Top Interest Rate Headlines 1-11-11: Citi Prepares Tranche Market For Muni-Bond Derivatives

Citi Prepares Tranche Market For Muni-Bond Derivatives
BY KATY BURNE, WSJ.com
Citigroup Inc. is planning to start quoting derivatives on different slices of the MCDX, a derivatives index tracking 50 municipal issuers. The move comes as the typically placid muni-bond market has grown turbulent in recent months. Among several concerns in the market is the potential for cash-strapped municipalities to default on their debt.
http://jlne.ws/ffjX0P

Narayana Kocherlakota Speech - It’s a Wonderful Fed - January 11, 2011
The Federal Reserve Bank of Minneapolis
Thank you very much for that generous introduction, and thanks to the Wisconsin Bankers Association for the invitation to join you here today. I’ve visited Madison several times, and I’ve always enjoyed the experience. I’ve always felt that Madison and the Twin Cities are pretty similar as a pair of state capitals with beautiful water views and great universities. Of course, at that level, they sound a lot like Venice, Italy. My speech today will have two distinct parts. In the first part, I will discuss my outlook for the economy in 2011. In the second part, I will look back in time to the Great Recession of 2007-09. My discussion will parallel the classic Frank Capra movie, “It’s a Wonderful Life.” In that movie, the hero, George Bailey, is granted the miraculous opportunity to see how other lives would have been affected if he had never existed. I will do the same for the Federal Reserve and describe how I believe the Great Recession of 2007-09 would have unfolded if the Fed did not exist...
http://jlne.ws/hk1NCp

UBS launches electronic trading of CDS
Credit Flux
UBS has launched electronic trading of credit default swaps on Bloomberg for the major iTraxx and CDX global indices, including SovX WE and CEEMA SovX and also for Western sovereign single names. The bank will publish live prices across these instruments. UBS says it is positioning in the electronic market in anticipation of changes under Dodd-Frank.
http://jlne.ws/fdvnB8

Brevan Howard Says Failure to Address Debt Crisis Is Biggest Growth Risk
By Warren Giles, Bloomberg
Brevan Howard, Europe’s biggest hedge-fund firm, said the greatest risk to global economic growth would be the failure of European Union leaders to tackle the sovereign-debt crisis.
http://jlne.ws/fLmyQm

An inside view of the Fed’s bond buying
Graham Bowley, the Globe And Mail
Deep inside the Federal Reserve Bank of New York, the $600-billion man is fast at work. In a spare, government-issue office in Lower Manhattan, behind a bank of cubicles and a scruffy copy machine, Josh Frost and a band of market specialists are making the Fed’s ultimate Wall Street trade. They are buying hundreds of billions of dollars of U.S. Treasury securities on the open market in a controversial attempt to keep interest rates low and, in the process, revive the economy.
http://jlne.ws/gzHEkL

ELX Reduces Minimum Block Trade Levels to 300 Contracts for the 5, 10 and 30 Yr U.S. Treasury Futures
Press Release
ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today that it has reduced minimum block trade levels to 300 contracts from 1,000 contracts for the 5, 10, and 30 year U.S. Treasury futures contracts as well as the Ultrabond. The new block trade sizes are effective immediately. The block trade size for the 2-year futures contract remains at 1,000 contracts.
http://jlne.ws/hRveVg

Geithner: The first man blamed becomes last man standing on economic team
By Peter Schroeder, The Hill
Treasury Secretary Timothy Geithner has fended off repeated calls for his resignation to become the last man standing from President Obama’s original economic team.While the president’s inner circle is undergoing a makeover as part of the pre-election “retooling,” Geithner remains the economic mainstay from the earliest days of the administration.
http://bit.ly/gEd5qH

Global accord targets credit bubbles
By Brooke Masters in London - Financial Times
Banking regulators have quietly taken a major step towards harmonised global regulation by agreeing to raise worldwide capital requirements whenever an individual country declares a credit bubble.
http://jlne.ws/ev3SFe

Moody's clashes with EU on advance warnings
By Nikki Tait in Brussels and Richard Milne in London
Moody's, one of the three big credit rating agencies, is mounting strong opposition to potential European Union proposals which would give countries several days' advance warning when sovereign debt ratings were being issued.
http://jlne.ws/gpPZIp

UBS analysts foretell Barclays overhaul
eFinancial News
Barclays is likely to announce a major restructuring of its business along with its full-year results next month, with its investment bank following domestic rival RBS by offloading billions of risky assets into a new "bad bank", according to UBS analysts.
http://jlne.ws/h3kDWU

UBS Global Asset Management Launches Fixed Income Opportunities Fund
Business Wire
CHICAGO--(BUSINESS WIRE)--UBS Global Asset Management today announced the launch of its new UBS Fixed Income Opportunities Fund, an opportunistic fixed income strategy that seeks returns with low correlation to traditional equity and fixed income markets. The Fund seeks to outperform 3-month LIBOR by 3%, net of fund ordinary operating expenses, over rolling five-year time horizons.
http://jlne.ws/exCGj4

Bank of China Brings Yuan Trading to the U.S.
By LINGLING WEI, WSJ.com
Bank of China Ltd., one of the country's four major state-owned banks, has opened trading in the Chinese currency to customers in the U.S., representing a symbolic endorsement by Beijing of foreign trading in the yuan. Until the middle of last year, the buying and selling of yuan, had largely been confined within China's borders by the country's strict capital controls. Trading in the yuan has ballooned in Hong Kong since Beijing first opened it up to offshore trading this past July.
http://jlne.ws/eZQ5uk

Fubon bids to take bank private
The Standard
Taiwan-based financial services company Fubon Financial Holding yesterday said it plans to privatize its Hong Kong unit - Fubon Bank (Hong Kong) (0636.HK) - for HK$1.47 billion in an effort to lower costs.
http://jlne.ws/9kLhcr

Here's That Big Citigroup Report On Why Absolutely No Sovereign Debt Is Safe
Business Insider
Citigroup economists have brought into question what is assumed to be the world's risk free asset, sovereign debt.
http://jlne.ws/hsnSGn


CBOE To Launch Options Alternative To Credit Default Swaps
http://jlne.ws/ghY98w