Top Interest Rate Headlines 01-31-11: Chicago PMI Jumps to 20-Yr High, Consumer Spending Rises

Chicago PMI Jumps to 20-Yr High, Consumer Spending Rises
By Maulik Mody, Bond Squawk
Consumer spending increased more than forecast in December, making the last quarter the best one of 2010. Spending increased 0.7% in the last month, following a 0.3% gain in November. Personal income grew for a third month in a row, continuing to grow at 0.4%. Although income and spending continues to grow, the pace is moderate making the recovery very slow. The Fed’s preferred gauge of inflation, the Personal Consumption Expenditure Core Price Index, was flat in December after advancing 0.1% in November.
http://jlne.ws/fKyM7A

Goldman profits from AIG bailout
Dan Collins, Futures Mag.com
Yesterday Bloomberg reported that Goldman Sachs profited $2.9 billion for its own account thanks to the  taxpayer bailout of American International Group Inc (AIG) according to a congressionally appointed panel.
http://jlne.ws/fpDjfy

Munis Becoming Attractive to Taxable-Bond Managers
By Christine Benz, Morningstar
Morningstar's Miriam Sjoblom says even though things are looking bad for some issuers, several topnotch taxable-bond managers are starting to see opportunity in the sector.
http://jlne.ws/hbDs9B

Estimating the Macroeconomic Effects of the Fed's Asset Purchases
By Hess Chung, Jean-Philippe Laforte, David Reifschneider, and John C. Williams, FRBSF Economic Letter
An analysis shows that the Federal Reserve's large-scale asset purchases have been effective at reducing the economic costs of the zero lower bound on interest rates. Model simulations indicate that, by 2012, the past and projected expansion of the Fed's securities holdings since late 2008 will lower the unemployment rate by 1½ percentage points relative to what it would have been absent the purchases. The asset purchases also have probably prevented the U.S. economy from falling into deflation.
http://jlne.ws/gFDMTs

U.S., British Exchanges Attacked by Hackers, According to Report
Tom Steinert-Threlkeld, Securities Technology Monitor
The London Stock Exchange has been working with British security services to investigate cyber attacks against it, that may have led to the postponement of a transfer to a new trading technology platform until February 14, according to a report in the Times of London.
http://jlne.ws/hHg6Hp

Dallas Fed's trimmed mean PCE inflation rate 1.2 percent for December
Press Release
The trimmed mean PCE inflation rate for December was an annualized 1.2 percent. According to the BEA, the overall PCE inflation rate for December was 3.8 percent, annualized, while the inflation rate for PCE excluding food and energy was 0.4 percent.
http://jlne.ws/fdBaqC

Egypt may be 2011's black swan
Terry Keenan, New York Post
This weekend Wall Street is keeping an eye on the Arab Street, and with good reason, as rousing protests in Cairo and across Egypt are raising concerns of a 1970s-style oil price shock in the coming months.
http://jlne.ws/feNWvQ

What might happen in China this year?
By Gordon Orr, McKinsey Quarterly
Inflation in food prices will take longer than expected to control. The drivers of inflation are much more structural than cyclical. Indeed, the entire system is now so highly stressed that one snowstorm brings large spikes in food and energy prices as coal runs short.
http://jlne.ws/hcCV1w

New York Fed purchases $7.720 bln in Tsy coupons: New York Fed purchases $7.720 bln in Tsy coupons
Press Release
The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system
http://jlne.ws/hmCgjZ

Fed's Lockhart sees only gradual inflation rise
By Greg Robb, MarketWatch
Inflation should rise only gradually over the next two years to "healthier" levels from current "very low levels," said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank on Monday. A few months ago, fear of deflation was justified but recently this concern has abated as the rate of inflation has stabilized, Lockhart said in remarks at Miami Dade College.
http://jlne.ws/gfxCNd

Former Fed Officials Expect Dollar to Stay Dominant
By Luca Di Leo, WSJ.com
The U.S. dollar will still be the world’s dominant currency for at least the next decade, said three former top officials at the Federal Reserve, including former Fed Vice Chairman Donald Kohn.
http://jlne.ws/hPu4rK

ELX Announces 9-Cent One-Tier Fee Schedule for U.S. Tsys and Eurodollar Futures
Press Release
ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today a new 9 cent one-tier bundled fee schedule for market users trading all U.S. Treasury and Eurodollar futures contracts on ELX, effective February 1, 2011.
http://jlne.ws/gJZTFa

ELX Futures Aggressively Drops Trading Fees For Rate Futures 
By Jacob Bunge Of DOW JONES NEWSWIRES
ELX Futures LP said Monday that it will this week cut trading fees on its derivatives exchange to a flat 9 cents per contract ahead of the expected launch of a new rival.
The user-owned U.S. exchange operator told traders that it would lower fees on futures contracts on Treasury yields and inter-bank lending rates to 9 cents per contract beginning Tuesday, as the still-small challenger works to draw business.
http://jlne.ws/gHKfcH

ICE Futures Europe Sets Daily Volume and WTI Crude Futures Records
London (31 January 2011) IntercontinentalExchange, Inc. (NYSE: ICE), a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, announced that ICE Futures Europe set an exchange-wide daily volume record of 1,492,384 contracts on 28 January. The new record surpassed by 4.4% the previous daily record of 1,429,283 contracts, which was established on 12 January 2011.
http://jlne.ws/eStwrD

Wells Fargo Joins CME Group for Interest-Rate Swap Clearing
By Matthew Leising, Bloomberg
Wells Fargo & Co.’s securities unit has joined the CME Group Inc. for guaranteeing interest-rate swaps, the firm said today in a statement. Banks will be required to back most of their interest-rate swaps with a clearinghouse beginning this year under the U.S. Dodd-Frank Act.

http://jlne.ws/gxQzDx

Brooksley Born of the FCIC: "We may well still be in a financial crisis"
By: David Dayen
In a sometimes contentious call, Financial Crisis Inquiry Commission representatives Phil Angelides and Brooksley Born acknowledged that we might still be in a financial crisis, and that their report should not be seen as the last word on an event that still has the capacity to significantly damage the global economy.
FDL News Desk
http://jlne.ws/hRlorF

Harmonised accounting rules to hit US banks
By Helen Thomas, Financial Times
US banks could see their balance sheets balloon under new proposals from the accountancy rulemakers that would dramatically reduce their ability to net their derivatives exposure.
http://jlne.ws/dMhP18

IMF contests complacency over euro
By Chris Giles in Davos, Financial Times
John Lipsky, the leading US official at the International Monetary Fund, challenged the air of complacency over the eurozone at the World Economic Forum, telling the Financial Times that the loans to Greece and Ireland had "no guarantee of success" and that restructuring of debt would not be without cost.
http://jlne.ws/hOR6XX

Europe's banks hint at return to health
By David Oakley in London and Ralph Atkins in Frankfurt - Financial Times
Europe's banking system is returning to health amid signs that financial institutions are no longer hoarding cash, according to key indicators.
http://jlne.ws/fIMK3i

Citigroup restructuring investment banking operations
PTI via Yahoo! India News
New York, Jan 30 (PTI) Citigroup Inc is restructuring its operations with a view to channelise investment in the energy, power and chemical sectors, according to a media report.Citing a memo the bank sent to employees on Friday, The Wall Street Journal reported that Citi is splitting its energy and power businesses into two separate portfolios, while chemicals will now fall under its global ...
http://jlne.ws/dLkVmC

UBS: To Pay CHF16 Million For One-Time Payment To Pensioners
Dow Jones
UBS AG (UBS) said Monday it will charge roughly 16 million Swiss francs ($17 million) against first-quarter earnings in order to pay CHF1,000 each to retired employees in Switzerland.
http://jlne.ws/i8C34h

UK may start selling $73 bln RBS stake in early 2012
Reuters UK Focus via Yahoo! UK & Ireland Finance
Britain could start selling its 46 billion pound ($73 billion) stake in Royal Bankof Scotland early next year, the Financial Times said on Monday citing bosses at the bailed-out ...
http://jlne.ws/fb49vu