viewed favorably by 42 percent of voters, little changed from previous surveys.
The Bloomberg National Poll, conducted June 17-20, shows that the reputation of Bernanke, who led the central bank through the longest U.S. recession since the Great Depression, has slid lower as the unemployment rate has remained stuck near 9 percent or higher for 26 consecutive months.
Bernanke is viewed favorably by 30 percent of those polled, compared with 26 percent who view him unfavorably; the remainder are unsure. In September of 2009, Bernanke enjoyed 41 percent approval and 22 percent disapproval. The Fed itself is viewed favorably by 42 percent of voters, little changed from previous surveys.
The Bloomberg National Poll, conducted June 17-20, shows that the reputation of Bernanke, who led the central bank through the longest U.S. recession since the Great Depression, has slid lower as the unemployment rate has remained stuck near 9 percent or higher for 26 consecutive months.
Oil prices tumbled on Friday to their lowest level since the outbreak of fighting in Libya after western governments agreed to release strategic stocks of crude for only the third time since 1974.
The price of Brent crude futures, the global benchmark, tumbled 8.5 per cent over the week to touch a low of $103.62 a barrel on Friday – the lowest since February 21, when an escalation of violence in Libya first threatened oil supplies.
Prices fell as much as $8 a barrel in the wake of Thursday’s announcement that the members of the International Energy Agency, a group of rich oil consuming countries, would release as much as 2m barrels a day from their strategic reserves over a 30-day period.
Traders, who had been expecting global oil markets to tighten in the coming months, were caught wrong-footed. More than 1.2bn barrels of Brent crude futures changed hands on Thursday – 35 per cent higher than the previous record volume.
The news of higher supply compounded some investors’ concerns about weakening economic growth, especially in the US and eurozone. Oil prices have now fallen 18 per cent from a peak in April, while commodities as a group have slumped 11 per cent.
Analysts and traders had expected global oil demand to outpace supply by 1m-2m b/d in the third quarter, as refiners ramped up output after their traditional maintenance season and summer power shortages in Japan and China boosted demand for diesel for electricity generation.
Thus, in the short term, the move could alleviate some of the expected shortage, analysts said, slashing their oil price forecasts.
Goldman Sachs said prices would be $10-$12 lower than expected over the next three months, predicting a Brent price of $105-$107 a barrel. JPMorgan cut its projection for third quarter prices to $100 on average from $130. And Morgan Stanley said the IEA’s move could push prices $10 lower than the $120 it had previously forecast for the whole of 2011.
Paul Horsnell, head of commodities research at Barclays Capital, said: “If the third quarter was set to be the strongest quarter with the largest quarter on quarter increase in demand, resulting in a sharp stock draw to balance the market, the IEA’s actions may alleviate a part of that tightness.”
The longer-term implications of the move were less straightforward, analysts said. The apparent willingness of the IEA to intervene more actively in the oil market than it has done is likely to make traders wary of betting on oil price spikes in the future.
On the other hand, analysts noted that the IEA would most likely have to return to the market at some point and replenish any stocks they sell.-FT
The price of Brent crude futures, the global benchmark, tumbled 8.5 per cent over the week to touch a low of $103.62 a barrel on Friday – the lowest since February 21, when an escalation of violence in Libya first threatened oil supplies.
Prices fell as much as $8 a barrel in the wake of Thursday’s announcement that the members of the International Energy Agency, a group of rich oil consuming countries, would release as much as 2m barrels a day from their strategic reserves over a 30-day period.
Traders, who had been expecting global oil markets to tighten in the coming months, were caught wrong-footed. More than 1.2bn barrels of Brent crude futures changed hands on Thursday – 35 per cent higher than the previous record volume.
The news of higher supply compounded some investors’ concerns about weakening economic growth, especially in the US and eurozone. Oil prices have now fallen 18 per cent from a peak in April, while commodities as a group have slumped 11 per cent.
Analysts and traders had expected global oil demand to outpace supply by 1m-2m b/d in the third quarter, as refiners ramped up output after their traditional maintenance season and summer power shortages in Japan and China boosted demand for diesel for electricity generation.
Thus, in the short term, the move could alleviate some of the expected shortage, analysts said, slashing their oil price forecasts.
Goldman Sachs said prices would be $10-$12 lower than expected over the next three months, predicting a Brent price of $105-$107 a barrel. JPMorgan cut its projection for third quarter prices to $100 on average from $130. And Morgan Stanley said the IEA’s move could push prices $10 lower than the $120 it had previously forecast for the whole of 2011.
Paul Horsnell, head of commodities research at Barclays Capital, said: “If the third quarter was set to be the strongest quarter with the largest quarter on quarter increase in demand, resulting in a sharp stock draw to balance the market, the IEA’s actions may alleviate a part of that tightness.”
The longer-term implications of the move were less straightforward, analysts said. The apparent willingness of the IEA to intervene more actively in the oil market than it has done is likely to make traders wary of betting on oil price spikes in the future.
On the other hand, analysts noted that the IEA would most likely have to return to the market at some point and replenish any stocks they sell.-FT
Mervyn King, governor of the Bank of England, warned on Friday that stopgap measures to extend new loans to countries such as Greece, Portugal and Ireland would not solve the eurozone debt crisis.
Presenting the Bank’s first analysis of financial stability in the UK banking system after the formation of the new financial policy committee, he said the eurozone debt crisis was a crisis of solvency that would not be resolved by extending new loans.-FT
Presenting the Bank’s first analysis of financial stability in the UK banking system after the formation of the new financial policy committee, he said the eurozone debt crisis was a crisis of solvency that would not be resolved by extending new loans.-FT
WSJ.com - Germans, Prizing Virtues of Saving, Find Euro Bailouts Hard to Swal...
http://on.wsj.com/inssTd
http://on.wsj.com/inssTd
Chinese Premier Wen Jiabao said on Saturday he was "still confident" that Europe can overcome the debt crisis and said China would remain a long-term investor in Europe's debt market.
The Chinese Premier spoke at a press conference with Hungarian Prime Minister Viktor Orban during a visit to Hungary.
"I have confidence in European economic development," he said. "China is a long-term investor in Europe's sovereign debt market. In recent years we have increased by a quite big margin holdings of euro bonds."
"In the future, as we have done in the past, we will support Europe and the euro," Wen added.
He said China stood willing to help Europe "work for expeditious recovery and stable growth," but did not give exact figures on how much euro zone sovereign debt China might buy.-Reuters
The Chinese Premier spoke at a press conference with Hungarian Prime Minister Viktor Orban during a visit to Hungary.
"I have confidence in European economic development," he said. "China is a long-term investor in Europe's sovereign debt market. In recent years we have increased by a quite big margin holdings of euro bonds."
"In the future, as we have done in the past, we will support Europe and the euro," Wen added.
He said China stood willing to help Europe "work for expeditious recovery and stable growth," but did not give exact figures on how much euro zone sovereign debt China might buy.-Reuters
The Group of Governors and Heads of Supervision, an oversight body for world banking, on Saturday said it raised capital requirements for loss absorbancy to as much as 3.5% in a move hailed as a step toward reducing hazards faced by major international lenders.
Jean-Claude Trichet, president of the European Central Bank and chairman of the Group of Governors and Heads of Supervision, said the agreement would “help address the negative externalities and moral hazard posed by global systemically important banks.” -MarketWatch
Jean-Claude Trichet, president of the European Central Bank and chairman of the Group of Governors and Heads of Supervision, said the agreement would “help address the negative externalities and moral hazard posed by global systemically important banks.” -MarketWatch
NEW YORK, June 24 (Reuters) - Investors are pulling cash from some U.S. money market funds on worries about the funds' investments in European banks in case of a Greek sovereign default that they fear could roil the $2.7 trillion industry.
Despite signs of progress on a rescue for Greece, assets of non-Treasury money market funds -- which are perceived as riskier than funds that own only U.S. government securities -- declined by $3.6 billion on Thursday, while assets of Treasury-only funds rose by $5.2 billion, according to Crane Data.
There were reports on Friday that banks and policymakers moved closer to an aid deal for Greece in advance of a parliamentary vote on drastic deficit reduction next week, but investors remained on edge.
Investors are scrambling for U.S. Treasury bills, a move that pushed T-bill rates into negative territory this week, analysts said.
But there is no evidence yet of strain in the financial system as seen during the 2007-2009 global credit crunch.
European banks are still raising short-term funds through sales of U.S. commercial paper and certificates of deposits with a miniscule rise in borrowing costs.
"The market is just waiting," said Jim Lee, head of short-term markets and futures strategy at RBS Securities in Stamford, Connecticut. "If there were a situation where there was a restructuring of Greek debt, then the contagion would start."
Corporate treasurers and money managers are withdrawing funds from institutional money market funds that invest in commercial paper and other debt issued by European banks. They are putting some of the cash into bank accounts and less risky money funds that own only U.S. government securities, analysts said.
Assets of institutional Treasury money market funds rose by $5.23 billion to $601.5 billion in the week ended Wednesday, while assets of non-Treasury money funds plunged by $16.62 billion to $1.069 trillion, the Investment Company Institute reported Thursday.
After the market bounced back on Thursday many bulls thought that this was the bottom, but then the news hit that Italian banks were now under review, and another cycle of worries about European sovereign debt set in.
I believe we will see many rallies and reversals on headlines about Greece, and then about the other countries of the European periphery.
Now the indices are back near their recent lows, and the downtrend is still intact.
In order to make money you have to trade with the trend and not to fight it.
Next week is likely to be challenging.
I believe we will see many rallies and reversals on headlines about Greece, and then about the other countries of the European periphery.
Now the indices are back near their recent lows, and the downtrend is still intact.
In order to make money you have to trade with the trend and not to fight it.
Next week is likely to be challenging.
SAN FRANCISCO (MarketWatch) — A late-hour wave of selling dropped gold futures to their lowest settlement since mid-May, less than a dollar above $1,500 an ounce.
Gold for August delivery declined $19.60, or 1.3%, to settle at $1,500.90 an ounce on the Comex division of the New York Mercantile Exchange. That was the poorest settlement since May 19, when gold closed at $1,492.40. Marc to Market: Some Thoughts on Europe
Marc to Market: Some Thoughts on Europe: "The last few days have been very significant and will likely shape investors views in the weeks ahead. While Greece remains at the epicente..."
Nouriel Roubini Blog: Economic Outlook
Nouriel Roubini Blog: Economic Outlook: "Optimists argue that the global economy has merely hit a “soft patch'. Firms and consumers reacted to this year’s shocks by “temporarily” sl..."
Friday, June 24, 2011
MILAN, June 24 (Reuters) - Shares in Italian banks UniCredit SpA and Intesa Sanpaolo fell sharply on Friday as worries circulated about their capital positions and the deepening euro zone crisis.
Brokers cited a host of reasons contributing to the sell-off.
These included speculation Italian banks could be forced to raise more capital as a result of imminent stress tests, a European Central Bank board member saying the euro zone debt crisis was not over, German comments on a possible sovereign debt rollover, and a Moody's downgrade threat on Italian banks.
Shares in Italy's top two banks were briefly suspended for hitting the daily downward limit.
At 1150 GMT, Intesa had restarted trading and was down 2.2 percent at 1.74 euros, while UniCredit was down 4.7 percent at 1.375 euros.
Several traders said there were fears Italian banks could be shown to be short of capital in stress tests to be released next month.
"It is easy to see that Italian banks are in the sights of everyone," one Milan trader said.
Another dealer said the suspension of UniCredit and Intesa's shares added to the unease.
"All the rumours, and the suspension -- without knowing what was going on -- hasn't helped. Markets are very nervous and any whiff of bad news can make people very jittery," the dealer said.
Brokers cited a host of reasons contributing to the sell-off.
These included speculation Italian banks could be forced to raise more capital as a result of imminent stress tests, a European Central Bank board member saying the euro zone debt crisis was not over, German comments on a possible sovereign debt rollover, and a Moody's downgrade threat on Italian banks.
Shares in Italy's top two banks were briefly suspended for hitting the daily downward limit.
At 1150 GMT, Intesa had restarted trading and was down 2.2 percent at 1.74 euros, while UniCredit was down 4.7 percent at 1.375 euros.
Several traders said there were fears Italian banks could be shown to be short of capital in stress tests to be released next month.
"It is easy to see that Italian banks are in the sights of everyone," one Milan trader said.
Another dealer said the suspension of UniCredit and Intesa's shares added to the unease.
"All the rumours, and the suspension -- without knowing what was going on -- hasn't helped. Markets are very nervous and any whiff of bad news can make people very jittery," the dealer said.
BANKS AND EU FINMINS SET OUT PROPOSAL TO AVOID RATING AGENCIES DECLARING BANKS' CONTRIBUTION TO GREEK AID AS DEFAULT
PROPOSAL FORESEES VOLUNTARY DEBT ROLLOVER INTO SECURITIES OF A DIFFERENT, NOT COMPARABLE, CREDIT COMPOSITION
GERMAN PRIVATE CREDITORS TO SUBMIT DATA ON EXPOSURE AND ROLLOVER INTENTIONS TO FINMIN BY EARLY NEXT WEEK.
PROPOSAL FORESEES VOLUNTARY DEBT ROLLOVER INTO SECURITIES OF A DIFFERENT, NOT COMPARABLE, CREDIT COMPOSITION
GERMAN PRIVATE CREDITORS TO SUBMIT DATA ON EXPOSURE AND ROLLOVER INTENTIONS TO FINMIN BY EARLY NEXT WEEK.
ECB'S GONZALEZ-PARAMO - CRISIS CONTINUES, WILL NOT END SOON
EURO ZONE INTEREST RATES STILL ACCOMMODATIVE
EURO ZONE IS EPICENTRE OF GLOBAL FINANCIAL TENSIONS, BUT EURO STILL A SUCCESS
SUSTAINABLE LONG-TERM SPANISH GROWTH LARGELY DEPENDENT ON STRUCTURAL REFORMS
SHARES IN ITALIAN BANKS INTESA, UNICREDIT SUSPENDED FROM TRADING, INDICATED DOWN MORE THAN 3 PCT
EURO ZONE INTEREST RATES STILL ACCOMMODATIVE
EURO ZONE IS EPICENTRE OF GLOBAL FINANCIAL TENSIONS, BUT EURO STILL A SUCCESS
SUSTAINABLE LONG-TERM SPANISH GROWTH LARGELY DEPENDENT ON STRUCTURAL REFORMS
SHARES IN ITALIAN BANKS INTESA, UNICREDIT SUSPENDED FROM TRADING, INDICATED DOWN MORE THAN 3 PCT
UBS-FX forecast
What is more dangerous, the euro or the US dollar? Assessing the situation, we moderated our call for short-term US dollar strength by setting the three-month forecast at 1.39 rather than 1.35. However we uphold our view of more USD weakness further down the road, and kept the twelve-month forecast at 1.48.
Marc Faber Blog: Latest Bloomberg Video Interview, June 23
Marc Faber Blog: Latest Bloomberg Video Interview, June 23: "June 23 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom & Doom report, talks about his investment strategy and the outlook for glob..."
Commission statement on the agreement between the Troika and Greek authorities on measures to close the fiscal gap for the years 2011-2014
Heads of Mission of the European Commission, the International Monetary Fund and the European Central Bank (the Troika) and the Greek authorities have reached tonight a satisfactory agreement on a set of measures to close the fiscal gap for the years 2011-2014. The Troika and the Greek authorities have agreed on the Medium-Term Fiscal Strategy (MTFS). The Commission expects now that the MTFS is reflected in the new implementation law and translated into concrete legislative measures, also reflecting the privatisation plan. The Commission is looking forward to the voting of both legislative bills next week in the Greek Parliament. These measures, once fully implemented, will enable Greece to meet the agreed targets and remain on track.
Heads of Mission of the European Commission, the International Monetary Fund and the European Central Bank (the Troika) and the Greek authorities have reached tonight a satisfactory agreement on a set of measures to close the fiscal gap for the years 2011-2014. The Troika and the Greek authorities have agreed on the Medium-Term Fiscal Strategy (MTFS). The Commission expects now that the MTFS is reflected in the new implementation law and translated into concrete legislative measures, also reflecting the privatisation plan. The Commission is looking forward to the voting of both legislative bills next week in the Greek Parliament. These measures, once fully implemented, will enable Greece to meet the agreed targets and remain on track.
Yesterday's bounce was driven by news that Greece had reached a deal on austerity measures. That doesn't seem very surprising, but the market suddenly leapt higher on the news. Today will probably be a very volatile day, though, as the Russell indices are rebalanced. This always produces a big jump in volume and some crazy action in the stocks that are being added and dropped. On top of that we expect important economic news today courtesy of Durable Goods Orders (1% consensus) and GDP (1.9% consensus).
This market has no memory from day to day.
This market has no memory from day to day.
(Reuters) - European Union leaders promised more money to help Greece stave off looming bankruptcy, provided its parliament enacts an austerity plan finalized in fraught last-minute talks with international lenders.
Greek Prime Minister George Papandreou promised to push through radical economic reform after his new finance minister clinched agreement with EU and IMF inspectors on extra tax rises and spending cuts to plug a 3.8 billion euro funding gap.
"A comprehensive reform package... and adoption by the Greek parliament of the key laws on the fiscal strategy and privatization must be finalized as a matter of urgency in the coming days," EU leaders said in a summit statement.
Greek Prime Minister George Papandreou promised to push through radical economic reform after his new finance minister clinched agreement with EU and IMF inspectors on extra tax rises and spending cuts to plug a 3.8 billion euro funding gap.
"A comprehensive reform package... and adoption by the Greek parliament of the key laws on the fiscal strategy and privatization must be finalized as a matter of urgency in the coming days," EU leaders said in a summit statement.
Thursday, June 23, 2011
GREEK PM PAPANDREOU:GREECE IS STRONGLY COMMITTED TO RADICAL CHANGES TO MAKE OUR ECONOMY VIABLE
THIS IS A FIGHT WITH THE GREEK PEOPLE, FOR OUR COUNTRY
THIS IS ALSO A FIGHT FOR A COMMON EUROPEAN CURRENCY AND A COMMON EUROPE
I THINK WITH A STRONG COMMITMENT FROM THE EU, THERE WILL BE A STRONG COMMITMENT FROM GREEK PARLIAMENT TOO
THIS IS A FIGHT WITH THE GREEK PEOPLE, FOR OUR COUNTRY
THIS IS ALSO A FIGHT FOR A COMMON EUROPEAN CURRENCY AND A COMMON EUROPE
I THINK WITH A STRONG COMMITMENT FROM THE EU, THERE WILL BE A STRONG COMMITMENT FROM GREEK PARLIAMENT TOO
Credit Suisse on Greece
There are three inter-connected problems in peripheral Europe: a) most serious, a loss of competitiveness (ex Ireland) that we think requires more wage deflation than the economic consensus forecasts; b) excessive private sector debt and c) high public debt, where a haircut of 36%, 25% and 32% is probably needed in Greece, Portugal and Ireland. Our base-case scenario is that this is not a systemic risk (as the cost to core Europe of not bailing out peripheral Europe is at least 2x the cost of bailing it out), Spain (which is 12% of European GDP) does not require a haircut and the ECB will endup repo-ing more and more peripheral European debt to offset deposit flight
We believe there is a 75% probability of a delayed and 'agreed' default in Greece: a roll-over of government bonds will be implemented, allowing GGBs to be used as collateral with the ECB, with restructuring being postponed until Greece runs a primary surplus, banks are better capitalised and the ESM is set up.
We believe there is a 15% probability of a unilateral default within six months, but this would be met by a quick European policy response. In this scenario, European markets are likely to fall 10% but offer an attractive buying opportunity (as the ECB will likely have to do QE).
Lastly, we see a 5% probability of a unilateral default with a poor European response, a break-up of the Euro, a 5% fall in European GDP and a 20% decline in markets (and a 5% probability of Germany withdrawing from the Euro).
Leaving the Euro-area would just be an expensive way to default: if any peripheral European country left the Euro, we estimate GDP would fall by 20% or more (owing to the relianceon ECB funding and the need to tighten fiscal policy, as all these countries are running primary budget deficits).! Investment conclusions: buy domestic Germany (eg, Deutsche Wohnen, Commerzbank); stay short of domestic plays in peripheral Europe (eg, FCC, Brisa); buy Italy (eg, Enel): it looks abnormally cheap and should not be considered part of theperiphery, in our view; the euro could easily weaken to Eu/$1.35; banks do not offer sufficient appeal until they trade 10% lower (we are overweight the life companies); and we stay underweight Continental Europe.
We believe there is a 75% probability of a delayed and 'agreed' default in Greece: a roll-over of government bonds will be implemented, allowing GGBs to be used as collateral with the ECB, with restructuring being postponed until Greece runs a primary surplus, banks are better capitalised and the ESM is set up.
We believe there is a 15% probability of a unilateral default within six months, but this would be met by a quick European policy response. In this scenario, European markets are likely to fall 10% but offer an attractive buying opportunity (as the ECB will likely have to do QE).
Lastly, we see a 5% probability of a unilateral default with a poor European response, a break-up of the Euro, a 5% fall in European GDP and a 20% decline in markets (and a 5% probability of Germany withdrawing from the Euro).
Leaving the Euro-area would just be an expensive way to default: if any peripheral European country left the Euro, we estimate GDP would fall by 20% or more (owing to the relianceon ECB funding and the need to tighten fiscal policy, as all these countries are running primary budget deficits).! Investment conclusions: buy domestic Germany (eg, Deutsche Wohnen, Commerzbank); stay short of domestic plays in peripheral Europe (eg, FCC, Brisa); buy Italy (eg, Enel): it looks abnormally cheap and should not be considered part of theperiphery, in our view; the euro could easily weaken to Eu/$1.35; banks do not offer sufficient appeal until they trade 10% lower (we are overweight the life companies); and we stay underweight Continental Europe.
OBAMA DEEPLY CONCERNED ABOUT IMPACT IN DISRUPTION FROM LIBYA, IMPACT ON GLOBAL ECONOMY
US ENGAGED WITH GOVERNMENTS OF MAJOR OIL EXPORTERS FOR LAST SEVERAL MONTHS ON STEPS TO TAKE
RELEASE OF OIL INTENDED TO COMPLEMENT SAUDI INCREASE IN OIL PRODUCTION
US WILL RELEASE "LARGELY LIGHT SWEET CRUDE" FROM RESERVES
US TAKING ACTION IN RESPONSE TO TIGHTNESS IN MARKET DUE TO LOSS OF LIGHT, SWEET CRUDE FROM LIBYA
US OIL RELEASE TO ADDRESS SEASONAL INCREASE IN DEMAND
US STANDS READY TO DO MORE, AS IS NECESSARY, TO ADDRESS ISSUE
US ENGAGED WITH GOVERNMENTS OF MAJOR OIL EXPORTERS FOR LAST SEVERAL MONTHS ON STEPS TO TAKE
RELEASE OF OIL INTENDED TO COMPLEMENT SAUDI INCREASE IN OIL PRODUCTION
US WILL RELEASE "LARGELY LIGHT SWEET CRUDE" FROM RESERVES
US TAKING ACTION IN RESPONSE TO TIGHTNESS IN MARKET DUE TO LOSS OF LIGHT, SWEET CRUDE FROM LIBYA
US OIL RELEASE TO ADDRESS SEASONAL INCREASE IN DEMAND
US STANDS READY TO DO MORE, AS IS NECESSARY, TO ADDRESS ISSUE
Greece Has ‘Russia-in-1998’ Feel, World Bank Economist Says
June 23 (Bloomberg) -- The Greek crisis has all the
elements that dogged Russia during its 1998 default, according
to Sergei Ulatov, the resident World Bank economist in Moscow.
“The Greece example reminds me very much of what was
happening in Russia in 1998, but on a much larger scale,” Ulatov
said in an interview during the Russia and CIS Capital Markets
Forum organized by Euromoney in London today.
Greece is struggling to convince investors it can keep its
finances intact as European officials scramble to put together a
second bailout package for the debt-strapped nation. Greek Prime
Minister George Papandreou earlier this week won a vote of
confidence, bolstering his new government’s chances of pushing
through austerity measures to secure further financial aid.
Failure to secure the aid would push Greece to the brink of
default, with the country needing the funds to cover 6.6 billion
euros ($9.3 billion) of maturing bonds in August. European
finance ministers said earlier this week they would hold off on
approving a 12 billion-euro payment to the country promised for
July until passage of the plans to cut the budget deficit and
sell state assets.
Russia defaulted on bonds in 1998, when failure to repay
$40 billion worth of local-currency debt caused the ruble to be
devalued by 70 percent in two weeks and the economy to contract
by 5.3 percent that year.
Ulatov, like some of the other participants of the forum,
said he expects a Greek default.
Too Big to Fail
“I don’t see any alternatives,” said Alexander Morozov,
chief Russia and CIS economist for HSBC Holdings Plc.
Zdenek Turek, president of Citibank’s CIS division, said
European nations maybe postponing the pain. With a Greek
default, the “sooner the better,” he said.
European leaders have sought to present a common front to
avoid a Greek default. Germany’s attempt to demand a
“substantial” participation from bondholders, which would have
effectively been a default according to credit rating companies,
met pushback from the European Central Bank and France, the
country most exposed to Greek debt. German Chancellor Angela
Merkel dropped the idea of a compulsory Greek debt exchange on
June 17.
At a Brussels summit tonight and tomorrow, European leaders
will debate the size of new loans to the Athens government and
how to get holders of Greek bonds to chip in.
“It begins from the notion that Greece is too large to
fail,” the World Bank’s Ulatov said. “Then, there is an
international consensus that we need to come up with a package,
but there is a lot of moral hazard involved.”
“Some private investors, even though they think it’s going
to fail, push this package so they can exit,” he said. “Some
big investment banks just want this package so they can exit.”
elements that dogged Russia during its 1998 default, according
to Sergei Ulatov, the resident World Bank economist in Moscow.
“The Greece example reminds me very much of what was
happening in Russia in 1998, but on a much larger scale,” Ulatov
said in an interview during the Russia and CIS Capital Markets
Forum organized by Euromoney in London today.
Greece is struggling to convince investors it can keep its
finances intact as European officials scramble to put together a
second bailout package for the debt-strapped nation. Greek Prime
Minister George Papandreou earlier this week won a vote of
confidence, bolstering his new government’s chances of pushing
through austerity measures to secure further financial aid.
Failure to secure the aid would push Greece to the brink of
default, with the country needing the funds to cover 6.6 billion
euros ($9.3 billion) of maturing bonds in August. European
finance ministers said earlier this week they would hold off on
approving a 12 billion-euro payment to the country promised for
July until passage of the plans to cut the budget deficit and
sell state assets.
Russia defaulted on bonds in 1998, when failure to repay
$40 billion worth of local-currency debt caused the ruble to be
devalued by 70 percent in two weeks and the economy to contract
by 5.3 percent that year.
Ulatov, like some of the other participants of the forum,
said he expects a Greek default.
Too Big to Fail
“I don’t see any alternatives,” said Alexander Morozov,
chief Russia and CIS economist for HSBC Holdings Plc.
Zdenek Turek, president of Citibank’s CIS division, said
European nations maybe postponing the pain. With a Greek
default, the “sooner the better,” he said.
European leaders have sought to present a common front to
avoid a Greek default. Germany’s attempt to demand a
“substantial” participation from bondholders, which would have
effectively been a default according to credit rating companies,
met pushback from the European Central Bank and France, the
country most exposed to Greek debt. German Chancellor Angela
Merkel dropped the idea of a compulsory Greek debt exchange on
June 17.
At a Brussels summit tonight and tomorrow, European leaders
will debate the size of new loans to the Athens government and
how to get holders of Greek bonds to chip in.
“It begins from the notion that Greece is too large to
fail,” the World Bank’s Ulatov said. “Then, there is an
international consensus that we need to come up with a package,
but there is a lot of moral hazard involved.”
“Some private investors, even though they think it’s going
to fail, push this package so they can exit,” he said. “Some
big investment banks just want this package so they can exit.”
June 23 (Bloomberg) -- Greek Finance Minister Evangelos
Venizelos will hold a news conference in Athens today following
his meetings with representatives of the European Union,
International Monetary Fund and European Central Bank, according
to an e-mailed statement from the Athens-based ministry today.
The news conference is scheduled to start at 5 p.m. local
time and no additional details were provided.
Venizelos will hold a news conference in Athens today following
his meetings with representatives of the European Union,
International Monetary Fund and European Central Bank, according
to an e-mailed statement from the Athens-based ministry today.
The news conference is scheduled to start at 5 p.m. local
time and no additional details were provided.
EUROPEAN BANKING AUTHORITY SAYS CLOSELY MONITORING GREECE SITUATION, STRESS TESTS TO ALLOW ASSESSMENT OF POTENTIAL IMPACTS
EBA SAYS HAS GIVEN BANKS IN EARLY JUNE ADDITIONAL GUIDANCE "TO ADDRESS INCONSISTENCIES AND EXCESSIVE OPTIMISM"
EBA SAYS STRESS TEST PARAMETERS FOR HAIRCUTS ON GREEK DEBT TRADING BOOK POSITIONS ADJUSTED TO REFLECT MKT DEVELOPMENTS
EBA SAYS HAS GIVEN BANKS IN EARLY JUNE ADDITIONAL GUIDANCE "TO ADDRESS INCONSISTENCIES AND EXCESSIVE OPTIMISM"
EBA SAYS STRESS TEST PARAMETERS FOR HAIRCUTS ON GREEK DEBT TRADING BOOK POSITIONS ADJUSTED TO REFLECT MKT DEVELOPMENTS
EUROZONE JUNE FLASH SERVICES PMI 54.2 (55.5 F'CAST, 56.0 MAY); LOWEST SINCE DEC
EUROZONE JUNE FLASH SERVICES PMI NEW BUSINESS PMI 53.8 (55.3 MAY); LOWEST SINCE NOV
EUROZONE JUNE FLASH MANUFACTURING PMI 52.0 (53.8 F'CAST, 54.6 MAY); LOWEST SINCE DEC 2009
EUROZONE JUNE FLASH FACTORY OUTPUT INDEX 52.4 (55.2 MAY); LOWEST SINCE SEPT 2009
EUROZONE JUNE FLASH FACTORY NEW ORDERS PMI 49.6 (53.3 MAY); LOWEST SINCE JUNE 2009
MARKIT EUROZONE JUNE FLASH COMPOSITE PMI 53.6 (55.1 F'CAST, 55.8 MAY); LOWEST SINCE OCT 2009
EUROZONE JUNE FLASH COMPOSITE PMI BACKLOGS OF WORK 50.9 (53.0 MAY); LOWEST SINCE OCT
EUROZONE JUNE FLASH SERVICES PMI NEW BUSINESS PMI 53.8 (55.3 MAY); LOWEST SINCE NOV
EUROZONE JUNE FLASH MANUFACTURING PMI 52.0 (53.8 F'CAST, 54.6 MAY); LOWEST SINCE DEC 2009
EUROZONE JUNE FLASH FACTORY OUTPUT INDEX 52.4 (55.2 MAY); LOWEST SINCE SEPT 2009
EUROZONE JUNE FLASH FACTORY NEW ORDERS PMI 49.6 (53.3 MAY); LOWEST SINCE JUNE 2009
MARKIT EUROZONE JUNE FLASH COMPOSITE PMI 53.6 (55.1 F'CAST, 55.8 MAY); LOWEST SINCE OCT 2009
EUROZONE JUNE FLASH COMPOSITE PMI BACKLOGS OF WORK 50.9 (53.0 MAY); LOWEST SINCE OCT
STARK - IF INDUSTRIALISED NATIONS DON'T CUT DEBT I SEE UNPREDICTABLE RISKS TO STABILITY AND EMPLOYMENT
GREECE NEEDS TO MAKE FURTHER SUBSTANTIAL EFFORTS AND REALIZE PRIVATISATIONS
DON'T SEE REASON WHY GREECE WOULD NOT BE ABLE TO RETURN TO MARKETS IF IMPLEMENTS PLANS
UNDERSTANDS CALLS FOR PRIVATE SECTOR ROLE IN GREEK DEBT DEAL, NECESSARY TO AVOID MORAL HAZARD. HOWEVER WOULD CREATE CREDIT EVENT
DEFAULT WOULD HIT GREEK BANKS, EUROPEAN TAXPAYERS WOULD THEN HAVE TO STEP IN TO REFINANCE THEM
RISKS TAKEN BY ECB HAVE BEEN BIG BUT CAN BE MANAGED
GREECE NEEDS TO MAKE FURTHER SUBSTANTIAL EFFORTS AND REALIZE PRIVATISATIONS
DON'T SEE REASON WHY GREECE WOULD NOT BE ABLE TO RETURN TO MARKETS IF IMPLEMENTS PLANS
UNDERSTANDS CALLS FOR PRIVATE SECTOR ROLE IN GREEK DEBT DEAL, NECESSARY TO AVOID MORAL HAZARD. HOWEVER WOULD CREATE CREDIT EVENT
DEFAULT WOULD HIT GREEK BANKS, EUROPEAN TAXPAYERS WOULD THEN HAVE TO STEP IN TO REFINANCE THEM
RISKS TAKEN BY ECB HAVE BEEN BIG BUT CAN BE MANAGED
ECB'S STARK - EURO ZONE AT POINT WHERE MORE AND MORE RESCUE MEASURES WOULD BE FATAL WITHOUT FINANCIAL SYSTEM AND ECONOMIC POLICY ADJUSTMENTS
ECB STARTING TO ADJUST INTEREST RATES, REMOVE SUPPORT MEASURES
SLOVAK PM: GREEK PM, IN PHONE CALL, SAID CANNOT GUARANTEE REFORMS WILL FIND SUPPORT IN GREEK PARLT
ECB STARTING TO ADJUST INTEREST RATES, REMOVE SUPPORT MEASURES
SLOVAK PM: GREEK PM, IN PHONE CALL, SAID CANNOT GUARANTEE REFORMS WILL FIND SUPPORT IN GREEK PARLT
http://bloom.bg/ioDdcX#ooid=xlYmpqMjqGaY5EJ9gmju7N5CkV1abEKL
June 22 (Bloomberg) -- James Grant, editor of Grant's Interest Rate Observer, talks about the outlook for Federal Reserve monetary policy and the consquences of the central bank's policy of quantitative easing. Fed officials said today they will maintain record monetary stimulus to support a flagging economic recovery after completing a $600 billion bond-purchase program as scheduled this month. Grant speaks on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)
June 22 (Bloomberg) -- James Grant, editor of Grant's Interest Rate Observer, talks about the outlook for Federal Reserve monetary policy and the consquences of the central bank's policy of quantitative easing. Fed officials said today they will maintain record monetary stimulus to support a flagging economic recovery after completing a $600 billion bond-purchase program as scheduled this month. Grant speaks on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)
The Senate on Thursday will resume consideration of S. 679, a bill to streamline the presidential appointment process, and is expected to vote around noon on amendments offered by Sens. David Vitter (R-La.) and Jim DeMint (R-SC).
Vitter's amendment would end the ability of the White House to appoint policy "czars," and prohibit funds for salaries and expenses for appointed czars. DeMint's would end the U.S. government's authority to provide loans to the International Monetary Fund (IMF) and rescind related appropriated amounts.
Vitter's amendment would end the ability of the White House to appoint policy "czars," and prohibit funds for salaries and expenses for appointed czars. DeMint's would end the U.S. government's authority to provide loans to the International Monetary Fund (IMF) and rescind related appropriated amounts.
The market recently behaves as it was expected within a downtrend. It had a big spike to the upside that squeezed shorts and caught underinvested longs by surprise, and then a fairly quick failure on poor news flow.
The thing to keep in mind is that despite the strength on Tuesday, the market remains in a downtrend. Technicals favor the shorts.Strength should be treated with suspicion. Be careful.
The thing to keep in mind is that despite the strength on Tuesday, the market remains in a downtrend. Technicals favor the shorts.Strength should be treated with suspicion. Be careful.
China’s manufacturing activity eased in June to its slowest rate of expansion in 11 months, barely above the level indicating no growth at all, according to preliminary results from a key survey published Thursday.
The HSBC flash Purchasing Managers’ Index (PMI) eased to 50.1 in June, down from 51.6 in May.
(MarketWatch)
The HSBC flash Purchasing Managers’ Index (PMI) eased to 50.1 in June, down from 51.6 in May.
(MarketWatch)
(Reuters) - The Federal Reserve on Wednesday cut its forecasts for U.S. economic growth, but offered no hint of further monetary support, saying the recovery should gradually pick up heading into 2012.
Fed Chairman Ben Bernanke said factors weighing on the economy, such as high commodity prices, should be fleeting but warned some of the weakness could linger.
"Part of the slowdown is temporary and part of it may be longer lasting,".
The Fed estimated the economy should grow 2.7 percent to 2.9 percent this year, down from a forecast range of 3.1 to 3.3 percent made in April.
It also said it sees 2012 growth in a range of 3.3 percent to 3.7 percent, lower than its previous forecast.
In a statement, the central bank said a jump in commodity prices and supply-chain disruptions from Japan's devastating earthquake had weighed on growth and pushed up prices, but that those factors should dissipate over time.
The Fed confirmed it was ending its $600 billion bond-buying program at the end of June and reiterated it will continue to reinvest principal payments from its holdings.
By the time its latest "quantitative easing" program wraps up next week, the Fed will have pumped some $2.3 trillion into the economy.
"There are no hints of further easing from the Fed," said Nick Bennenbroek, head of Group of forex strategy at Wells Fargo in New York. "The statement overall disappointed investors looking for more bearish language and that's why we are seeing the dollar rally a little bit."
Bernanke, in a wide-ranging question-and-answer session with reporters which touched on issues as diverse as Greece's economic woes and the size of reserves that big banks should hold, conceded that U.S. economic hopes were partly hostage to events in Europe.
"If there were a failure to resolve that (Greek debt) situation, it would pose threats to the European financial system, the global financial system, and to European political unity," he said. "So yes, we did discuss it and it is one of several potential financial risks that we are facing now."
While Bernanke did not rule anything out, he made clear the Fed does not feel the economy is in as dire a condition as it was last fall when it launched its latest bond-buying plan.
If it were pressed into action, the Fed chief said the central bank could buy more securities, lower the interest rate it pays to banks on reserves held at the Fed or even pledge to keep its balance sheet at a high level for an extended period.
Bernanke said the vow to keep interest rates exceptionally low is intended to suggest the Fed is at least two or three meetings away from a move, but that the time period could be "significantly longer" depending on the economy.
Fed Chairman Ben Bernanke said factors weighing on the economy, such as high commodity prices, should be fleeting but warned some of the weakness could linger.
"Part of the slowdown is temporary and part of it may be longer lasting,".
The Fed estimated the economy should grow 2.7 percent to 2.9 percent this year, down from a forecast range of 3.1 to 3.3 percent made in April.
It also said it sees 2012 growth in a range of 3.3 percent to 3.7 percent, lower than its previous forecast.
In a statement, the central bank said a jump in commodity prices and supply-chain disruptions from Japan's devastating earthquake had weighed on growth and pushed up prices, but that those factors should dissipate over time.
The Fed confirmed it was ending its $600 billion bond-buying program at the end of June and reiterated it will continue to reinvest principal payments from its holdings.
By the time its latest "quantitative easing" program wraps up next week, the Fed will have pumped some $2.3 trillion into the economy.
"There are no hints of further easing from the Fed," said Nick Bennenbroek, head of Group of forex strategy at Wells Fargo in New York. "The statement overall disappointed investors looking for more bearish language and that's why we are seeing the dollar rally a little bit."
Bernanke, in a wide-ranging question-and-answer session with reporters which touched on issues as diverse as Greece's economic woes and the size of reserves that big banks should hold, conceded that U.S. economic hopes were partly hostage to events in Europe.
"If there were a failure to resolve that (Greek debt) situation, it would pose threats to the European financial system, the global financial system, and to European political unity," he said. "So yes, we did discuss it and it is one of several potential financial risks that we are facing now."
While Bernanke did not rule anything out, he made clear the Fed does not feel the economy is in as dire a condition as it was last fall when it launched its latest bond-buying plan.
If it were pressed into action, the Fed chief said the central bank could buy more securities, lower the interest rate it pays to banks on reserves held at the Fed or even pledge to keep its balance sheet at a high level for an extended period.
Bernanke said the vow to keep interest rates exceptionally low is intended to suggest the Fed is at least two or three meetings away from a move, but that the time period could be "significantly longer" depending on the economy.
Wednesday, June 22, 2011
Subscribe to:
Posts (Atom)