April 28, 2011
Conversation Starter
Federal Reserve Bank Of Minneapolis Puts The Recession And Recovery Into Perspective
The 2007-2009 recession officially ended in June of 2009 (in the second quarter). How bad was this recession, and how quickly is the economy recovering? How does this recession and recovery compare to previous cycles? The Federal Reserve Bank Of Minneapolis has posted interactive charts on its site that put the current economic downturn and recovery into historical (post-WWII) perspective. The Minneapolis Fed compares output and employment changes from the 2007-2009 recession and subsequent recovery with the same data for the 10 previous recessions and recoveries that have occurred since 1946.
According to the Federal Reserve Bank of Minneapolis, the 2007-09 recession was the deepest recession in the post-war period. At their lowest points, employment fell by 6.1 percent and output fell by 4.1 percent.
Eris Exchange Picks Chip Dempsey As Winner Of Platform Name Contest For "Eris SwapBook" (TM)
Eris Exchange has selected Chip Dempsey as the winner of its naming contest for its trading platform to be deployed on May 18, 2011. Dempsey's entry of "Eris SwapBook" (TM) is being used as the name of the exchange's central limit order book and RFQ trading platform. For his effort, Dempsey will be presented with an Apple iPad 2. The exchange also thanks Joe Meissner for his support in the matter.
An explanation of how Eris SwapBook (TM) plays into the Eris Exchange strategy can be found here.
--Christine Nielsen
Lead Stories
Economists React: First-Quarter GDP ‘Stutter’ Likely Temporary
By Phil Izzo, WSJ.com
Economists and others weigh in on the 1.8% increase in first-quarter gross domestic product at a seasonally adjusted annual rate. -Despite the stutter in the first quarter, we expect the U.S. economic recovery to remain largely on track and expect the pace of growth to accelerate in the coming quarters as the sustained positive momentum in labor market activity continues to provide the supportive backdrop for household spending and business investment. –Millan L. B. Mulraine, TD Securities...
http://jlne.ws/iThqkd
In Bernanke We Trust?
By Zachary Karabell, Time - The Curious Capitalist
Yesterday, Ben Bernanke departed from the silent, opaque tradition of the Federal Reserve and held a press conference. The event attracted considerable attention, for its novelty as much as for its substance. But those hoping that Bernanke would do his best imitation of Willy Wonka and reveal hidden facets of humor, complexity and charisma were, to say the least, disappointed.
http://jlne.ws/jNpsfr
**CN: The search for golden tickets continues...
CFTC, SEC Propose Exempting Insurance From Swaps Regulation
By Silla Brush, Bloomberg
Financial regulators voted to propose rules excluding insurance policies, home heating oil contracts and forwards tied to commodities from swaps regulations required under the Dodd-Frank Act.
http://jlne.ws/j3AOfU
Stimulus by Fed Is Disappointing, Economists Say
By BINYAMIN APPELBAUM, The New York Times
The Federal Reserve’s experimental effort to spur a recovery by purchasing vast quantities of federal debt has pumped up the stock market, reduced the cost of American exports and allowed companies to borrow money at lower interest rates.
http://jlne.ws/dEv3H7
Sarkozy Supports Italian Official to Lead Central Bank
By LIZ ALDERMAN and JUDY DEMPSEY, The New York Times
The high-level politicking over who will be the next president of the European Central Bank moved closer to resolution on Tuesday when President Nicolas Sarkozy of France said he would support a respected Italian monetary official, Mario Draghi, to succeed Jean-Claude Trichet when he steps down later this year.
http://jlne.ws/gl4Iwr
Primary dealers warn on debt-ceiling-breach impact
By Steve Goldstein, MarketWatch
The Treasury Borrowing Advisory Committee, which represents the primary dealers of U.S. Treasurys on Wall Street, on Tuesday warned over the impact of not raising the debt ceiling in a letter to U.S. Treasury Secretary Timothy Geithner.
http://jlne.ws/iffL9i
Why Do We Have a Debt Ceiling Anyhow?
By David Wessel, WSJ.com
On the face of it, a federal debt ceiling seem strange. Congress passes spending bills and tax bills, and those decisions lead to bigger or smaller deficits — or once upon a time surpluses — depending on what happens with the economy. The decision to borrow more or less is a consequence of those tax and spending decisions. With Congress once against arguing about raising the debt limit, one might wonder how this peculiar practice began.
http://jlne.ws/eqyYLr
Geithner: Lock in reforms with multi-year framework
By Kristina Cooke, Reuters
Congress and the White House could buy time to make the difficult decisions needed to cut the U.S. budget gap if they can agree on a broad deficit reduction framework, Treasury Secretary Timothy Geithner said on Tuesday.
http://jlne.ws/gtVXbI
The Yale Law Journal Online - Failure Is an Option: An Ersatz-Antitrust Approach to Financial Regulation
By Jonathan R. Macey and James P. Holdcroft, Jr.
We distinguish the economic problems when large financial institutions (“banks”) become insolvent from the political challenges that exist before banks are distressed. These political problems arise because policymakers would like to be able to precommit while a bank is still healthy to refrain from bailing out the bank later, should it become distressed.
http://jlne.ws/ec8Flv
Caution urged on bank foreclosure fines
By Tom Braithwaite, Financial Times
Banks will be fined for failures that led to the foreclosure debacle but regulators should avoid “dangerously large” penalties, according to one of the top officials participating in fractious settlement talks.
http://jlne.ws/hmWNan
Loan figures raise doubt over bank earnings
By Suzanne Kapner and Francesco Guerrera in New York, Financial Times
Sluggish loan growth and ultra-low interest rates are depressing US banks’ revenues, compounding investors’ fears that future earnings will remain under pressure in spite of the domestic economic recovery.
http://jlne.ws/eNxd7O
FRB: Press Release--FOMC statement--April 27, 2011
Information received since the Federal Open Market Committee met in March indicates that the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March...
http://jlne.ws/jMbpqi
Fed Forecasts Show Transitory Inflation and Lower Growth in 2011
By Joshua Zumbrun, Bloomberg
Federal Reserve officials forecast that a measure of prices will rise between 2.1 percent and 2.8 percent this year before moderating, underscoring their view that inflation pressures will be “transitory.”
http://jlne.ws/lQ9PsH
Fed Trims Its Growth Outlook
By Michael S. Derby, WSJ.com
The Federal Reserve on Wednesday trimmed its outlook for growth and signaled it expects higher inflation amid a slightly lower unemployment rate for 2011.
http://jlne.ws/l0t0Tq
Bernanke Says ‘A Couple of Meetings’ Before Action
By Caroline Salas, Bloomberg
Federal Reserve Chairman Ben S. Bernanke said the central bank’s pledge to keep interest rates low for an “extended period” means there likely will be no tightening of policy “for a couple of meetings.”
http://jlne.ws/mCzHv8
**CN: CME Group FedWatch tool indicates IR contracts reflect expectations of a 52% chance of a 25-basis-point rate hike by June.
Bernanke makes Fed history, not news
By Robin Harding in Washington, Financial Times
The press conference by Federal Reserve chairman Ben Bernanke was historic. No Fed chair, a position labelled the second most powerful in the US, has given a scheduled conference before. The 60 or so reporters gathered on the top floor of the Fed’s building in Washington had many pent up questions, stored over years of sitting through Bernanke testimony to Congress.
http://jlne.ws/mOh4OM
Fed Signals Intent to Complete Bond Buying
BY LUCA DI LEO, JON HILSENRATH AND TOM BARKLEY, WSJ.com
The Federal Reserve signaled Wednesday the coming completion of its $600 billion bond-buying program as planned, but Chairman Ben Bernanke said the central bank has no timetable for ending its low interest-rate policies.
http://jlne.ws/lVj1UF
CFTC Proposes Protecting Margin of Swaps Users From Peers That Go Bankrupt
By Matthew Leising, Bloomberg
The Commodity Futures Trading Commission approved a proposal to allow swaps users who post collateral to a clearinghouse to have their margin protected against another investor’s bankruptcy, a move that may increase trading costs.
http://jlne.ws/eYeDR3
Gensler Says CFTC May Extend Comment Period for All Swaps Rules
By Silla Brush, Bloomberg
The U.S. Commodity Futures Trading Commission may reopen or extend all proposed derivatives regulations under the Dodd-Frank Act for 30 days of additional public comment, CFTC Chairman Gary Gensler said today.
http://jlne.ws/dGWYkR
Extra time granted on US reforms
By Tom Braithwaite in Washington and Aline van Duyn in New York - Financial Times
Derivatives dealers and users will have more time to weigh in on financial reforms and the chance to argue for a slow introduction, US officials have said, in the face of persistent complaints about the pace and effects of new market rules. So-called “over-the-counter” derivatives, those not traded on exchanges, have proved one of the thorniest areas of last year’s Dodd-Frank financial reforms.
http://jlne.ws/mKyNy1
EM central banks are doing Fed’s dirty work
By Richard Bernstein, Financial Times
US investors are increasingly fearful of inflation. Every cycle has some growth in headline inflation, but there is a big difference between such normal, cyclical pricing pressure and the rising fear that the US economy is somehow mutating into that of a developing markets country. Ironically, emerging market central banks’ recent monetary tightening is likely to prevent US inflation from getting out of control and could actually prolong the US economic cycle.
http://jlne.ws/f54K1t
Prospects bleak for US ‘muni’ funds revival
By Nicole Bullock in New York, Financial Times
The prospects are bleak for a significant revival in investor appetite this year for mutual funds that buy the debt of US states, cities and other local bodies, according to a survey of municipal bond experts.
http://jlne.ws/g3g0QU
Will the FDIC's New Liquidation Authority Trigger Non-Bank Panics?
The Atlantic
Instead of cleaning up the mess, this new process could create a different one
http://jlne.ws/gni8Fa
Stephen Foley: Please let's not pretend that averting the next Lehman will be easy
Independent
US Outlook: No crash. No bang. No wallop. If the Dodd-Frank Wall Street reforms, which became law last year, had been in place back in 2008, Lehman Brothers would either not have failed, or would have been wound down by regulators in an orderly fashion. The panic of September 2008 would never have been. Or at least this is the conclusion of an analysis conducted by the Federal Deposit Insurance Corporation, the regulator that has shored up confidence in America's banks since the Great Depression.
http://jlne.ws/fmNP1B
Jim Rogers Is One Step Away From Shorting The US Treasury Market
Business Insider
"If the bond goes up another 3 or 4 points, I for one am going to sell it short. I just think at some point along the line, people are going to realise it's absurd to lend money to the United States government for 30 years in U.S. dollars at 3 or 4 or 5 or 6 percent interest.
http://jlne.ws/eo4gWc
For U.S. Economy, Short-Term Good News Is Bad News
Time Magazine
How the U.S.'s economic strength overseas prevents it from facing its debt crisis
http://jlne.ws/fzTya6
S and P sounds fresh alarm on Japan debt
By Michiyo Nakamoto in Tokyo, Financial Times
Standard and Poor's has downgraded its outlook for Japan’s sovereign debt from “stable” to “negative,” citing concerns that reconstruction costs following the March 11 disaster would increase Japan’s fiscal deficits.
http://jlne.ws/ecnMq6
The Yale Law Journal Online - Failure Is an Option: An Ersatz-Antitrust Approach to Financial Regulation
By Jonathan R. Macey & James P. Holdcroft, Jr.
We distinguish the economic problems when large financial institutions (“banks”) become insolvent from the political challenges that exist before banks are distressed. These political problems arise because policymakers would like to be able to precommit while a bank is still healthy to refrain from bailing out the bank later, should it become distressed.
http://jlne.ws/ec8Flv
Economic News
ETA Press Release: Unemployment Insurance Weekly Claims Report
In the week ending April 23, the advance figure for seasonally adjusted initial claims was 429,000, an increase of 25,000 from the previous week's revised figure of 404,000. The 4-week moving average was 408,500, an increase of 9,250 from the previous week's revised average of 399,250.
http://jlne.ws/bNH4iG
The region's expansion accelerated in April - Federal Reserve Bank of Richmond
The Carolinas Business Activity Index jumped from March to April, suggesting acceleration in the pace of expansion. The current general business activity index was in positive territory for the sixth straight month as a larger share of respondents noted an increase in activity than that which reported a decrease. The comparable general business expectation index moved slightly higher over the month and remained solidly in expansion territory, suggesting significant positive momentum heading into the second quarter of 2011.
http://jlne.ws/kt5TqS
Kansas City Fed Mfg Survey Moderated Somewhat
By Gary Siegel, The Bond Buyer
Manufacturing activity in the Federal Reserve Bank of Kansas City’s region “moderated somewhat in April, but remained solid. Most producers continued to report healthy expectations. Raw materials prices continued to rise, and more producers raised selling prices,” according to the bank’s monthly manufacturing survey, released Thursday.
http://jlne.ws/kY73f6
One Million Exhausted Jobless Benefits in Past Year
By Andrew Ackerman, WSJ.com
Roughly one million people were unable to find work after exhausting their unemployment benefits over the past year, new data released Thursday by the Labor Department suggests. The back-of-the-envelope datapoint is yet another sign that the labor market remains weak, economists said.
http://jlne.ws/j2BsSg
Home prices fall for 8th month in February: S and P/Case
Reuters
Single-family home prices fell for an eighth straight month in February, inching closer to an April 2009 trough, a closely watched survey said on Tuesday.
http://jlne.ws/eq00hr
At 15% to 50% of Tier 1, Underwater Home Equity Stirs Unease
American Banker
Delinquencies have stabilized and chargeoffs have eased, and the second dip in home prices has not been remotely as severe as its older twin.
http://jlne.ws/j1t0gF
Exchanges, Clearing Houses & MTFs
NYSE Sees Fall Expansion Of US Interest-Rate Derivatives Market
By Jacob Bunge Of DOW JONES NEWSWIRES
NYSE Euronext (NYX) plans to introduce a slate of new interest-rate derivatives in the fall, expanding its challenge to the long-term dominance of CME Group Inc. (CME).
http://jlne.ws/eg0gaU
CME Plans Contract on Government Yield Spreads
By Cynthia Lin, Dow Jones
CME Group Inc. said it will offer a contract beginning next month that wraps the yield gap between the debt of six government into a single futures product. The Sovereign Yield Spread futures will incorporate bonds from France, Germany, Italy, Netherlands, United Kingdom and the U.S. in the initial launch. Maturities of the six credits will range from eight years and one month to 10 years.
http://jlne.ws/dQfyxM
Firms & Banks
UBS Prime Brokerage Chief Gray Out, Nomura's Wannenmacher In FIN Alternatives
UBS has lost its Asia-Pacific prime brokerage chief, David Gray. Gray, who has spent the last 17 years with the Swiss bank, has left the firm, UBS said. It is unclear what his future plans are.
http://jlne.ws/hpC5DP
Private clients regain confidence in UBS
By Haig Simonian in Zurich, Financial Times
UBS’s recovery from the credit crisis continued apace in the first quarter as investment banking reaped the benefits of its rebuilding and private banking clients regained confidence in the Swiss group’s prospects.
http://jlne.ws/icVSmH
MPs attack Treasury on lack of influence over bank lending
Money Marketing Online
MPs have criticised the Treasury's "lack of effective sanctions" against Royal Bank of Scotland and Lloyds Banking Group when the banks failed to meet lending targets for small businesses under the Asset Protection Scheme.
http://jlne.ws/gGPPWM
Goldman Creditor Group Files Lehman Liquidation Plan to Rival Paulson's
Bloomberg
Goldman Sachs Group Inc. (GS) and other creditors of Lehman Brothers Holdings Inc. including Morgan Stanley (MS) and Credit Suisse Group AG (CSGN) filed a liquidation plan for the defunct company that would give more money to their group than two other proposals for allotting $61 billion among creditors.
http://jlne.ws/gKHcIx
CMG Mortgage Hires Fannie Executive
By Brian Collins, National Mortgage News
CMG Mortgage has hired Todd Hempstead to work with private investors interested in buying and securitizing conforming and Jumbo mortgages.
http://jlne.ws/fp21Yx
Bank of America's New Credit Card Penalty Interest Rate Is Nearly 30%
Daily Finance
Bank of America credit card holders, beware. If you're late on a monthly payment, that little "oops" might become a big "ouch": Your future balances could be subject to a penalty rate of nearly 30%, notes a report Wednesday in The Charlotte Observer. The penalty rate will not be applied to previous balances, however.
http://jlne.ws/gYxue3
Barclays Posts 5% Drop in Profit on Investment Bank Decline
BusinessWeek
Barclays Plc, the U.K.'s third- largest bank by assets, said earnings fell to 1.01 billion pounds ($1.67 billion) in the first quarter, as revenue from its investment banking unit declined by 15 percent.
http://jlne.ws/fyPTwr
Credit Suisse fails to match 2010 results
By Haig Simonian in Zurich, Financial Times
Credit Suisse’s profits and revenues in the first quarter failed to match its bumper results of 2010 but were well ahead of the depressed levels of the final three months of last year, the Swiss lender announced on Wednesday.
http://jlne.ws/gGqM98
Lehman to start Aurora bank auction by June
Reuters via Yahoo! India News
Lehman Brothers Holdings Inc is expected to begin the sale process for Aurora Bank, worth around $850 million, by June as the bankrupt firm sells off pieces of itself to pay off creditors, sources familiar with the situation said.
http://jlne.ws/epluR3
J.P. Morgan Announces Trade Matching Functionality for the U.S. Tri-Party Repo Market
Business Wire Finance Press Releases UK via Yahoo! UK & Ireland Finance
J.P. Morgan Worldwide Securities Services announced today the launch of its Repo Trade Matching Engine. This new functionality will enhance the operating model of the U.S. Tri-Party ...
http://jlne.ws/etLx9y
Goldman Sachs aims to build $1b charity fund
Boston Globe
On the back of record profit so far this year, Goldman Sachs , the global investment bank, is starting a donor-driven philanthropy fund that aims to reach $1 billion over the next few years.
http://jlne.ws/hV7OEa
Citigroup Denies Wrongdoing Over Greece Debt-Restructuring Rumors
INO News
U.S. banking giant Citigroup has denied any wrongdoing over an e-mail allegedly sent by one of its London traders suggesting that Greece may be forced to restructure its national debt as early as Easter.
http://jlne.ws/gE3xQO
Citigroup out to tap emerging markets growth: CEO
Business Recorder
SAO PAULO: Citigroup, the third-largest US bank, is focused on tapping emerging markets to take advantage of growth in in trade and capital flows, Chief Executive Vikram Pandit said on Wednesday.
http://jlne.ws/l1hvnv
A.I.G. to Sue 2 Firms to Recover Some Losses
By LOUISE STORY, NY Times
The American International Group, the giant insurer rescued by the federal government during the financial crisis, on Thursday will file the first of what could be a series of lawsuits against Wall Street firms, contending that it was the victim of fraud.
http://jlne.ws/jJePgR
Deutsche Bank Profit Rises on Record Consumer Bank Earnings
BusinessWeek
Deutsche Bank AG, Germany's biggest bank, reported a 17 percent increase in first-quarter profit, exceeding analyst estimates on record earnings at the consumer- banking and asset-management units.
http://jlne.ws/iVmRu2
Deutsche Bank Strengthens Investment Grade Credit Trading in North America
Business Wire
Deutsche Bank today announced the addition of Dennis Lu and Peter Ragosa to the Investment Grade Credit Trading group in North America. Lu will join as a Managing Director and senior investment grade trader focused on cash bonds. He has over 17 years of experience, most recently as a managing director in high grade flow credit trading at Barclays Capital. Prior to ...
http://jlne.ws/laNOKL
David Prosser: Did Barclays' own executives see the bank coming?
Independent
Two years ago, when Royal Bank of Scotland contemplated a future in which it would be interminably dragged down by horrible losses on toxic sub-prime loans, it decided the humiliation and expense of asking the Government to insure it against such setbacks, via the asset-protection scheme, was the lesser of two evil alternatives. But this unsophisticated – and, worse, state-backed – solution was never going to be for Barclays.
http://jlne.ws/mahnLa
Berkshire Says Citigroup Account 'Did Not Square' With Sokol's
Bloomberg
Comments from the bank "did not square with Mr. Sokol's remark in January that he had come to know Lubrizol by owning the stock," Omaha, Nebraska-based Berkshire said today in a statement. Sokol resigned after details about his stake were disclosed to Berkshire, the company said.
http://jlne.ws/mcgfut
Nomura quarterly profits drop 35%
By Michiyo Nakamoto in Tokyo, Financial Times
Nomura reported a 35 per cent drop in quarterly net profits as its global market operations were hit by volatility resulting from the European sovereign credit crisis.
http://jlne.ws/m9rQkF
Investors look beyond UAE bank results
By Sarah Mishkin, Financial Times
Patchy first-quarter results from the UAE banks have not significantly dented demand for shares in the sector. Instead, investors are looking at cheap valuations and hints of recovery from the depth of the Dubai real estate crisis.
http://jlne.ws/iuZu6y
Operator of trading platform for fixed incomes, MarketAxess, reports first quarter 2011 record revenue of $43.6 mln
Press Release
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the first quarter ended March 31, 2011.
http://jlne.ws/kTf6Yk
Regulators
ECB Publication: Recovery and beyond: lessons for trade adjustment and competitiveness
http://jlne.ws/izVK9t
CFTC Proposes Protecting Swaps User Margin From Peer Default
By Matthew Leising, Bloomberg
The Commodity Futures Trading Commission approved a proposal to allow swaps users who post collateral to a clearinghouse to have their margin protected against another investor’s bankruptcy, a move that may increase trading costs.
http://jlne.ws/k9hA6Q
CFTC unveils key swaps definition measure
Reuters
The U.S. futures regulator unveiled a crucial part of an expanded oversight of the swaps market by defining what products will be covered by financial reform legislation. In one of its most anticipated proposals, the U.S. Commodity Futures Trading Commission said most products and transactions would fall under the definition of a swap, except certain insurance products, consumer and commercial transactions such as a contract to purchase home heating oil and loan participations.
http://jlne.ws/jnbKOE
Regulators eye new capital for derivatives units
By Ronald D. Orol, MarketWatch
As House Republicans seek to delay regulations for the $450 trillion derivatives market, the nation’s commodities and securities watchdogs moved forward with a package of post-crisis regulations Wednesday, including one to ensure swaps-trading institutions have sufficient capital to weather future economic crises.
http://jlne.ws/kCAQRX
Global News
Spanish borrowing costs jump; Greek debt shunned
By Paul Day and William James, Reuters
Spain's short-term borrowing costs jumped on Tuesday as euro zone markets returned from the Easter break still fretting about a potential Greek debt restructuring with knock-on effects on other sovereigns. France meanwhile became the first euro zone state publicly to endorse the candidacy of Bank of Italy governor Mario Draghi to succeed Jean-Claude Trichet as president of the European Central Bank later this year.
http://jlne.ws/fZfaOZ
Greece's Budget Deficit Higher Than Expected
By MATTHEW DALTON And LAURENCE NORMAN, Dow Jones
Greece's budget deficit in 2010 was 10.5% of gross domestic product, significantly higher than forecast by either the Greek government or the European Union authorities, Eurostat, the EU's official statistics agency, said Tuesday.
http://jlne.ws/fqlRSZ
HSBC to close retail operations in Russia
By Courtney Weaver in Moscow
HSBC is to close down its retail operations in Russia, making it the second foreign bank to leave the state-dominated sector in as many months. The decision by HSBC, on the back of a similar plan at Barclays, comes as both rethink their global strategy to cut back on operations that are a drag on group profitability.
http://jlne.ws/gQgrgF
Former Banco Santander Analyst Agrees To Settle Insider Trading Charges
Press Release
The Securities and Exchange Commission today announced that former Banco Santander S.A. analyst Juan Jose Fernandez Garcia of Madrid, Spain, has agreed to pay more than $625,000 to settle insider trading charges against him. The SEC accused Garcia in August 2010 of illegally trading in advance of a corporate takeover by a company that Santander advised.
http://jlne.ws/hl0juJ
Canada first G-7 economy to move from recovery to self-sustaining expansion
By Mark Hopkins, Moody's Analytics
Output and employment have surpassed pre-crisis peaks, but growth remains below its potential rate...
http://jlne.ws/ej9DZF
Supercurrency opens rift in Brazil government
By Brian Winter, Reuters
The relentless rise of Brazil's currency has opened a big rift within President Dilma Rousseff's government, as some ministers and other officials work behind the scenes for new capital controls to curb the real and protect local industry.
http://jlne.ws/kP87Rr
Economy is ‘roughly in the right place’
By George Parker and Chris Giles, Financial Times
George Osborne, chancellor, has warned the cabinet that the British economy is still facing difficulties but was “roughly in the right place”, ahead of the publication on Wednesday of eagerly awaited economic data.
http://jlne.ws/fjKRwL
South Korea Will Audit Currency Derivatives Positions Held at Four Banks
Bloomberg
South Korean regulators will conduct an audit of currency derivatives of Credit Agricole SA (ACA) , ING Groep NV (INGA) , Standard Chartered First Bank Korea Ltd. and Woori Bank amid concern over rising short-term external debt.
http://jlne.ws/gswqfx
S.Korea targets four bank outlets with FX inspections
Reuters UK Focus via Yahoo! UK & Ireland Finance
South Korea's planned inspectionof foreign currency derivatives will target branches of CreditAgricole-CIB and ING and two domesticbanks, a regulatory agency official said ...
http://jlne.ws/ebwqnZ
Indian bank scraps ‘teaser’ home loans
By James Lamont in Shimla, Financial Times
The State Bank of India, the country’s largest commercial bank, has been forced to withdraw “teaser” mortgage loans amid fears of repeating the lending follies of the US subprime crisis. Under pressure from the Reserve Bank of India to curb what the regulator considered potentially reckless lending, the SBI said last week that it would scrap the home loans from May.
http://jlne.ws/eGP5aG
Jumat, 29 April 2011
Top Interest Rate Headlines 04-29-11: Gold-Buying Central Bankers May Extend Record Rally
Gold-Buying Central Bankers May Extend Record Rally
By Pham-Duy Nguyen, Bloomberg
Central banks that were net sellers of gold a decade ago are buying the precious metal to reduce their reliance on the dollar as a reserve currency, signaling demand that may extend a record rally in prices.
http://jlne.ws/jRmr5u
Chicago Fed Annual Report
http://jlne.ws/mPZ14D
Ireland cuts growth forecasts
Reuters/FT.com
Ireland cut its growth forecasts sharply on Friday, following similar downgrades by analysts, and said its debt would peak at 118 per cent of gross domestic product in 2013 rather than the 102.5 per cent forecast four months ago. Ireland’s finance ministry said it expected gross domestic product growth of 0.8 per cent in 2011, down from the 1.7 per cent forecast in December.
http://jlne.ws/me8qNx
Regulatory newbies may be eased into US swaps reforms-CFTC
By Christopher Doering, Reuters
Market participants not used to strict regulatory oversight may be given more time to comply with new swaps rules, but those with ties to big banks could be hit sooner, under rough guidelines the Commodity Futures Trading Commission is considering.
http://jlne.ws/jac0HR
Markit Statement on European Commission CDS Inquiry
Markit is aware of the European Commission’s statement that it will open investigations relating to the Credit Default Swaps information and clearing markets. Markit has no exclusive arrangements with any data provider and makes its data and related products widely available to global market participants. Markit has created new and innovative products and services in a competitive marketplace since its inception, bringing greater transparency and information to the CDS market. Markit is unaware of any collusion by other market participants as described by the Commission. Markit does not believe it has engaged in any inappropriate conduct and looks forward to demonstrating that to the Commission.
http://jlne.ws/joZmZP
Ghana Commercial Bank Q1 profit falls
Ghana Commercial Bank (GCB.GH) reported a 7.1 percent fall in first-quarter net profit to 19.76 mln cedis ($13.08 mln) on Friday as interest income slipped and operating expenses ticked higher.
http://jlne.ws/m40PaE
ECB Move Adding New Ratings to Some Older MBS
By Bonnie Sinnock, IDD
Recent collateral requirements from the ECB appear to be creating, among other things, some demand for new second ratings of older MBS and potentially other deals.
http://jlne.ws/kTdW5T
Federal Reserve Bank Of Dallas: Trimmed Mean PCE Inflation Rate FRB Dallas
The trimmed mean PCE inflation rate is an alternative measure of core inflation in the price index for personal consumption expenditures (PCE). It is calculated by staff at the Dallas Fed, using data from the Bureau of Economic Analysis (BEA).
http://jlne.ws/fdBaqC
Spain’s jobless total nears 5m
By Miles Johnson, FT.com
Spanish unemployment climbed to almost 5m in the first quarter of the year, hitting the highest level in 14 years as the consequences of an imploded construction bubble continued to depress the eurozone’s fourth-largest economy. The proportion of adults out of work rose to 21.3 per cent, up from 20.3 per cent in the previous quarter as the Spanish government this week embarked on measures to clamp down on unofficial work in the black market.
http://jlne.ws/imYuOl
Bernanke: Economy Improving But Far From Where We Would Like
Market News International
Federal Reserve Chairman Ben Bernanke Friday reemphasized his concern about high unemployment and home foreclosures, while making no mention of inflation, in a speech on "community development."
http://jlne.ws/jpPbv5
For International Investors, Non-Dollar Bonds More Popular
Fixed income fund managers piled into local currency debt of the big emerging markets for the third straight week, according to fund trackers at EPFR Global in Cambridge, Mass. Overall, fund managers are buying up emerging market government and corporate bonds as it appears clear the US has no intention on raising interest rates anytime soon. But most of the investors choosing emerging market debt are buying bond funds with local currency debt, rather than buying the sovereign or quasi-sovereign dollar denominated bonds that foreign countries like Brazil also issue.
http://jlne.ws/mbPBMV
MERS names CitiMortgage chief new CEO
Mortgage Electronic Registration Systems announced the appointment of former chairman and CEO of CitiMortgage, Bill Beckmann, as president and chief executive officer of MERSCORP. MERS provides a national national, real-time database that tracks mortgages.
http://jlne.ws/k4EAqt
PMI surveys in focus before BoE meeting
Reuters
Manufacturing growth is likely to have held at a healthy pace in April, albeit below peaks hit at the start of the year.
The March survey pointed to rising cost pressures and economists will be keen to see if these intensify. The sector has been one of the few bright spots during the recovery of the British economy, growing by 1.1 percent in the first quarter.
http://jlne.ws/jTD4mX
Time to trim bond strategy
FT.com
Peter Harrison, chief executive of RWC Partners, says in the current inflationary environment, trustees must urgently reassess the risky strategy of investing heavily in bonds. Inflation will undermine the capital value of the bonds and if they are holding corporate bonds, there is an additional risk of default. While the obvious thing to do in the past was to buy more index linked gilts, yields are now so low that it would be better to look at alternative investments.
http://jlne.ws/kOuana
Banks Set Sights on Islamic Bond Market
VTB Group and Gazprombank are vying to become the first Russian borrowers to sell Islamic debt in a bid to attract Middle Eastern investment. VTB, Russia’s second-largest bank, aims this year to raise about $200 million selling sukuk, debt that complies with Islam’s ban on interest, Herbert Moos, the lender’s deputy chairman, said in an interview Wednesday. Gazprombank, the lending arm of gas export monopoly Gazprom, is in talks with at least 10 Moscow-based companies on arranging a sale and will meet investors in the Persian Gulf in September, said Alexander Kazakov, director of structured and syndicated finance.
http://jlne.ws/ldP4cb
Fed Chairman Ben S. Bernanke Speech: Community Development in Challenging Times
As always, I'm pleased to join you at the Federal Reserve's biennial Community Affairs Research Conference. This meeting brings together researchers, community development professionals, and public-sector officials to explore how best to strengthen struggling communities. Needless to say, that endeavor is more crucial than ever. The past few years have been very difficult. Weak economic conditions at the national level have translated into hardships in many communities at the same time that communities have fewer resources available for stabilization and revitalization. Considerable good work is going on nonetheless, and I will offer a few examples of that today.
http://jlne.ws/jWCwkf
The Inflation Project: Longer-Term Deflation Probabilities Down To 8 Percent
Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates in 2015 can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2010.One measure of this deflation probability decreased from 11 percent on April 20 to 8 percent on April 27. An alternative lower bound on this deflation probability declined from 1 percent on April 20 to 0 percent on April 27.
http://jlne.ws/iCtEFk
Failed-Trade Charge for Mortgage Bonds Proposed, Pimco Balks
By Jody Shenn, Bloomberg
Dealers and investors in agency debt and government-backed mortgage bonds should face penalties for failing to complete trades at agreed times, according to an industry group that guides market rules.
http://jlne.ws/lDbX1t
Fears over Dodd-Frank spur action
By Beagan Wilcox, FT.com
The US mutual fund industry’s lobbyist, the Investment Company Institute, is tracking more than 100 rule-makings, studies and reports mandated by the Dodd-Frank Act, the sweeping financial reform law passed last July. But the issue of “broadest and deepest concern” to the industry, says Paul Schott Stevens, ICI president and chief executive, is the Financial Stability Oversight Council’s plan to designate non-bank financial institutions as systemically important, and thus subject to heightened oversight by the Federal Reserve.
http://jlne.ws/knfrDy
Citadel to Start Quant Business With Nazarali, Cushman From Knight Capital
By Saijel Kishan, Bloomberg
Citadel LLC, the $11 billion hedge fund run by Ken Griffin, hired Jamil Nazarali and Matt Cushman, former executives at Knight Capital Group Inc. (KCG), to lead a new effort in quantitative trading.
http://jlne.ws/mgTmde
Consumer Sentiment in U.S. Increased in April on Jobs
By Shobhana Chandra and Timothy R. Homan, Bloomberg
Confidence among U.S. consumers climbed in April from the lowest level in more than a year as job growth helped Americans withstand rising fuel costs.
http://jlne.ws/kTPYE8
Promises, Promises. Better Measuring the Effect of Pension Reform – The IMF Blog
By Benedict Clements, IMF Direct
We all hope to retire one day. Our pensions hold the promise of that. But when that promise is a public pension, it’s also a lot like debt the government has to pay at some point in the future.
http://jlne.ws/kESVBm
CFTC Provides Concepts And Questions Document Ahead Of Joint CFTC-SEC Public Discussion On Dodd-Frank Implementation
Press Release
Staff of the Commodity Futures Trading Commission (CFTC) today released a document setting forth concepts that it is considering with regard to the effective dates of final rules for swaps under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The document, which is being provided to panelists participating in the May 2-3, 2011, public roundtable being hosted by the CFTC and the Securities and Exchange Commission (SEC), also presents a series of relevant questions concerning how to phase the implementation of new rules.
http://jlne.ws/lg8GOo
The Problem With the F.D.I.C.’s Powers
By SIMON JOHNSON, Today's Economist
Under the Dodd-Frank financial regulation legislation (in Title II of that act), the Federal Deposit Insurance Corporation is granted expanded powers to intervene and manage the closure of any failing bank or other financial institution. There are two strongly held views of this legal authority: that it substantially solves the problem of how to handle failing megabanks and therefore serves as an effective constraint on their future behavior, and that it is largely irrelevant.
http://jlne.ws/m5Z5Jz
NYSE Euronext CEO Looks To Asian Exchanges In Long-Term
By Kristina Peterson and Jacob Bunge Of DOW JONES NEWSWIRES
The NYSE Euronext (NYX) chief executive said the company considered partnerships with Asian exchanges prior to moving forward with the Deutsche Boerse (DB1.XE, DBOEF) merger, but decided such tie-ups would only be feasible in the long-term future.
http://jlne.ws/lPmzMW
Reflections on Bernanke
Gavyn Davies, Financial Times
Following yesterday’s live blog on FT Alphaville, here are some quick final reflections on the Bernanke press conference:
1. It was a success. After a hesitant start, the Fed chairman spoke calmly and authoritatively, explaining the Fed’s exit strategy much more clearly than the FOMC statement had managed to do. In fact, in the absence of the press conference, there would have been considerable uncertainty about what the statement actually meant.
http://jlne.ws/kpBEAN
Remarks By U.S. Treasury Secretary Tim Geithner At The Detroit Economic Club
Press Release
http://jlne.ws/mCr2yY
ECB examines covered bond sector
By Jennifer Hughes, Financial Times
Covered bond experts have been called to Frankfurt to discuss the health of their market with the European Central Bank. The ECB bought E60bn of the bonds, an ultra-safe form of securitisation, during the financial crisis and has since taken a strong line on improving the transparency and investor-friendliness of the products.
http://jlne.ws/miHI7Z
Lehman Hires Morgan Stanley to Sell as Much as $675 Million of Muni Bonds
Bloomberg
Lehman Brothers Holdings Inc. hired Morgan Stanley (MS) to market a portfolio of municipal securities valued at as much as $675 million to "monetize" the assets for creditors, the bankrupt securities firm said.
http://jlne.ws/jze5pj
By Pham-Duy Nguyen, Bloomberg
Central banks that were net sellers of gold a decade ago are buying the precious metal to reduce their reliance on the dollar as a reserve currency, signaling demand that may extend a record rally in prices.
http://jlne.ws/jRmr5u
Chicago Fed Annual Report
http://jlne.ws/mPZ14D
Ireland cuts growth forecasts
Reuters/FT.com
Ireland cut its growth forecasts sharply on Friday, following similar downgrades by analysts, and said its debt would peak at 118 per cent of gross domestic product in 2013 rather than the 102.5 per cent forecast four months ago. Ireland’s finance ministry said it expected gross domestic product growth of 0.8 per cent in 2011, down from the 1.7 per cent forecast in December.
http://jlne.ws/me8qNx
Regulatory newbies may be eased into US swaps reforms-CFTC
By Christopher Doering, Reuters
Market participants not used to strict regulatory oversight may be given more time to comply with new swaps rules, but those with ties to big banks could be hit sooner, under rough guidelines the Commodity Futures Trading Commission is considering.
http://jlne.ws/jac0HR
Markit Statement on European Commission CDS Inquiry
Markit is aware of the European Commission’s statement that it will open investigations relating to the Credit Default Swaps information and clearing markets. Markit has no exclusive arrangements with any data provider and makes its data and related products widely available to global market participants. Markit has created new and innovative products and services in a competitive marketplace since its inception, bringing greater transparency and information to the CDS market. Markit is unaware of any collusion by other market participants as described by the Commission. Markit does not believe it has engaged in any inappropriate conduct and looks forward to demonstrating that to the Commission.
http://jlne.ws/joZmZP
Ghana Commercial Bank Q1 profit falls
Ghana Commercial Bank (GCB.GH) reported a 7.1 percent fall in first-quarter net profit to 19.76 mln cedis ($13.08 mln) on Friday as interest income slipped and operating expenses ticked higher.
http://jlne.ws/m40PaE
ECB Move Adding New Ratings to Some Older MBS
By Bonnie Sinnock, IDD
Recent collateral requirements from the ECB appear to be creating, among other things, some demand for new second ratings of older MBS and potentially other deals.
http://jlne.ws/kTdW5T
Federal Reserve Bank Of Dallas: Trimmed Mean PCE Inflation Rate FRB Dallas
The trimmed mean PCE inflation rate is an alternative measure of core inflation in the price index for personal consumption expenditures (PCE). It is calculated by staff at the Dallas Fed, using data from the Bureau of Economic Analysis (BEA).
http://jlne.ws/fdBaqC
Spain’s jobless total nears 5m
By Miles Johnson, FT.com
Spanish unemployment climbed to almost 5m in the first quarter of the year, hitting the highest level in 14 years as the consequences of an imploded construction bubble continued to depress the eurozone’s fourth-largest economy. The proportion of adults out of work rose to 21.3 per cent, up from 20.3 per cent in the previous quarter as the Spanish government this week embarked on measures to clamp down on unofficial work in the black market.
http://jlne.ws/imYuOl
Bernanke: Economy Improving But Far From Where We Would Like
Market News International
Federal Reserve Chairman Ben Bernanke Friday reemphasized his concern about high unemployment and home foreclosures, while making no mention of inflation, in a speech on "community development."
http://jlne.ws/jpPbv5
For International Investors, Non-Dollar Bonds More Popular
Fixed income fund managers piled into local currency debt of the big emerging markets for the third straight week, according to fund trackers at EPFR Global in Cambridge, Mass. Overall, fund managers are buying up emerging market government and corporate bonds as it appears clear the US has no intention on raising interest rates anytime soon. But most of the investors choosing emerging market debt are buying bond funds with local currency debt, rather than buying the sovereign or quasi-sovereign dollar denominated bonds that foreign countries like Brazil also issue.
http://jlne.ws/mbPBMV
MERS names CitiMortgage chief new CEO
Mortgage Electronic Registration Systems announced the appointment of former chairman and CEO of CitiMortgage, Bill Beckmann, as president and chief executive officer of MERSCORP. MERS provides a national national, real-time database that tracks mortgages.
http://jlne.ws/k4EAqt
PMI surveys in focus before BoE meeting
Reuters
Manufacturing growth is likely to have held at a healthy pace in April, albeit below peaks hit at the start of the year.
The March survey pointed to rising cost pressures and economists will be keen to see if these intensify. The sector has been one of the few bright spots during the recovery of the British economy, growing by 1.1 percent in the first quarter.
http://jlne.ws/jTD4mX
Time to trim bond strategy
FT.com
Peter Harrison, chief executive of RWC Partners, says in the current inflationary environment, trustees must urgently reassess the risky strategy of investing heavily in bonds. Inflation will undermine the capital value of the bonds and if they are holding corporate bonds, there is an additional risk of default. While the obvious thing to do in the past was to buy more index linked gilts, yields are now so low that it would be better to look at alternative investments.
http://jlne.ws/kOuana
Banks Set Sights on Islamic Bond Market
VTB Group and Gazprombank are vying to become the first Russian borrowers to sell Islamic debt in a bid to attract Middle Eastern investment. VTB, Russia’s second-largest bank, aims this year to raise about $200 million selling sukuk, debt that complies with Islam’s ban on interest, Herbert Moos, the lender’s deputy chairman, said in an interview Wednesday. Gazprombank, the lending arm of gas export monopoly Gazprom, is in talks with at least 10 Moscow-based companies on arranging a sale and will meet investors in the Persian Gulf in September, said Alexander Kazakov, director of structured and syndicated finance.
http://jlne.ws/ldP4cb
Fed Chairman Ben S. Bernanke Speech: Community Development in Challenging Times
As always, I'm pleased to join you at the Federal Reserve's biennial Community Affairs Research Conference. This meeting brings together researchers, community development professionals, and public-sector officials to explore how best to strengthen struggling communities. Needless to say, that endeavor is more crucial than ever. The past few years have been very difficult. Weak economic conditions at the national level have translated into hardships in many communities at the same time that communities have fewer resources available for stabilization and revitalization. Considerable good work is going on nonetheless, and I will offer a few examples of that today.
http://jlne.ws/jWCwkf
The Inflation Project: Longer-Term Deflation Probabilities Down To 8 Percent
Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates in 2015 can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2010.One measure of this deflation probability decreased from 11 percent on April 20 to 8 percent on April 27. An alternative lower bound on this deflation probability declined from 1 percent on April 20 to 0 percent on April 27.
http://jlne.ws/iCtEFk
Failed-Trade Charge for Mortgage Bonds Proposed, Pimco Balks
By Jody Shenn, Bloomberg
Dealers and investors in agency debt and government-backed mortgage bonds should face penalties for failing to complete trades at agreed times, according to an industry group that guides market rules.
http://jlne.ws/lDbX1t
Fears over Dodd-Frank spur action
By Beagan Wilcox, FT.com
The US mutual fund industry’s lobbyist, the Investment Company Institute, is tracking more than 100 rule-makings, studies and reports mandated by the Dodd-Frank Act, the sweeping financial reform law passed last July. But the issue of “broadest and deepest concern” to the industry, says Paul Schott Stevens, ICI president and chief executive, is the Financial Stability Oversight Council’s plan to designate non-bank financial institutions as systemically important, and thus subject to heightened oversight by the Federal Reserve.
http://jlne.ws/knfrDy
Citadel to Start Quant Business With Nazarali, Cushman From Knight Capital
By Saijel Kishan, Bloomberg
Citadel LLC, the $11 billion hedge fund run by Ken Griffin, hired Jamil Nazarali and Matt Cushman, former executives at Knight Capital Group Inc. (KCG), to lead a new effort in quantitative trading.
http://jlne.ws/mgTmde
Consumer Sentiment in U.S. Increased in April on Jobs
By Shobhana Chandra and Timothy R. Homan, Bloomberg
Confidence among U.S. consumers climbed in April from the lowest level in more than a year as job growth helped Americans withstand rising fuel costs.
http://jlne.ws/kTPYE8
Promises, Promises. Better Measuring the Effect of Pension Reform – The IMF Blog
By Benedict Clements, IMF Direct
We all hope to retire one day. Our pensions hold the promise of that. But when that promise is a public pension, it’s also a lot like debt the government has to pay at some point in the future.
http://jlne.ws/kESVBm
CFTC Provides Concepts And Questions Document Ahead Of Joint CFTC-SEC Public Discussion On Dodd-Frank Implementation
Press Release
Staff of the Commodity Futures Trading Commission (CFTC) today released a document setting forth concepts that it is considering with regard to the effective dates of final rules for swaps under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The document, which is being provided to panelists participating in the May 2-3, 2011, public roundtable being hosted by the CFTC and the Securities and Exchange Commission (SEC), also presents a series of relevant questions concerning how to phase the implementation of new rules.
http://jlne.ws/lg8GOo
The Problem With the F.D.I.C.’s Powers
By SIMON JOHNSON, Today's Economist
Under the Dodd-Frank financial regulation legislation (in Title II of that act), the Federal Deposit Insurance Corporation is granted expanded powers to intervene and manage the closure of any failing bank or other financial institution. There are two strongly held views of this legal authority: that it substantially solves the problem of how to handle failing megabanks and therefore serves as an effective constraint on their future behavior, and that it is largely irrelevant.
http://jlne.ws/m5Z5Jz
NYSE Euronext CEO Looks To Asian Exchanges In Long-Term
By Kristina Peterson and Jacob Bunge Of DOW JONES NEWSWIRES
The NYSE Euronext (NYX) chief executive said the company considered partnerships with Asian exchanges prior to moving forward with the Deutsche Boerse (DB1.XE, DBOEF) merger, but decided such tie-ups would only be feasible in the long-term future.
http://jlne.ws/lPmzMW
Reflections on Bernanke
Gavyn Davies, Financial Times
Following yesterday’s live blog on FT Alphaville, here are some quick final reflections on the Bernanke press conference:
1. It was a success. After a hesitant start, the Fed chairman spoke calmly and authoritatively, explaining the Fed’s exit strategy much more clearly than the FOMC statement had managed to do. In fact, in the absence of the press conference, there would have been considerable uncertainty about what the statement actually meant.
http://jlne.ws/kpBEAN
Remarks By U.S. Treasury Secretary Tim Geithner At The Detroit Economic Club
Press Release
http://jlne.ws/mCr2yY
ECB examines covered bond sector
By Jennifer Hughes, Financial Times
Covered bond experts have been called to Frankfurt to discuss the health of their market with the European Central Bank. The ECB bought E60bn of the bonds, an ultra-safe form of securitisation, during the financial crisis and has since taken a strong line on improving the transparency and investor-friendliness of the products.
http://jlne.ws/miHI7Z
Lehman Hires Morgan Stanley to Sell as Much as $675 Million of Muni Bonds
Bloomberg
Lehman Brothers Holdings Inc. hired Morgan Stanley (MS) to market a portfolio of municipal securities valued at as much as $675 million to "monetize" the assets for creditors, the bankrupt securities firm said.
http://jlne.ws/jze5pj
ISDA Comments on FASB/IASB Exposure Draft
Press Release
NEW YORK, Friday, April 29, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) filed a comment letter on April 28 with the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) in response to their exposure draft on the offsetting of financial assets and financial liabilities.
In the comment letter, ISDA acknowledges the desire and offers its support for convergence in the area of offsetting financial assets and liabilities and commends the Boards for working jointly to develop a common set of principles. The letter notes, however, that the proposed principles within FASB’s and IASB's exposure draft do not provide the most faithful representation of an entity's financial position, solvency, and exposure to credit and liquidity risk, and will not improve the usefulness of financial statements.
"Reporting derivative assets and derivative liabilities on a gross basis pursuant to the proposal in the FASB/IASB exposure draft rather than on a net basis under current U.S. GAAP would mislead users of financial statements by overstating the economic resources and obligations of the entity,” said Conrad Voldstad, ISDA’s Chief Executive Officer. "There is a compelling argument that net presentation of all derivative transactions executed under legally enforceable master netting arrangements is more relevant and provides better information than presenting the individual transactions executed under those arrangements on a gross basis."
ISDA favors the current U.S. GAAP offsetting principles as they provide the best reflection of an entity's solvency and exposure to credit and liquidity risk. The basis for ISDA's view is that, upon termination or settlement of transactions subject to a master netting arrangement, the individual derivative receivables do not represent resources to which general creditors have rights and individual derivative payables do not represent claims that are equal to the claims of general creditors. Instead, the net termination amount is the most relevant balance to present.
"As there is no consensus among financial statement users as to whether net or gross presentation is more useful, ISDA questions the Boards' decision to favor a model that impairs the usefulness of the financial statements while raising significant cost-benefit concerns, " said Robert Pickel, ISDA's Executive Vice Chairman.
The comment letter is available on ISDA’s website here.
NEW YORK, Friday, April 29, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) filed a comment letter on April 28 with the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) in response to their exposure draft on the offsetting of financial assets and financial liabilities.
In the comment letter, ISDA acknowledges the desire and offers its support for convergence in the area of offsetting financial assets and liabilities and commends the Boards for working jointly to develop a common set of principles. The letter notes, however, that the proposed principles within FASB’s and IASB's exposure draft do not provide the most faithful representation of an entity's financial position, solvency, and exposure to credit and liquidity risk, and will not improve the usefulness of financial statements.
"Reporting derivative assets and derivative liabilities on a gross basis pursuant to the proposal in the FASB/IASB exposure draft rather than on a net basis under current U.S. GAAP would mislead users of financial statements by overstating the economic resources and obligations of the entity,” said Conrad Voldstad, ISDA’s Chief Executive Officer. "There is a compelling argument that net presentation of all derivative transactions executed under legally enforceable master netting arrangements is more relevant and provides better information than presenting the individual transactions executed under those arrangements on a gross basis."
ISDA favors the current U.S. GAAP offsetting principles as they provide the best reflection of an entity's solvency and exposure to credit and liquidity risk. The basis for ISDA's view is that, upon termination or settlement of transactions subject to a master netting arrangement, the individual derivative receivables do not represent resources to which general creditors have rights and individual derivative payables do not represent claims that are equal to the claims of general creditors. Instead, the net termination amount is the most relevant balance to present.
"As there is no consensus among financial statement users as to whether net or gross presentation is more useful, ISDA questions the Boards' decision to favor a model that impairs the usefulness of the financial statements while raising significant cost-benefit concerns, " said Robert Pickel, ISDA's Executive Vice Chairman.
The comment letter is available on ISDA’s website here.
Rabu, 27 April 2011
April 21, 2011: Lower Loan Losses Push Profits For U.S. Banks [NEWSLETTER]
Conversation Starter
TABB Group's McPartland Says "First-Trade" Announcements In Cleared Swaps Alerting Market Who Will Be Ready
Kevin McPartland, principal at TABB Group, noted in his blog this week that he was quoted by Dow Jones regarding Barclays Capital's announcement that it had entered two interest rate swaps with Citadel LLC on Bloomberg's fixed-income trading platform, clearing one through CME Clearing and the other through LCH.Clearnet's SwapClear.
"I know I know, another announcement of the first electronic swap trade," McPartland opined in the blog entry. "But it's important to keep tabs on who’s doing what and what the final client offerings might entail. We must also remember that those that trade for a living don’t necessarily have time to keep up with the latest regulatory proposals and how different brokers and providers are planning to address them. I’m sure we’ll see many more announcements like this for the next year at least."
Pressed a little more in this issue by John Lothian News, McPartland added that the major brokers have budgets and armies of people to keep up with changing regulatory policy and new solutions being brought to market, but for many buy-side firms time constraints and the need to focus solely producing returns for investors make it hard for them to keep up to date. "The frequent first-trade announcements are a bit redundant, but they do a good job of letting the market know who’s getting ahead of this and plans to be open for business come rule implementation," McPartland said.
--Barclays And Citadel Announce E-Traded, Cleared Rate Swap
Dow Jones
Barclays Capital said Friday it has entered two interest rate swaps with Citadel LLC on Bloomberg's fixed-income trading platform, clearing one through CME Clearing and the other through LCH.Clearnet's SwapClear. The development is another sign of the $583 trillion off-exchange swaps market moving toward seamless electronic execution and central clearing.
http://jlne.ws/hqvxxO
FOMC's First Post-Meeting Press Conference Of Year To Be Held Wednesday
The FOMC's first post-meeting press conference of the year will be held at 1:15 p.m. Central Wednesday. The FOMC's statement, which is usually delivered about that time, will be released instead at 11:30 a.m. Central on Wednesday, at the conclusion of next week’s two-day meeting. The change is due to the new Fed Chairman press conferences, which will be held after each of the two-day FOMC meetings. When the Fed just meets for one day, the old schedule 1:15pm CDT statement release time will be used and there will not be a press conference.
SIFMA Market Close Recommendations for Observance of the Good Friday Holiday in the US
SIFMA recommends an early market close on April 21 and a full market close on April 22 for trading of US dollar-denominated fixed-income securities in the US in observance of the Good Friday holiday
http://jlne.ws/hN0VcB
Note: JLNIR will refrain from publishing Friday in observance of the Good Friday holiday.
--Christine Nielsen
Lead Stories
Lower Loan Losses Push Profits For U.S. Banks
By Joe Rauch and Clare Baldwin, Reuters
Improving credit losses helped U.S. regional banks like BB&T Corp (BBT.N) and PNC Financial Services Group Inc (PNC.N) post stronger quarterly results on Thursday, even as loan growth remained tepid four years after the housing market collapsed.
http://jlne.ws/fJkYSZ
Fed unveils proposal on mortgage standards
By Dave Clarke, International Business Times
Lenders would be required to make sure prospective borrowers have the ability to repay their mortgages before giving them a loan, under a proposal released by the Federal Reserve on Tuesday.
http://jlne.ws/gMxxzJ
S and P cuts US credit outlook to ‘negative’
By Michael Mackenzie, Nicole Bullock, Telis Demos and Shannon Bond, FT.com
Standard and Poor’s has downgraded its outlook on US sovereign debt from “stable to negative”, citing worries over budget deficits and debt.
http://jlne.ws/eTVBlU
U.S. credit rating outlook lowered by S and P. Puts additional pressure on Congress to bring down long-term deficits
CNNMoney.com
Standard and Poor's lowered its outlook for the nation's long-term debt Monday, even as it reaffirmed the agency's top-tier rating for the U.S. economy.
http://jlne.ws/etCxqp
Should You Worry About a U.S. Default?
By Catherine Rampell, The New York Times
Standard and Poor’s, the ratings agency, lowered its outlook for the United States to “negative” on Monday, a warning that the country’s top-notch, triple-A credit rating may be lowered. Credit ratings are supposed to give crucial insight into a debtor’s likelihood of default, so a lot of investors and pundits made a big deal about this announcement.
http://jlne.ws/fxz4VN
Geithner: No Risk U.S. Will Lose AAA Credit Rating
Reuters
U.S. Treasury Secretary Timothy Geithner on Tuesday said there was "no risk" that the United States would lose its prized AAA credit rating, saying political prospects for long-term deficit reduction were improving.
http://jlne.ws/hOHFfe
El-Erian: S and P action a warning for the US, and for the global economy
FT.com
Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, responds to Standard and Poor’s latest action on US debt.
http://jlne.ws/gFROje
Hoyer warns against 'playing games' with US credit
Reuters
The No. 2 Democrat in the House of Representatives, Steny Hoyer, said on Monday that Standard & Poor's downgrade of the U.S. credit outlook demonstrated that "Republicans cannot hold the debt limit hostage over partisan, divisive issues."
http://jlne.ws/i6NW81
Geithner Shows Confidence on Reaching Deficit Deal
By Jeannine Aversa, Associated Press
Treasury Secretary Timothy Geithner on Tuesday reassured investors that the White House and Republican lawmakers will reach a deal to control the nation's finances, downplaying an unprecedented warning that the government risks losing its coveted debt rating if it fails to do so.
http://jlne.ws/eONJxt
On the road to sell deficit approach, Obama 'optimistic' about bipartisan plan
By Athena Jones, MSNBC
President Barack Obama took his case for deficit reduction on the road Tuesday, telling a town hall audience in Virginia he is hopeful a bipartisan compromise to address the nation's budget deficit can be reached.
http://jlne.ws/feFkqU
Faltering in a stormy sea of debt
By Martin Wolf
It is astonishing that Standard and Poor’s can say anything about the best-known debt class in the world that is deemed to add value. This business is, after all, one of a class whose failures contributed mightily to the financial crisis. Nevertheless, the announcement that it was shifting its long-term rating on US federal debt from stable to negative reminded us all of something vital: the world economy is not on a stable path. On the contrary, to adopt a phrase often applied by the Chinese premier Wen Jiabao to his country, the world economy is “unsteady, unbalanced, unco-ordinated and unsustainable”. The US fiscal position is just one of a number of risks – and far from the biggest.
http://jlne.ws/eC8nlc
Comparing Debt Loads Across Nations
WSJ.com
Standard and Poor’s changed its outlook on U.S. debt to “negative” yesterday, thanks to the nation’s mounting debt load. But the U.S. isn’t the only country facing rising debt.
http://jlne.ws/ep4VyX
Treasury Will Resist Efforts to Slow Dodd-Frank Implementation, Wolin Says
Bloomberg
Deputy Treasury Secretary Neal Wolin says the Obama administration will resist efforts to slow the changes required by the Dodd-Frank overhaul of U.S. financial regulations.
http://jlne.ws/gDUpD2
SIFMA’s Ryan Response to Deputy Treasury Secretary Wolin’s Remarks on Dodd-Frank Implementation
Washington, DC, April 19, 2011–SIFMA today released the following statement by President and CEO Tim Ryan in response to Deputy Treasury Secretary Neal Wolin’s remarks at the Pew Charitable Trusts on implementation of the Dodd-Frank Act. “Implementation of the Dodd-Frank Act is too important not to be done right for the sake of meeting arbitrary deadlines. SIFMA shares the same goal as Secretary Wolin: full implementation of the Dodd-Frank Act, so to bring greater clarity, oversight, and confidence to our markets and financial institutions that play a key role in America’s economic growth and job creation..."
http://jlne.ws/fOMWXo
Treasury's Oldest Bonds Show Covert Demand With End in Sight for Fed's QE2
Bloomberg
Investors are paying the smallest discounts for Treasuries other than the newest, most-traded bonds since the start of the financial crisis, a sign of growing demand even as the Federal Reserve’s $600 billion buying program approaches its conclusion.
http://jlne.ws/ifaUye
ECB’s Trichet Defends Rate Increase to Portugal, Greece
By Brian Blackstone, WSJ.com
European Central Bank President Jean-Claude Trichet has been spending some time at the typewriter, writing a pair of letters to European parliamentarians from Greece and Portugal defending his recent decision to raise interest rates.
http://jlne.ws/dJaTiT
OTC trading is just 16% of European market
By Jeremy Grant, FT.com
The proportion of European share trading that takes place over-the-counter (OTC), rather than on stock exchanges, is closer to 16 per cent than some estimates of 40 per cent, according to a study done by the trade association that represents banks and brokers.
http://jlne.ws/hphBgI
Fannie Mae Cuts 2011 US Economic Growth View To 3.1%
Dow Jones Newswires
Fannie Mae's (FNMA) Economics & Mortgage Market Analysis Group lowered its 2011 U.S. economic growth forecast, citing ongoing political turmoil in the Middle East and North Africa, rising oil prices, and supply disruptions from ...
http://jlne.ws/h7qgaU
Monetary policy: Is the Fed finished?
The Economist
THE Financial Times has a story by Robin Harding above the fold this morning, headlined, "Fed to signal end of monetary easing". Sounds like big news! What's it all about?
http://jlne.ws/gCqWOq
What are the implications of rising commodity prices for inflation and monetary policy?
By Charles L. Evans, president and chief executive officer, and Jonas D. M. Fisher, vice president and director of macroeconomic research
http://jlne.ws/i0ins9
CFTC Proposal for Swaps Margin May Apply to Futures
By Matthew Leising
The Commodity Futures Trading Commission may require margin changes in futures markets that are being considered for new swaps clearing plans. The CFTC has proposed divvying up margin payments of individual swaps users at clearinghouses rather than allowing accounts to be treated as one pool by banks representing multiple customers. Futures markets now allow banks to pool all their customer accounts together when settling a day’s margins. The swaps plan may be used for futures margin, too, said CFTC Commissioner Scott O’Malia. “It’s being considered,” he said in an interview yesterday.
http://jlne.ws/hc9OMg
Leader of Big Mortgage Lender Guilty of $2.9 Billion Fraud
By BEN PROTESS, NY Times
The founder of what was once one of the nation’s largest mortgage lenders was convicted of fraud on Tuesday for masterminding a scheme that cheated investors and the government out of billions of dollars. It is one of the few successful prosecutions to come out of the financial crisis.
http://jlne.ws/g4BqYn
SEC, CFTC Walk Away From Government Shutdown Threats With Bigger Budgets
Forbes
The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) were among the winners in the budget brinksmanship that occurred last week. Although a number of federal agencies were the subject of approximately $40 billion in cuts, the SEC $75 million in extra funding for 2011.
http://jlne.ws/gxAzZg
Video: Robert Nichols, President And CEO, Financial Services Forum On The Federal Debt Ceiling
C-Span
Robert Nichols talked about the definition, history, and significance of the federal debt ceiling, and he also responded to telephone calls and electronic communications. Mr. Nichols believes Congress must raise the debt ceiling
http://jlne.ws/gI6mmv
Why Goldman Is Not a Simple Culprit in the Financial Crisis Report
By STEVEN M. DAVIDOFF, NY Times
The Senate Permanent Investigation Subcommittee’s report on the financial crisis is an important document. It is an exhaustive look at certain main aspects of the financial crisis, a report which heavily criticizes Washington Mutual, the now-defunct Office of Thrift Supervision, the credit ratings agencies, Goldman Sachs and Deutsche Bank. The focus in the media, as well as in Senator Carl Levin’s news conference on the report, has been the criticism shed on Goldman Sachs for betting against clients who bought collateralized debt obligations from it. But the criticism of Goldman is overwrought. And the focus on Goldman obscures the other important points the report makes about the entire financial industry.
http://jlne.ws/elMzVr
Swaps Regulator Watchdog Failed U.S. Government Standards Audit
By Silla Brush, Bloomberg
The U.S. Commodity Futures Trading Commission’s internal watchdog has “significant deficiencies” in its auditing systems and received a failing grade in a government-required review completed in March. From October 2006 through March 2010, the agency’s Office of the Inspector General failed to meet government standards for quality control procedures, overseeing independent accountants, documenting budget requests, and auditing contractors, according to the 37-page review. The IG’s office also failed to regularly make its reports available on the Internet, the review said.
http://jlne.ws/ewlt9H
Super rich see taxes drop while nearly half of US households pay no federal income tax
By STEPHEN OHLEMACHER, Associated Press
Still scrambling to file your taxes? You'll probably take little consolation in hearing that the super rich pay a lot less taxes than they did a couple of decades ago. And nearly half of U.S. households pay no income taxes at all.
http://jlne.ws/fn8a9g
Happy People Save More Money for Retirement
Yahoo! News
More than half of Americans report having less than $25,000 saved for the future, according to a 2011 Employee Benefit Research Institute survey. An Associated Press and LifeGoesStrong.com poll found that 25 percent of baby boomers have no retirement savings at all. And the American Institute of Certified Public Accountants recently revealed that 56 percent of the people in their poll are not even saving for retirement.
http://jlne.ws/g0PNGh
**CN: Conversely, people who have money saved for retirement are happy.
Economic News
Philly Fed manufacturing index slumps in April
By Steve Goldstein, MarketWatch
The Philadelphia Fed's index of current activity slumped to 18.5 in April after the March reading of 43.4, which was the highest since Jan. 1984. Economists polled by MarketWatch had expected the gauge to fall to 35.5. Nearly all of the survey's broadest indicators remained positive but fell from their readings in the previous month, the Philly Fed said. The Philadelphia Fed index, which has been conducted each month since May 1968, is a diffusion index, which means it's calculated by subtracting the percentage of respondents indicating a decrease from the percentage indicating an increase.
http://jlne.ws/guHI7d
Philly Fed Full Report: April 2011 Business Outlook Survey - Philadelphia Fed
Results from the Business Outlook Survey suggest that regional manufacturing activity continued to grow in April but at a slower pace than in March. Nearly all of the survey’s broadest indicators remained positive but fell from their readings in the previous month. Increases in input prices continue to be widespread, and a significant percentage of firms reported increases in prices for their own manufactured goods. The survey’s indicators of future activity fell notably this month; however, most firms expect continued growth over the next six months.
http://jlne.ws/eLUZi5
U.S. Monthly House Price Index Declined 1.6 Percent from January to February
FHFA
U.S. house prices declined 1.6 percent on a seasonally adjusted basis from January to February, according to the Federal Housing Finance Agency’s
monthly House Price Index. The previously reported 0.3 percent decrease in January was revised to a 1.0 percent decrease. For the 12 months ending in February, U.S. prices fell 5.7 percent. The U.S. index is 18.6 percent below its April 2007 peak and roughly the same as the February 2004 index level.
http://jlne.ws/ejrlHF
Existing home sales rebound a bit in March
By Greg Robb, MarketWatch
Sales of existing single-family homes and condos rebounded by 3.7% in March to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors reported Wednesday.
http://jlne.ws/g6KvX5
New-home construction increases 7.2 pct. in March
By Derek Kravitz, Associated Press
Builders broke ground on more new homes last month, giving the weak housing market a slight boost at the start of the spring buying season.
http://jlne.ws/glzdKE
Consumer sentiment index rises to 69.6 in April
By Ruth Mantell, MarketWatch
The Thomson Reuters/University of Michigan consumer sentiment survey hit 69.6 in the preliminary reading for April, compared with 67.5 for March, according to Friday media reports. Economists surveyed by MarketWatch were looking for an April reading of 69.
http://jlne.ws/fK46fQ
Exchanges, Clearing Houses & MTFs
CME Group Announces Introduction of Sovereign Yield Spread Futures To Manage Risk Exposure Between Gov Bond Markets
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, has announced today that it will introduce cash-settled Sovereign Yield Spread futures beginning May 22 for a trade date of May 23. The six countries represented in the initial launch phase include France (OAT), Germany (Bund), Italy (BTP), Netherlands (DSL), United Kingdom (Treasury Gilts), and United States (Treasury Notes). These products are listed by and subject to the rules of CME, and further diversifies CME Group’s Interest Rates product portfolio.
http://jlne.ws/hQLDgP
LCH.Clearnet’s SwapClear Implements Murex Technology; Doubles SwapClear's Capacity
LCH.Clearnet Limited (LCH.Clearnet) has enhanced its market leading interest rate swap (IRS) clearing service, SwapClear, with the successful implementation of Murex’s world-class capital markets platform MX.3. The technology, which has been adapted by LCH.Clearnet and Murex, replaces a series of legacy systems and provides enhanced risk management capabilities.
http://jlne.ws/ehFQDl
LCH Clearnet Ltd. To Increase Extra Deposit Charge For Long Positions In Portuguese Government Bonds To 25% From 15%
By Emma Charlton and Keith Jenkins, Bloomberg
Greek bonds tumbled, leading declines by securities from Europe’s most indebted countries, as a German government adviser said the Mediterranean nation will probably have to restructure its debt burden.
http://jlne.ws/ieD5ZJ
ELX Comment Letter to CFTC on Core Principles and Other Requirements for DCMs
http://bit.ly/gk6uZe
SGX chief plays down failed offer
By Kevin Brown, FT.com
Magnus Böcker, chief executive of the Singapore Exchange, said he was under no pressure to achieve a significant strategic deal following the collapse of an A$8.3bn (US$8.7bn) bid for the Australian Securities Exchange.
http://jlne.ws/eOvYjQ
Firms & Banks
Morgan Stanley's income falls on weak bond trading
By PALLAVI GOGO, Associated Press/Yahoo! News
Morgan Stanley's income fell 48 percent in the first quarter on a sharp drop in revenue from bond trading and losses from a Japanese investment.
http://jlne.ws/dTubCN
F and C senior bond manager departs
Dow Jones Financial News
Paul Grice, a senior member of the government bonds team at F&C Asset Management and a manager of two key institutional products, has left the company after five years.
http://jlne.ws/fDjFjn
BofA to spin off $5bn private equity arm
By Justin Baer in New York, Financial Times
Bank of America plans to spin off the $5bn private-equity arm the lender inherited in its takeover of Merrill Lynch, severing ties to what had been one of Wall Street’s most prominent buy-out funds before the financial crisis.
http://jlne.ws/fc1ZPR
HSBC Hires Roubini Global's Delgado as Emerging Market Cross-Asset Analyst
Bloomberg
HSBC Holdings Plc. (HSBA) , Europe's largest bank by market value, hired Bertrand Delgado as an emerging-markets strategist, luring him away from Roubini Global Economics LLC.
http://jlne.ws/dZeFi6
Stephen Foley: Why it really pays to work at RBS
Independent
There was no shortage of outrage over executive bonuses at Royal Bank of Scotland when shareholders gathered for its annual meeting in Edinburgh yesterday, and the House of Commons Public Accounts Committee will pile on this morning in its latest report on our state-supported banks. It is "inappropriate" for the likes of RBS to be handing multimillion-pound incomes to its bosses until ...
http://jlne.ws/eOf0wB
Berkshire, Buffett sued over Sokol's trades
By Tom Hals, Reuters
Warren Buffett and the rest of Berkshire Hathaway Inc's board of directors were sued by a shareholder on Tuesday over presumed heir apparent David Sokol's trading in the stock of a company that was later bought by Berkshire.
http://jlne.ws/gZ1AVh
RBS warns of higher costs from bank reforms
By Andrew Bolger, FT.com
Shareholders in Royal Bank of Scotland have been warned that they and the bank’s customers would face extra costs under proposals to “ring-fence” retail banking and impose higher capital requirements.
http://jlne.ws/heQDIa
Citi puts $12.7bn portfolio up for sale
By Francesco Guerrera and Patrick Jenkins, FT.com
Citigroup has taken radical action to cushion the impact of new global capital rules for banks, putting up for sale a $12.7bn portfolio of bad assets that were responsible for some of its huge losses during the financial crisis. Citi revealed the move on Monday alongside first-quarter results that showed a 32 per cent drop in net income that was narrowly better than analysts’ expectations.
http://jlne.ws/eYbT0R
Pimco to Pay $92 Million to Settle Market Manipulation Lawsuit
By Sree Vidya Bhaktavatsalam, Bloomberg
Pacific Investment Management Co., manager of the world’s biggest bond fund, agreed to pay $92 million to settle a private class-action lawsuit that accused it of manipulating the price of Treasury futures contracts.
http://jlne.ws/ew7eXd
Deutsche Bank halts plan to sell BHF unit
Market Watch
Deutsche Bank said Monday that it's ended talks with Liechtenstein's LGT Bank over the sale of its BHF-Bank unit. Deutsche Bank said that the two firms had drawn up a mutually beneficial agreement that was ready to sign, but that "following discussions between the parties and with the competent supervisory authorities," the banks decided not to pursue the transaction ...
http://jlne.ws/dIpbJ9
Ex-Citigroup executive elected to Moody's board
INO News
A long-time executive of Citigroup Inc. has been elected to the board of directors of Moody's Corp. Jorge Bermudez will serve on the board's audit and governance and compensation committees, Moody's said Wednesday.
http://jlne.ws/hdSPSD
Pimco’s new ETF to focus on US debt
By Dan McCrum in New York, Financial Times
Bill Gross, manager of the world’s largest mutual fund, is to run a new exchange-traded fund for Pimco. The involvement of such a high-profile investor in an actively traded ETF will attract attention, and assets, to a corner of an industry better known as a cheap and flexible way to make passive investments.
http://jlne.ws/hqg7PS
Auctions & Statistics
US: $0.B TIPSPurchase 2011-04-20 NYFed permanent open market operations
The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee (FOMC).
http://jlne.ws/dcRpcM
Freddie Mac And Fannie Mae 2011 Note Calendar
Reuters
The following are scheduled sales announcement dates for potential Freddie Mac (FMCC.OB) reference, Fannie Mae (FNMA.OB)
benchmark notes for 2011.
http://jlne.ws/g4IOoT
Regulators
FRB: Bernanke, Statement by Chairman Bernanke on financial literacy
Statement by Chairman Bernanke on financial literacy
Provided for the record of a hearing held on April 12, 2011 conducted by the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Committee on Homeland Security and Governmental Affairs, U.S. Senate
April 20, 2011...
http://jlne.ws/hdyT5E
Remarks By Deputy U.S. Treasury Secretary Neal S. Wolin
Press Release
http://jlne.ws/hj0ToU
St. Louis Fed: The basics of quantitative easing in seven easy-to-read paragraphs
Standard and Poor’s changed its outlook on U.S. debt to “negative” yesterday, thanks to the nation’s mounting debt load. But the U.S. isn’t the only country facing rising debt...
http://jlne.ws/fgWgtm
Fed's Bullard: Concern Over 2Q Growth 'At Odds' With Industry View
By Daniel Kruger, Bloomberg
Investors are paying the smallest discounts for Treasuries other than the newest, most-traded bonds since the start of the financial crisis, a sign of growing demand even as the Federal Reserve’s $600 billion buying program approaches its conclusion.
http://jlne.ws/eRk85p
Federal Reserve Seeks Comments On Outline Of How It Intends To Apply Certain Parts Of Its Current Consolidated Supervisory Program For Bank Holding Companies To Savings And Loan Holding Companies
Press Release
The Federal Reserve Board is seeking comment on a notice that outlines how it intends to apply certain parts of its current consolidated supervisory program for bank holding companies to savings and loan holding companies (SLHCs) after assuming supervisory responsibility for SLHCs. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, supervisory and rule-writing authority for SLHCs and their non-depository subsidiaries will transfer from the Office of Thrift Supervision (OTS) to the Board on July 21, 2011.
http://jlne.ws/hPsndX
FDIC eyes tougher rules for big banks
By Tom Braithwaite in Washington, Financial Times
American banks should ringfence their riskier investment banking operations, according to a top financial regulator who wants the US to adopt restrictions similar to those proposed last week by Britain’s Independent Commission on Banking.
http://jlne.ws/hqtLVq
Communiqué Of The Twenty-Third Meeting Of The International Monetary And Financial Committee Of The Board Of Governors Of The International Monetary Fund
Press Release
http://jlne.ws/geHEdo
Statement By U.S. Treasury Secretary Tim Geithner To The International Monetary Fund And World Bank Group Development Committee Meeting
Press Release
http://jlne.ws/eSiL7v
Statement By U.S. Treasury Secretary Tim Geithner At The International Monetary And Financial Committee (IMFC) Meeting
Press Release
http://jlne.ws/dXBmw4
FSB releases progress reports on OTC derivatives reforms and implementation of G20 fin reg recommendations
This note provides an overview of work underway to implement the G20 recommendations for strengthening financial stability. It focuses on international policy development and implementation that has taken place since the G20 Finance Ministers and Governors meeting
in February 2011.
http://jlne.ws/hgLKMa
Fed Could Start to Tighten by End of Year: Plosser
By: Jeff Cox, CNBC
The Federal Reserve is not "behind the curve" when it comes to inflation and could take action before the end of the year to tighten monetary policy, Philadelphia Fed President Charles Plosser told CNBC.
http://jlne.ws/hKV5EU
Gensler Says Regulators Should Set Small Group of Systemic Firms
By Phil Mattingly, Bloomberg
The number of financial firms federal regulators deem systemically important should be kept small, a member of the council identifying the firms said. Gary Gensler, the chairman of the Commodity Futures Trading Commission, said the Dodd-Frank Act requires regulators to limit the number of firms getting the designation. The Financial Stability Oversight Council is labeling the financial firms that may face more stringent oversight and capital requirements.
http://jlne.ws/fBvpnI
Global News
New Turkish c.bank gov makes surprise RRR hike
Reuters
Turkey's central bank launched its new governor's term in charge with a surprise rise in required reserves on Thursday, strengthening the lira and Turkish government bonds.
http://jlne.ws/e3Gyax
Greek woes, aid backlash counter solid Spain auction
Reuters
Spain attracted solid demand at a bond sale on Wednesday, easing concerns it could be swept up by the contagion hitting other euro zone states, but worries about Greek debt continued to haunt the bloc.
http://jlne.ws/fMfMac
UK banks’ rush into property needs watching
By John Plender, Financial Times
While the financial crisis that began in 2007 had a plethora of causes, property was at the heart of the problem. The fact that the big UK-based banks, with the exception of Lloyds Banking Group which is battling with the dismal property legacy it acquired with HBOS, have been significantly increasing their exposure to the sector should thus prompt eyebrows to twitch.
http://jlne.ws/elEvoL
Switzerland set to propose strict bank rules
Reuters Finance News (EU) via Yahoo! UK & Ireland Finance
The Swiss government looks set to push ahead with plans to make UBS and Credit Suisse reach tough new capital standards despite warnings they could make the banks uncompetitive. The ...
http://jlne.ws/eDLooy
Russia's Alfa, Evraz Eye Lower Eurobond yields
Reuters
Russia's Alfa Bank and steelmaker Evraz (HK1q.L) are seeking to place Eurobonds at lower yields than previously indicated, in a sign that investor demand has not been hurt too much by global sovereign debt woes.
http://jlne.ws/dL2Xis
Finnish PM-Elect Sees No Big Change To Portugal Bailout
Reuters
Finland's likely next prime minister ruled out proposing major changes to a bailout package for Portugal, seeking to soothe concerns that its new government could block the European Union's plans and upset markets.
http://jlne.ws/fsDH06
Political gains for Finland's main nationalist party stoke concerns over the eurozone debt crisis
AFP
The euro slumped against the dollar Monday as shock political gains for Finland's main nationalist party stoked concerns over the eurozone debt crisis, analysts said. As authorities prepared to discuss Portugal's financial bailout, fresh worries over indebted eurozone nations helped the price of 'safe-haven' gold to reach fresh record highs.
http://jlne.ws/e0v6kU
Ireland's Kenny Seeks to Reassure Markets
By Ainsley Thomson, WSJ.com
Irish Prime Minister Enda Kenny stepped up his diplomatic offensive during his first state visit to London on Monday, seeking to reassure the markets that his government is serious about tackling its budget deficit and that it will not consider defaulting on its debt.
http://jlne.ws/euztSr
Portuguese Banks Expect Debt Targets
By Patricia Kowsmann, WSJ.com
Portuguese banks will likely have to step up efforts to cut reliance on borrowed money in exchange for having some of the estimated 80 billion euros (about $114 billion) bailout earmarked for the country, senior bank officials say.
http://jlne.ws/eTm7qt
Hungary Central Bank Holds Interest Rate at 6.00%
CentralBankNews.info
The Magyar Nemzeti Bank held its main policy rate, the two-week deposit interest rate, unchanged at 6.00%. Hungary reported inflation of 4.5% in March, slightly higher than the 4.1% recorded in February, and higher than the central bank's target of 3%.
http://jlne.ws/dOh3zK
BRICS make move to shove dollar aside
By David Marsh, MarketWatch
China and four other leading high-growth economies have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system.
http://jlne.ws/dEt7ri
Loophole fears over Vickers bank rules
By Patrick Jenkins, Megan Murphy and Sharlene Goff, Financial Times
European banking groups could take advantage of a loophole to escape higher capital requirements recommended by the Vickers Commission report on UK bank restructuring, fuelling concerns they will secure a competitive advantage in high street banking.
http://jlne.ws/dHcjr3
Pension funds fight EU plan on derivatives
By Ellen Kelleher, Financial Times
European pension funds are fighting to revise a European Union proposal on derivatives regulation as they fear it will damage investment returns. The UK’s National Association of Pension funds and other European trade groups are lobbying to amend the European Market Infrastructure Regulation (EMIR), which would demand they post collateral with counterparty clearing houses when they use derivatives to hedge interest-rate movements or life- expectancy risks.
http://jlne.ws/gQxNYR
March mutual fund sales surge 81% from a year ago
The Globe And Mail
Net sales of mutual funds in Canada for March were estimated to be $3.72-billion, continuing the strong growth experienced in the first two months of this year, according to the Investment Funds Institute of Canada.
http://jlne.ws/hCfnNr
Virgin bank CEO looks to future
BBC News
Jayne-Anne Gadhia speaks to Douglas Fraser, presenter of Business Scotland, about her vision for Virgin Money's role in UK finance.
http://jlne.ws/fBZG99
RBS rebels bid to block Hester pay
Scotland on Sunday
ROYAL Bank of Scotland is this week facing a shareholder rebellion over a possible £7.7 million payout for chief executive Stephen Hester and confusion about the level of the bank's losses.
http://jlne.ws/ewTowW
Barclays, HSBC and Standard Chartered face domicile move chatter
The Scotsman: Business
A TOP City fund manager has revealed institutional investors are in "regular talks" with Barclays, HSBC and Standard Chartered over possibly shifting their tax domicil
http://jlne.ws/fdxVjd
Deutsche Bank, Liechtenstein's LGT end talks on sale of German bank's BHF-Bank
The Canadian Press via Yahoo! Canada News
Germany's Deutsche Bank AG says it has scrapped a plan to sell its BHF-Bank subsidiary to LGT of Liechtenstein and will hold on to the private banking and wealth management specialist.
http://jlne.ws/dNSmsd
TABB Group's McPartland Says "First-Trade" Announcements In Cleared Swaps Alerting Market Who Will Be Ready
Kevin McPartland, principal at TABB Group, noted in his blog this week that he was quoted by Dow Jones regarding Barclays Capital's announcement that it had entered two interest rate swaps with Citadel LLC on Bloomberg's fixed-income trading platform, clearing one through CME Clearing and the other through LCH.Clearnet's SwapClear.
"I know I know, another announcement of the first electronic swap trade," McPartland opined in the blog entry. "But it's important to keep tabs on who’s doing what and what the final client offerings might entail. We must also remember that those that trade for a living don’t necessarily have time to keep up with the latest regulatory proposals and how different brokers and providers are planning to address them. I’m sure we’ll see many more announcements like this for the next year at least."
Pressed a little more in this issue by John Lothian News, McPartland added that the major brokers have budgets and armies of people to keep up with changing regulatory policy and new solutions being brought to market, but for many buy-side firms time constraints and the need to focus solely producing returns for investors make it hard for them to keep up to date. "The frequent first-trade announcements are a bit redundant, but they do a good job of letting the market know who’s getting ahead of this and plans to be open for business come rule implementation," McPartland said.
--Barclays And Citadel Announce E-Traded, Cleared Rate Swap
Dow Jones
Barclays Capital said Friday it has entered two interest rate swaps with Citadel LLC on Bloomberg's fixed-income trading platform, clearing one through CME Clearing and the other through LCH.Clearnet's SwapClear. The development is another sign of the $583 trillion off-exchange swaps market moving toward seamless electronic execution and central clearing.
http://jlne.ws/hqvxxO
FOMC's First Post-Meeting Press Conference Of Year To Be Held Wednesday
The FOMC's first post-meeting press conference of the year will be held at 1:15 p.m. Central Wednesday. The FOMC's statement, which is usually delivered about that time, will be released instead at 11:30 a.m. Central on Wednesday, at the conclusion of next week’s two-day meeting. The change is due to the new Fed Chairman press conferences, which will be held after each of the two-day FOMC meetings. When the Fed just meets for one day, the old schedule 1:15pm CDT statement release time will be used and there will not be a press conference.
SIFMA Market Close Recommendations for Observance of the Good Friday Holiday in the US
SIFMA recommends an early market close on April 21 and a full market close on April 22 for trading of US dollar-denominated fixed-income securities in the US in observance of the Good Friday holiday
http://jlne.ws/hN0VcB
Note: JLNIR will refrain from publishing Friday in observance of the Good Friday holiday.
--Christine Nielsen
Lead Stories
Lower Loan Losses Push Profits For U.S. Banks
By Joe Rauch and Clare Baldwin, Reuters
Improving credit losses helped U.S. regional banks like BB&T Corp (BBT.N) and PNC Financial Services Group Inc (PNC.N) post stronger quarterly results on Thursday, even as loan growth remained tepid four years after the housing market collapsed.
http://jlne.ws/fJkYSZ
Fed unveils proposal on mortgage standards
By Dave Clarke, International Business Times
Lenders would be required to make sure prospective borrowers have the ability to repay their mortgages before giving them a loan, under a proposal released by the Federal Reserve on Tuesday.
http://jlne.ws/gMxxzJ
S and P cuts US credit outlook to ‘negative’
By Michael Mackenzie, Nicole Bullock, Telis Demos and Shannon Bond, FT.com
Standard and Poor’s has downgraded its outlook on US sovereign debt from “stable to negative”, citing worries over budget deficits and debt.
http://jlne.ws/eTVBlU
U.S. credit rating outlook lowered by S and P. Puts additional pressure on Congress to bring down long-term deficits
CNNMoney.com
Standard and Poor's lowered its outlook for the nation's long-term debt Monday, even as it reaffirmed the agency's top-tier rating for the U.S. economy.
http://jlne.ws/etCxqp
Should You Worry About a U.S. Default?
By Catherine Rampell, The New York Times
Standard and Poor’s, the ratings agency, lowered its outlook for the United States to “negative” on Monday, a warning that the country’s top-notch, triple-A credit rating may be lowered. Credit ratings are supposed to give crucial insight into a debtor’s likelihood of default, so a lot of investors and pundits made a big deal about this announcement.
http://jlne.ws/fxz4VN
Geithner: No Risk U.S. Will Lose AAA Credit Rating
Reuters
U.S. Treasury Secretary Timothy Geithner on Tuesday said there was "no risk" that the United States would lose its prized AAA credit rating, saying political prospects for long-term deficit reduction were improving.
http://jlne.ws/hOHFfe
El-Erian: S and P action a warning for the US, and for the global economy
FT.com
Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, responds to Standard and Poor’s latest action on US debt.
http://jlne.ws/gFROje
Hoyer warns against 'playing games' with US credit
Reuters
The No. 2 Democrat in the House of Representatives, Steny Hoyer, said on Monday that Standard & Poor's downgrade of the U.S. credit outlook demonstrated that "Republicans cannot hold the debt limit hostage over partisan, divisive issues."
http://jlne.ws/i6NW81
Geithner Shows Confidence on Reaching Deficit Deal
By Jeannine Aversa, Associated Press
Treasury Secretary Timothy Geithner on Tuesday reassured investors that the White House and Republican lawmakers will reach a deal to control the nation's finances, downplaying an unprecedented warning that the government risks losing its coveted debt rating if it fails to do so.
http://jlne.ws/eONJxt
On the road to sell deficit approach, Obama 'optimistic' about bipartisan plan
By Athena Jones, MSNBC
President Barack Obama took his case for deficit reduction on the road Tuesday, telling a town hall audience in Virginia he is hopeful a bipartisan compromise to address the nation's budget deficit can be reached.
http://jlne.ws/feFkqU
Faltering in a stormy sea of debt
By Martin Wolf
It is astonishing that Standard and Poor’s can say anything about the best-known debt class in the world that is deemed to add value. This business is, after all, one of a class whose failures contributed mightily to the financial crisis. Nevertheless, the announcement that it was shifting its long-term rating on US federal debt from stable to negative reminded us all of something vital: the world economy is not on a stable path. On the contrary, to adopt a phrase often applied by the Chinese premier Wen Jiabao to his country, the world economy is “unsteady, unbalanced, unco-ordinated and unsustainable”. The US fiscal position is just one of a number of risks – and far from the biggest.
http://jlne.ws/eC8nlc
Comparing Debt Loads Across Nations
WSJ.com
Standard and Poor’s changed its outlook on U.S. debt to “negative” yesterday, thanks to the nation’s mounting debt load. But the U.S. isn’t the only country facing rising debt.
http://jlne.ws/ep4VyX
Treasury Will Resist Efforts to Slow Dodd-Frank Implementation, Wolin Says
Bloomberg
Deputy Treasury Secretary Neal Wolin says the Obama administration will resist efforts to slow the changes required by the Dodd-Frank overhaul of U.S. financial regulations.
http://jlne.ws/gDUpD2
SIFMA’s Ryan Response to Deputy Treasury Secretary Wolin’s Remarks on Dodd-Frank Implementation
Washington, DC, April 19, 2011–SIFMA today released the following statement by President and CEO Tim Ryan in response to Deputy Treasury Secretary Neal Wolin’s remarks at the Pew Charitable Trusts on implementation of the Dodd-Frank Act. “Implementation of the Dodd-Frank Act is too important not to be done right for the sake of meeting arbitrary deadlines. SIFMA shares the same goal as Secretary Wolin: full implementation of the Dodd-Frank Act, so to bring greater clarity, oversight, and confidence to our markets and financial institutions that play a key role in America’s economic growth and job creation..."
http://jlne.ws/fOMWXo
Treasury's Oldest Bonds Show Covert Demand With End in Sight for Fed's QE2
Bloomberg
Investors are paying the smallest discounts for Treasuries other than the newest, most-traded bonds since the start of the financial crisis, a sign of growing demand even as the Federal Reserve’s $600 billion buying program approaches its conclusion.
http://jlne.ws/ifaUye
ECB’s Trichet Defends Rate Increase to Portugal, Greece
By Brian Blackstone, WSJ.com
European Central Bank President Jean-Claude Trichet has been spending some time at the typewriter, writing a pair of letters to European parliamentarians from Greece and Portugal defending his recent decision to raise interest rates.
http://jlne.ws/dJaTiT
OTC trading is just 16% of European market
By Jeremy Grant, FT.com
The proportion of European share trading that takes place over-the-counter (OTC), rather than on stock exchanges, is closer to 16 per cent than some estimates of 40 per cent, according to a study done by the trade association that represents banks and brokers.
http://jlne.ws/hphBgI
Fannie Mae Cuts 2011 US Economic Growth View To 3.1%
Dow Jones Newswires
Fannie Mae's (FNMA) Economics & Mortgage Market Analysis Group lowered its 2011 U.S. economic growth forecast, citing ongoing political turmoil in the Middle East and North Africa, rising oil prices, and supply disruptions from ...
http://jlne.ws/h7qgaU
Monetary policy: Is the Fed finished?
The Economist
THE Financial Times has a story by Robin Harding above the fold this morning, headlined, "Fed to signal end of monetary easing". Sounds like big news! What's it all about?
http://jlne.ws/gCqWOq
What are the implications of rising commodity prices for inflation and monetary policy?
By Charles L. Evans, president and chief executive officer, and Jonas D. M. Fisher, vice president and director of macroeconomic research
http://jlne.ws/i0ins9
CFTC Proposal for Swaps Margin May Apply to Futures
By Matthew Leising
The Commodity Futures Trading Commission may require margin changes in futures markets that are being considered for new swaps clearing plans. The CFTC has proposed divvying up margin payments of individual swaps users at clearinghouses rather than allowing accounts to be treated as one pool by banks representing multiple customers. Futures markets now allow banks to pool all their customer accounts together when settling a day’s margins. The swaps plan may be used for futures margin, too, said CFTC Commissioner Scott O’Malia. “It’s being considered,” he said in an interview yesterday.
http://jlne.ws/hc9OMg
Leader of Big Mortgage Lender Guilty of $2.9 Billion Fraud
By BEN PROTESS, NY Times
The founder of what was once one of the nation’s largest mortgage lenders was convicted of fraud on Tuesday for masterminding a scheme that cheated investors and the government out of billions of dollars. It is one of the few successful prosecutions to come out of the financial crisis.
http://jlne.ws/g4BqYn
SEC, CFTC Walk Away From Government Shutdown Threats With Bigger Budgets
Forbes
The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) were among the winners in the budget brinksmanship that occurred last week. Although a number of federal agencies were the subject of approximately $40 billion in cuts, the SEC $75 million in extra funding for 2011.
http://jlne.ws/gxAzZg
Video: Robert Nichols, President And CEO, Financial Services Forum On The Federal Debt Ceiling
C-Span
Robert Nichols talked about the definition, history, and significance of the federal debt ceiling, and he also responded to telephone calls and electronic communications. Mr. Nichols believes Congress must raise the debt ceiling
http://jlne.ws/gI6mmv
Why Goldman Is Not a Simple Culprit in the Financial Crisis Report
By STEVEN M. DAVIDOFF, NY Times
The Senate Permanent Investigation Subcommittee’s report on the financial crisis is an important document. It is an exhaustive look at certain main aspects of the financial crisis, a report which heavily criticizes Washington Mutual, the now-defunct Office of Thrift Supervision, the credit ratings agencies, Goldman Sachs and Deutsche Bank. The focus in the media, as well as in Senator Carl Levin’s news conference on the report, has been the criticism shed on Goldman Sachs for betting against clients who bought collateralized debt obligations from it. But the criticism of Goldman is overwrought. And the focus on Goldman obscures the other important points the report makes about the entire financial industry.
http://jlne.ws/elMzVr
Swaps Regulator Watchdog Failed U.S. Government Standards Audit
By Silla Brush, Bloomberg
The U.S. Commodity Futures Trading Commission’s internal watchdog has “significant deficiencies” in its auditing systems and received a failing grade in a government-required review completed in March. From October 2006 through March 2010, the agency’s Office of the Inspector General failed to meet government standards for quality control procedures, overseeing independent accountants, documenting budget requests, and auditing contractors, according to the 37-page review. The IG’s office also failed to regularly make its reports available on the Internet, the review said.
http://jlne.ws/ewlt9H
Super rich see taxes drop while nearly half of US households pay no federal income tax
By STEPHEN OHLEMACHER, Associated Press
Still scrambling to file your taxes? You'll probably take little consolation in hearing that the super rich pay a lot less taxes than they did a couple of decades ago. And nearly half of U.S. households pay no income taxes at all.
http://jlne.ws/fn8a9g
Happy People Save More Money for Retirement
Yahoo! News
More than half of Americans report having less than $25,000 saved for the future, according to a 2011 Employee Benefit Research Institute survey. An Associated Press and LifeGoesStrong.com poll found that 25 percent of baby boomers have no retirement savings at all. And the American Institute of Certified Public Accountants recently revealed that 56 percent of the people in their poll are not even saving for retirement.
http://jlne.ws/g0PNGh
**CN: Conversely, people who have money saved for retirement are happy.
Economic News
Philly Fed manufacturing index slumps in April
By Steve Goldstein, MarketWatch
The Philadelphia Fed's index of current activity slumped to 18.5 in April after the March reading of 43.4, which was the highest since Jan. 1984. Economists polled by MarketWatch had expected the gauge to fall to 35.5. Nearly all of the survey's broadest indicators remained positive but fell from their readings in the previous month, the Philly Fed said. The Philadelphia Fed index, which has been conducted each month since May 1968, is a diffusion index, which means it's calculated by subtracting the percentage of respondents indicating a decrease from the percentage indicating an increase.
http://jlne.ws/guHI7d
Philly Fed Full Report: April 2011 Business Outlook Survey - Philadelphia Fed
Results from the Business Outlook Survey suggest that regional manufacturing activity continued to grow in April but at a slower pace than in March. Nearly all of the survey’s broadest indicators remained positive but fell from their readings in the previous month. Increases in input prices continue to be widespread, and a significant percentage of firms reported increases in prices for their own manufactured goods. The survey’s indicators of future activity fell notably this month; however, most firms expect continued growth over the next six months.
http://jlne.ws/eLUZi5
U.S. Monthly House Price Index Declined 1.6 Percent from January to February
FHFA
U.S. house prices declined 1.6 percent on a seasonally adjusted basis from January to February, according to the Federal Housing Finance Agency’s
monthly House Price Index. The previously reported 0.3 percent decrease in January was revised to a 1.0 percent decrease. For the 12 months ending in February, U.S. prices fell 5.7 percent. The U.S. index is 18.6 percent below its April 2007 peak and roughly the same as the February 2004 index level.
http://jlne.ws/ejrlHF
Existing home sales rebound a bit in March
By Greg Robb, MarketWatch
Sales of existing single-family homes and condos rebounded by 3.7% in March to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors reported Wednesday.
http://jlne.ws/g6KvX5
New-home construction increases 7.2 pct. in March
By Derek Kravitz, Associated Press
Builders broke ground on more new homes last month, giving the weak housing market a slight boost at the start of the spring buying season.
http://jlne.ws/glzdKE
Consumer sentiment index rises to 69.6 in April
By Ruth Mantell, MarketWatch
The Thomson Reuters/University of Michigan consumer sentiment survey hit 69.6 in the preliminary reading for April, compared with 67.5 for March, according to Friday media reports. Economists surveyed by MarketWatch were looking for an April reading of 69.
http://jlne.ws/fK46fQ
Exchanges, Clearing Houses & MTFs
CME Group Announces Introduction of Sovereign Yield Spread Futures To Manage Risk Exposure Between Gov Bond Markets
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, has announced today that it will introduce cash-settled Sovereign Yield Spread futures beginning May 22 for a trade date of May 23. The six countries represented in the initial launch phase include France (OAT), Germany (Bund), Italy (BTP), Netherlands (DSL), United Kingdom (Treasury Gilts), and United States (Treasury Notes). These products are listed by and subject to the rules of CME, and further diversifies CME Group’s Interest Rates product portfolio.
http://jlne.ws/hQLDgP
LCH.Clearnet’s SwapClear Implements Murex Technology; Doubles SwapClear's Capacity
LCH.Clearnet Limited (LCH.Clearnet) has enhanced its market leading interest rate swap (IRS) clearing service, SwapClear, with the successful implementation of Murex’s world-class capital markets platform MX.3. The technology, which has been adapted by LCH.Clearnet and Murex, replaces a series of legacy systems and provides enhanced risk management capabilities.
http://jlne.ws/ehFQDl
LCH Clearnet Ltd. To Increase Extra Deposit Charge For Long Positions In Portuguese Government Bonds To 25% From 15%
By Emma Charlton and Keith Jenkins, Bloomberg
Greek bonds tumbled, leading declines by securities from Europe’s most indebted countries, as a German government adviser said the Mediterranean nation will probably have to restructure its debt burden.
http://jlne.ws/ieD5ZJ
ELX Comment Letter to CFTC on Core Principles and Other Requirements for DCMs
http://bit.ly/gk6uZe
SGX chief plays down failed offer
By Kevin Brown, FT.com
Magnus Böcker, chief executive of the Singapore Exchange, said he was under no pressure to achieve a significant strategic deal following the collapse of an A$8.3bn (US$8.7bn) bid for the Australian Securities Exchange.
http://jlne.ws/eOvYjQ
Firms & Banks
Morgan Stanley's income falls on weak bond trading
By PALLAVI GOGO, Associated Press/Yahoo! News
Morgan Stanley's income fell 48 percent in the first quarter on a sharp drop in revenue from bond trading and losses from a Japanese investment.
http://jlne.ws/dTubCN
F and C senior bond manager departs
Dow Jones Financial News
Paul Grice, a senior member of the government bonds team at F&C Asset Management and a manager of two key institutional products, has left the company after five years.
http://jlne.ws/fDjFjn
BofA to spin off $5bn private equity arm
By Justin Baer in New York, Financial Times
Bank of America plans to spin off the $5bn private-equity arm the lender inherited in its takeover of Merrill Lynch, severing ties to what had been one of Wall Street’s most prominent buy-out funds before the financial crisis.
http://jlne.ws/fc1ZPR
HSBC Hires Roubini Global's Delgado as Emerging Market Cross-Asset Analyst
Bloomberg
HSBC Holdings Plc. (HSBA) , Europe's largest bank by market value, hired Bertrand Delgado as an emerging-markets strategist, luring him away from Roubini Global Economics LLC.
http://jlne.ws/dZeFi6
Stephen Foley: Why it really pays to work at RBS
Independent
There was no shortage of outrage over executive bonuses at Royal Bank of Scotland when shareholders gathered for its annual meeting in Edinburgh yesterday, and the House of Commons Public Accounts Committee will pile on this morning in its latest report on our state-supported banks. It is "inappropriate" for the likes of RBS to be handing multimillion-pound incomes to its bosses until ...
http://jlne.ws/eOf0wB
Berkshire, Buffett sued over Sokol's trades
By Tom Hals, Reuters
Warren Buffett and the rest of Berkshire Hathaway Inc's board of directors were sued by a shareholder on Tuesday over presumed heir apparent David Sokol's trading in the stock of a company that was later bought by Berkshire.
http://jlne.ws/gZ1AVh
RBS warns of higher costs from bank reforms
By Andrew Bolger, FT.com
Shareholders in Royal Bank of Scotland have been warned that they and the bank’s customers would face extra costs under proposals to “ring-fence” retail banking and impose higher capital requirements.
http://jlne.ws/heQDIa
Citi puts $12.7bn portfolio up for sale
By Francesco Guerrera and Patrick Jenkins, FT.com
Citigroup has taken radical action to cushion the impact of new global capital rules for banks, putting up for sale a $12.7bn portfolio of bad assets that were responsible for some of its huge losses during the financial crisis. Citi revealed the move on Monday alongside first-quarter results that showed a 32 per cent drop in net income that was narrowly better than analysts’ expectations.
http://jlne.ws/eYbT0R
Pimco to Pay $92 Million to Settle Market Manipulation Lawsuit
By Sree Vidya Bhaktavatsalam, Bloomberg
Pacific Investment Management Co., manager of the world’s biggest bond fund, agreed to pay $92 million to settle a private class-action lawsuit that accused it of manipulating the price of Treasury futures contracts.
http://jlne.ws/ew7eXd
Deutsche Bank halts plan to sell BHF unit
Market Watch
Deutsche Bank said Monday that it's ended talks with Liechtenstein's LGT Bank over the sale of its BHF-Bank unit. Deutsche Bank said that the two firms had drawn up a mutually beneficial agreement that was ready to sign, but that "following discussions between the parties and with the competent supervisory authorities," the banks decided not to pursue the transaction ...
http://jlne.ws/dIpbJ9
Ex-Citigroup executive elected to Moody's board
INO News
A long-time executive of Citigroup Inc. has been elected to the board of directors of Moody's Corp. Jorge Bermudez will serve on the board's audit and governance and compensation committees, Moody's said Wednesday.
http://jlne.ws/hdSPSD
Pimco’s new ETF to focus on US debt
By Dan McCrum in New York, Financial Times
Bill Gross, manager of the world’s largest mutual fund, is to run a new exchange-traded fund for Pimco. The involvement of such a high-profile investor in an actively traded ETF will attract attention, and assets, to a corner of an industry better known as a cheap and flexible way to make passive investments.
http://jlne.ws/hqg7PS
Auctions & Statistics
US: $0.B TIPSPurchase 2011-04-20 NYFed permanent open market operations
The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee (FOMC).
http://jlne.ws/dcRpcM
Freddie Mac And Fannie Mae 2011 Note Calendar
Reuters
The following are scheduled sales announcement dates for potential Freddie Mac (FMCC.OB) reference, Fannie Mae (FNMA.OB)
benchmark notes for 2011.
http://jlne.ws/g4IOoT
Regulators
FRB: Bernanke, Statement by Chairman Bernanke on financial literacy
Statement by Chairman Bernanke on financial literacy
Provided for the record of a hearing held on April 12, 2011 conducted by the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Committee on Homeland Security and Governmental Affairs, U.S. Senate
April 20, 2011...
http://jlne.ws/hdyT5E
Remarks By Deputy U.S. Treasury Secretary Neal S. Wolin
Press Release
http://jlne.ws/hj0ToU
St. Louis Fed: The basics of quantitative easing in seven easy-to-read paragraphs
Standard and Poor’s changed its outlook on U.S. debt to “negative” yesterday, thanks to the nation’s mounting debt load. But the U.S. isn’t the only country facing rising debt...
http://jlne.ws/fgWgtm
Fed's Bullard: Concern Over 2Q Growth 'At Odds' With Industry View
By Daniel Kruger, Bloomberg
Investors are paying the smallest discounts for Treasuries other than the newest, most-traded bonds since the start of the financial crisis, a sign of growing demand even as the Federal Reserve’s $600 billion buying program approaches its conclusion.
http://jlne.ws/eRk85p
Federal Reserve Seeks Comments On Outline Of How It Intends To Apply Certain Parts Of Its Current Consolidated Supervisory Program For Bank Holding Companies To Savings And Loan Holding Companies
Press Release
The Federal Reserve Board is seeking comment on a notice that outlines how it intends to apply certain parts of its current consolidated supervisory program for bank holding companies to savings and loan holding companies (SLHCs) after assuming supervisory responsibility for SLHCs. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, supervisory and rule-writing authority for SLHCs and their non-depository subsidiaries will transfer from the Office of Thrift Supervision (OTS) to the Board on July 21, 2011.
http://jlne.ws/hPsndX
FDIC eyes tougher rules for big banks
By Tom Braithwaite in Washington, Financial Times
American banks should ringfence their riskier investment banking operations, according to a top financial regulator who wants the US to adopt restrictions similar to those proposed last week by Britain’s Independent Commission on Banking.
http://jlne.ws/hqtLVq
Communiqué Of The Twenty-Third Meeting Of The International Monetary And Financial Committee Of The Board Of Governors Of The International Monetary Fund
Press Release
http://jlne.ws/geHEdo
Statement By U.S. Treasury Secretary Tim Geithner To The International Monetary Fund And World Bank Group Development Committee Meeting
Press Release
http://jlne.ws/eSiL7v
Statement By U.S. Treasury Secretary Tim Geithner At The International Monetary And Financial Committee (IMFC) Meeting
Press Release
http://jlne.ws/dXBmw4
FSB releases progress reports on OTC derivatives reforms and implementation of G20 fin reg recommendations
This note provides an overview of work underway to implement the G20 recommendations for strengthening financial stability. It focuses on international policy development and implementation that has taken place since the G20 Finance Ministers and Governors meeting
in February 2011.
http://jlne.ws/hgLKMa
Fed Could Start to Tighten by End of Year: Plosser
By: Jeff Cox, CNBC
The Federal Reserve is not "behind the curve" when it comes to inflation and could take action before the end of the year to tighten monetary policy, Philadelphia Fed President Charles Plosser told CNBC.
http://jlne.ws/hKV5EU
Gensler Says Regulators Should Set Small Group of Systemic Firms
By Phil Mattingly, Bloomberg
The number of financial firms federal regulators deem systemically important should be kept small, a member of the council identifying the firms said. Gary Gensler, the chairman of the Commodity Futures Trading Commission, said the Dodd-Frank Act requires regulators to limit the number of firms getting the designation. The Financial Stability Oversight Council is labeling the financial firms that may face more stringent oversight and capital requirements.
http://jlne.ws/fBvpnI
Global News
New Turkish c.bank gov makes surprise RRR hike
Reuters
Turkey's central bank launched its new governor's term in charge with a surprise rise in required reserves on Thursday, strengthening the lira and Turkish government bonds.
http://jlne.ws/e3Gyax
Greek woes, aid backlash counter solid Spain auction
Reuters
Spain attracted solid demand at a bond sale on Wednesday, easing concerns it could be swept up by the contagion hitting other euro zone states, but worries about Greek debt continued to haunt the bloc.
http://jlne.ws/fMfMac
UK banks’ rush into property needs watching
By John Plender, Financial Times
While the financial crisis that began in 2007 had a plethora of causes, property was at the heart of the problem. The fact that the big UK-based banks, with the exception of Lloyds Banking Group which is battling with the dismal property legacy it acquired with HBOS, have been significantly increasing their exposure to the sector should thus prompt eyebrows to twitch.
http://jlne.ws/elEvoL
Switzerland set to propose strict bank rules
Reuters Finance News (EU) via Yahoo! UK & Ireland Finance
The Swiss government looks set to push ahead with plans to make UBS and Credit Suisse reach tough new capital standards despite warnings they could make the banks uncompetitive. The ...
http://jlne.ws/eDLooy
Russia's Alfa, Evraz Eye Lower Eurobond yields
Reuters
Russia's Alfa Bank and steelmaker Evraz (HK1q.L) are seeking to place Eurobonds at lower yields than previously indicated, in a sign that investor demand has not been hurt too much by global sovereign debt woes.
http://jlne.ws/dL2Xis
Finnish PM-Elect Sees No Big Change To Portugal Bailout
Reuters
Finland's likely next prime minister ruled out proposing major changes to a bailout package for Portugal, seeking to soothe concerns that its new government could block the European Union's plans and upset markets.
http://jlne.ws/fsDH06
Political gains for Finland's main nationalist party stoke concerns over the eurozone debt crisis
AFP
The euro slumped against the dollar Monday as shock political gains for Finland's main nationalist party stoked concerns over the eurozone debt crisis, analysts said. As authorities prepared to discuss Portugal's financial bailout, fresh worries over indebted eurozone nations helped the price of 'safe-haven' gold to reach fresh record highs.
http://jlne.ws/e0v6kU
Ireland's Kenny Seeks to Reassure Markets
By Ainsley Thomson, WSJ.com
Irish Prime Minister Enda Kenny stepped up his diplomatic offensive during his first state visit to London on Monday, seeking to reassure the markets that his government is serious about tackling its budget deficit and that it will not consider defaulting on its debt.
http://jlne.ws/euztSr
Portuguese Banks Expect Debt Targets
By Patricia Kowsmann, WSJ.com
Portuguese banks will likely have to step up efforts to cut reliance on borrowed money in exchange for having some of the estimated 80 billion euros (about $114 billion) bailout earmarked for the country, senior bank officials say.
http://jlne.ws/eTm7qt
Hungary Central Bank Holds Interest Rate at 6.00%
CentralBankNews.info
The Magyar Nemzeti Bank held its main policy rate, the two-week deposit interest rate, unchanged at 6.00%. Hungary reported inflation of 4.5% in March, slightly higher than the 4.1% recorded in February, and higher than the central bank's target of 3%.
http://jlne.ws/dOh3zK
BRICS make move to shove dollar aside
By David Marsh, MarketWatch
China and four other leading high-growth economies have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system.
http://jlne.ws/dEt7ri
Loophole fears over Vickers bank rules
By Patrick Jenkins, Megan Murphy and Sharlene Goff, Financial Times
European banking groups could take advantage of a loophole to escape higher capital requirements recommended by the Vickers Commission report on UK bank restructuring, fuelling concerns they will secure a competitive advantage in high street banking.
http://jlne.ws/dHcjr3
Pension funds fight EU plan on derivatives
By Ellen Kelleher, Financial Times
European pension funds are fighting to revise a European Union proposal on derivatives regulation as they fear it will damage investment returns. The UK’s National Association of Pension funds and other European trade groups are lobbying to amend the European Market Infrastructure Regulation (EMIR), which would demand they post collateral with counterparty clearing houses when they use derivatives to hedge interest-rate movements or life- expectancy risks.
http://jlne.ws/gQxNYR
March mutual fund sales surge 81% from a year ago
The Globe And Mail
Net sales of mutual funds in Canada for March were estimated to be $3.72-billion, continuing the strong growth experienced in the first two months of this year, according to the Investment Funds Institute of Canada.
http://jlne.ws/hCfnNr
Virgin bank CEO looks to future
BBC News
Jayne-Anne Gadhia speaks to Douglas Fraser, presenter of Business Scotland, about her vision for Virgin Money's role in UK finance.
http://jlne.ws/fBZG99
RBS rebels bid to block Hester pay
Scotland on Sunday
ROYAL Bank of Scotland is this week facing a shareholder rebellion over a possible £7.7 million payout for chief executive Stephen Hester and confusion about the level of the bank's losses.
http://jlne.ws/ewTowW
Barclays, HSBC and Standard Chartered face domicile move chatter
The Scotsman: Business
A TOP City fund manager has revealed institutional investors are in "regular talks" with Barclays, HSBC and Standard Chartered over possibly shifting their tax domicil
http://jlne.ws/fdxVjd
Deutsche Bank, Liechtenstein's LGT end talks on sale of German bank's BHF-Bank
The Canadian Press via Yahoo! Canada News
Germany's Deutsche Bank AG says it has scrapped a plan to sell its BHF-Bank subsidiary to LGT of Liechtenstein and will hold on to the private banking and wealth management specialist.
http://jlne.ws/dNSmsd
Top Interest Rate Headlines 04-27-11: Fed Forecasts Show Transitory Inflation and Lower Growth in 2011
Fed Forecasts Show Transitory Inflation and Lower Growth in 2011
By Joshua Zumbrun, Bloomberg
Federal Reserve officials forecast that a measure of prices will rise between 2.1 percent and 2.8 percent this year before moderating, underscoring their view that inflation pressures will be “transitory.”
http://jlne.ws/lQ9PsH
At 15% to 50% of Tier 1, Underwater Home Equity Stirs Unease
American Banker
Delinquencies have stabilized and chargeoffs have eased, and the second dip in home prices has not been remotely as severe as its older twin.
http://jlne.ws/j1t0gF
CFTC Proposes Protecting Margin of Swaps Users From Peers That Go Bankrupt
By Matthew Leising, Bloomberg
The Commodity Futures Trading Commission approved a proposal to allow swaps users who post collateral to a clearinghouse to have their margin protected against another investor’s bankruptcy, a move that may increase trading costs.
http://jlne.ws/eYeDR3
Bernanke Says ‘A Couple of Meetings’ Before Action
By Caroline Salas, Bloomberg
Federal Reserve Chairman Ben S. Bernanke said the central bank’s pledge to keep interest rates low for an “extended period” means there likely will be no tightening of policy “for a couple of meetings.”
http://jlne.ws/mCzHv8
U.S. Stocks, Gold Gain as Fed Keeps Plans for Low Rates
By Rita Nazareth and Inyoung Hwang, Bloomberg
The Standard & Poor’s 500 Index rallied to an almost three-year high and Treasuries fell as the Federal Reserve renewed its pledge to stimulate growth with low interest rates and said a pickup in inflation is likely temporary. Gold gained and the dollar weakened versus the euro.
http://jlne.ws/jmqj07
Stocks rise as Fed says it will end bond program
By Chip Cutter, Associated Press
Stocks turned higher Wednesday after the Federal Reserve said it would end its $600 billion bond-buying program as scheduled in June because the economy has improved.
http://jlne.ws/llcCql
Fed Trims Its Growth Outlook
By Michael S. Derby, WSJ.com
The Federal Reserve on Wednesday trimmed its outlook for growth and signaled it expects higher inflation amid a slightly lower unemployment rate for 2011.
http://jlne.ws/l0t0Tq
Supercurrency opens rift in Brazil government
By Brian Winter, Reuters
The relentless rise of Brazil's currency has opened a big rift within President Dilma Rousseff's government, as some ministers and other officials work behind the scenes for new capital controls to curb the real and protect local industry.
http://jlne.ws/kP87Rr
Fed Signals Intent to Complete Bond Buying
BY LUCA DI LEO, JON HILSENRATH AND TOM BARKLEY, WSJ.com
The Federal Reserve signaled Wednesday the coming completion of its $600 billion bond-buying program as planned, but Chairman Ben Bernanke said the central bank has no timetable for ending its low interest-rate policies.
http://jlne.ws/lVj1UF
Operator of trading platform for fixed incomes, MarketAxess, reports first quarter 2011 record revenue of $43.6 mln
Press Release
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the first quarter ended March 31, 2011.
http://jlne.ws/kTf6Yk
FRB: Press Release--FOMC statement--April 27, 2011
Information received since the Federal Open Market Committee met in March indicates that the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March...
http://jlne.ws/jMbpqi
Canada first G-7 economy to move from recovery to self-sustaining expansion
By Mark Hopkins, Moody's Analytics
Output and employment have surpassed pre-crisis peaks, but growth remains below its potential rate...
http://jlne.ws/ej9DZF
CMG Mortgage Hires Fannie Executive
By Brian Collins, National Mortgage News
CMG Mortgage has hired Todd Hempstead to work with private investors interested in buying and securitizing conforming and Jumbo mortgages.
http://jlne.ws/fp21Yx
Bank of America's New Credit Card Penalty Interest Rate Is Nearly 30%
Daily Finance
Bank of America credit card holders, beware. If you're late on a monthly payment, that little "oops" might become a big "ouch": Your future balances could be subject to a penalty rate of nearly 30%, notes a report Wednesday in The Charlotte Observer. The penalty rate will not be applied to previous balances, however.
http://jlne.ws/gYxue3
Gensler Says CFTC May Extend Comment Period for All Swaps Rules
By Silla Brush, Bloomberg
The U.S. Commodity Futures Trading Commission voted 4-1 today to reopen or extend public comment periods for proposed derivatives regulations under the Dodd- Frank Act for an additional 30 days.
http://jlne.ws/dGWYkR
S&P sounds fresh alarm on Japan debt
By Michiyo Nakamoto in Tokyo, Financial Times
Standard & Poor's has downgraded its outlook for Japan’s sovereign debt from “stable” to “negative,” citing concerns that reconstruction costs following the March 11 disaster would increase Japan’s fiscal deficits.
http://jlne.ws/ecnMq6
EM central banks are doing Fed’s dirty work
By Richard Bernstein, Financial Times
US investors are increasingly fearful of inflation. Every cycle has some growth in headline inflation, but there is a big difference between such normal, cyclical pricing pressure and the rising fear that the US economy is somehow mutating into that of a developing markets country. Ironically, emerging market central banks’ recent monetary tightening is likely to prevent US inflation from getting out of control and could actually prolong the US economic cycle.
http://jlne.ws/f54K1t
Economy is ‘roughly in the right place’
By George Parker and Chris Giles, Financial Times
George Osborne, chancellor, has warned the cabinet that the British economy is still facing difficulties but was “roughly in the right place”, ahead of the publication on Wednesday of eagerly awaited economic data.
http://jlne.ws/fjKRwL
Barclays Posts 5% Drop in Profit on Investment Bank Decline
BusinessWeek
Barclays Plc, the U.K.'s third- largest bank by assets, said earnings fell to 1.01 billion pounds ($1.67 billion) in the first quarter, as revenue from its investment banking unit declined by 15 percent.
http://jlne.ws/fyPTwr
Credit Suisse fails to match 2010 results
By Haig Simonian in Zurich, Financial Times
Credit Suisse’s profits and revenues in the first quarter failed to match its bumper results of 2010 but were well ahead of the depressed levels of the final three months of last year, the Swiss lender announced on Wednesday.
http://jlne.ws/gGqM98
Lehman to start Aurora bank auction by June
Reuters via Yahoo! India News
Lehman Brothers Holdings Inc is expected to begin the sale process for Aurora Bank, worth around $850 million, by June as the bankrupt firm sells off pieces of itself to pay off creditors, sources familiar with the situation said.
http://jlne.ws/epluR3
Prospects bleak for US ‘muni’ funds revival
By Nicole Bullock in New York, Financial Times
The prospects are bleak for a significant revival in investor appetite this year for mutual funds that buy the debt of US states, cities and other local bodies, according to a survey of municipal bond experts.
http://jlne.ws/g3g0QU
By Joshua Zumbrun, Bloomberg
Federal Reserve officials forecast that a measure of prices will rise between 2.1 percent and 2.8 percent this year before moderating, underscoring their view that inflation pressures will be “transitory.”
http://jlne.ws/lQ9PsH
At 15% to 50% of Tier 1, Underwater Home Equity Stirs Unease
American Banker
Delinquencies have stabilized and chargeoffs have eased, and the second dip in home prices has not been remotely as severe as its older twin.
http://jlne.ws/j1t0gF
CFTC Proposes Protecting Margin of Swaps Users From Peers That Go Bankrupt
By Matthew Leising, Bloomberg
The Commodity Futures Trading Commission approved a proposal to allow swaps users who post collateral to a clearinghouse to have their margin protected against another investor’s bankruptcy, a move that may increase trading costs.
http://jlne.ws/eYeDR3
Bernanke Says ‘A Couple of Meetings’ Before Action
By Caroline Salas, Bloomberg
Federal Reserve Chairman Ben S. Bernanke said the central bank’s pledge to keep interest rates low for an “extended period” means there likely will be no tightening of policy “for a couple of meetings.”
http://jlne.ws/mCzHv8
U.S. Stocks, Gold Gain as Fed Keeps Plans for Low Rates
By Rita Nazareth and Inyoung Hwang, Bloomberg
The Standard & Poor’s 500 Index rallied to an almost three-year high and Treasuries fell as the Federal Reserve renewed its pledge to stimulate growth with low interest rates and said a pickup in inflation is likely temporary. Gold gained and the dollar weakened versus the euro.
http://jlne.ws/jmqj07
Stocks rise as Fed says it will end bond program
By Chip Cutter, Associated Press
Stocks turned higher Wednesday after the Federal Reserve said it would end its $600 billion bond-buying program as scheduled in June because the economy has improved.
http://jlne.ws/llcCql
Fed Trims Its Growth Outlook
By Michael S. Derby, WSJ.com
The Federal Reserve on Wednesday trimmed its outlook for growth and signaled it expects higher inflation amid a slightly lower unemployment rate for 2011.
http://jlne.ws/l0t0Tq
Supercurrency opens rift in Brazil government
By Brian Winter, Reuters
The relentless rise of Brazil's currency has opened a big rift within President Dilma Rousseff's government, as some ministers and other officials work behind the scenes for new capital controls to curb the real and protect local industry.
http://jlne.ws/kP87Rr
Fed Signals Intent to Complete Bond Buying
BY LUCA DI LEO, JON HILSENRATH AND TOM BARKLEY, WSJ.com
The Federal Reserve signaled Wednesday the coming completion of its $600 billion bond-buying program as planned, but Chairman Ben Bernanke said the central bank has no timetable for ending its low interest-rate policies.
http://jlne.ws/lVj1UF
Operator of trading platform for fixed incomes, MarketAxess, reports first quarter 2011 record revenue of $43.6 mln
Press Release
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the first quarter ended March 31, 2011.
http://jlne.ws/kTf6Yk
FRB: Press Release--FOMC statement--April 27, 2011
Information received since the Federal Open Market Committee met in March indicates that the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March...
http://jlne.ws/jMbpqi
Canada first G-7 economy to move from recovery to self-sustaining expansion
By Mark Hopkins, Moody's Analytics
Output and employment have surpassed pre-crisis peaks, but growth remains below its potential rate...
http://jlne.ws/ej9DZF
CMG Mortgage Hires Fannie Executive
By Brian Collins, National Mortgage News
CMG Mortgage has hired Todd Hempstead to work with private investors interested in buying and securitizing conforming and Jumbo mortgages.
http://jlne.ws/fp21Yx
Bank of America's New Credit Card Penalty Interest Rate Is Nearly 30%
Daily Finance
Bank of America credit card holders, beware. If you're late on a monthly payment, that little "oops" might become a big "ouch": Your future balances could be subject to a penalty rate of nearly 30%, notes a report Wednesday in The Charlotte Observer. The penalty rate will not be applied to previous balances, however.
http://jlne.ws/gYxue3
Gensler Says CFTC May Extend Comment Period for All Swaps Rules
By Silla Brush, Bloomberg
The U.S. Commodity Futures Trading Commission voted 4-1 today to reopen or extend public comment periods for proposed derivatives regulations under the Dodd- Frank Act for an additional 30 days.
http://jlne.ws/dGWYkR
S&P sounds fresh alarm on Japan debt
By Michiyo Nakamoto in Tokyo, Financial Times
Standard & Poor's has downgraded its outlook for Japan’s sovereign debt from “stable” to “negative,” citing concerns that reconstruction costs following the March 11 disaster would increase Japan’s fiscal deficits.
http://jlne.ws/ecnMq6
EM central banks are doing Fed’s dirty work
By Richard Bernstein, Financial Times
US investors are increasingly fearful of inflation. Every cycle has some growth in headline inflation, but there is a big difference between such normal, cyclical pricing pressure and the rising fear that the US economy is somehow mutating into that of a developing markets country. Ironically, emerging market central banks’ recent monetary tightening is likely to prevent US inflation from getting out of control and could actually prolong the US economic cycle.
http://jlne.ws/f54K1t
Economy is ‘roughly in the right place’
By George Parker and Chris Giles, Financial Times
George Osborne, chancellor, has warned the cabinet that the British economy is still facing difficulties but was “roughly in the right place”, ahead of the publication on Wednesday of eagerly awaited economic data.
http://jlne.ws/fjKRwL
Barclays Posts 5% Drop in Profit on Investment Bank Decline
BusinessWeek
Barclays Plc, the U.K.'s third- largest bank by assets, said earnings fell to 1.01 billion pounds ($1.67 billion) in the first quarter, as revenue from its investment banking unit declined by 15 percent.
http://jlne.ws/fyPTwr
Credit Suisse fails to match 2010 results
By Haig Simonian in Zurich, Financial Times
Credit Suisse’s profits and revenues in the first quarter failed to match its bumper results of 2010 but were well ahead of the depressed levels of the final three months of last year, the Swiss lender announced on Wednesday.
http://jlne.ws/gGqM98
Lehman to start Aurora bank auction by June
Reuters via Yahoo! India News
Lehman Brothers Holdings Inc is expected to begin the sale process for Aurora Bank, worth around $850 million, by June as the bankrupt firm sells off pieces of itself to pay off creditors, sources familiar with the situation said.
http://jlne.ws/epluR3
Prospects bleak for US ‘muni’ funds revival
By Nicole Bullock in New York, Financial Times
The prospects are bleak for a significant revival in investor appetite this year for mutual funds that buy the debt of US states, cities and other local bodies, according to a survey of municipal bond experts.
http://jlne.ws/g3g0QU
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