September 22, 2011
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
DTCC Posts Stats On Top 15 Sovereign And Corporate Credit Default Swaps
This week, the Depository Trust and Clearing Corporation (DTCC) launched a weekly email containing tables that list credit default swaps (CDS) contracts on the top 15 sovereign and corporate reference entities by net notional amount as well as the Top 15 volume movers by percentage change based on the net notional amount registered in its Trade Information Warehouse, along with historical data.
Number one on the list in terms of net notional amount this week was the French Republic, with 24,328,795,876 net notional (USD EQ). The net notional amount is considered the true indication of risk, since it eliminates offsetting CDS contracts and represents the maximum amount that would have to be paid in the event of a default by the indicated entity, assuming netting across trade counterparties. The second highest ranked in terms of net notional amount this week was the Republic of Italy, at 23,342,091,691 (USD EQ)
DTCC’s Trade Information Warehouse contains approximately 98 percent of all CDS trades executed globally. See the full list of data from the DTCC can be found on the DTCC's website at www.dtcc.com.
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Five Minutes with Jim Rucker, Credit and Risk Officer, MarketAxess
Jim Rucker is the credit and risk officer of MarketAxess Holdings Inc. (MKTX). He joined the company at its inception, after a 20-year career with Chase Manhattan Bank, one of the three financial entities that founded MarketAxess. Earlier this month, MKTX issued a release outlining its views on the European Commission’s Markets in Financial Instruments Directive II (MiFID II). Rucker spoke with JLN’s Doug Ashburn about MiFID, swap execution facilities (SEFs), and emerging regulatory issues.
Q: We are in the midst of a sea of regulatory change - Basel III, Dodd-Frank in the U.S., MiFID II in Europe, the Vickers Commission in the UK. How is MarketAxess responding to the change?
A: We are doing things on a number of different levels. First of all, just trying to understand what is happening on the regulatory side: educating ourselves on draft regulations, working with regulators and legislators to both understand and influence the shape of regulations. That is the first piece. The second is that we spend a lot of time out talking with our clients about the regulations and the impact on their businesses – both on the buy-side and sell-side.
We have been making changes to our platform to comply with regulations, to the extent that we know them. Some areas are clearer than others. For instance, SEFs connecting into central clearing counterparties is fairly obvious, so we have been able to do a lot of work already in that area. We have connected into two of the clearing houses. When it comes to trading protocols, however, the rules are much less certain. We have done a lot of work already to create a range of flexible protocols for CDS trading, but we need to wait until we see the final regulations before we complete that.
Q: MarketAxess sent out a press release that outlined the firm’s views on MiFID II. In the release, MKTX advocated a consolidated-trade-tape system and post-trade transparency, but suggests that a pre-trade transparency regime would not be in the best interest of market participants. Why?
A: It is not that we are against pre-trade transparency, but rather the way in which it is introduced. In MiFID II (actually, what we should be calling MiFIR, as it will be a regulation rather than a directive), it talks about applying similar pre-trade price transparency requirements that currently apply in Europe in the equity markets to other asset classes, including fixed income. That is what we think is not appropriate: requiring, for instance, firms to post firm pre-trade prices for up to certain sizes, is not something we think is appropriate in a market that is as infrequently traded as many of the bonds are in the corporate bond markets in which we operate. It may be fine in very liquid instruments that have continuous active two-way markets, but does not make sense in markets that are thinly traded. Most corporate bonds do not trade that actively.
This is an excerpt of the Five Minutes piece with James Rucker. See the full interview here.
--Christine Nielsen
Lead Stories
IMF’s Lagarde Says ‘Downside Risks’ High for Global Economy
By Simon Kennedy, Bloomberg Businessweek
International Monetary Fund Managing Director Christine Lagarde said “downside risks” are high for the world economy.
http://jlne.ws/qc4ReX
El-Erian: World on Eve of Next Financial Crisis
By Shamim Adam, Bloomberg
The world is on the eve of the next financial crisis with sovereign debt its epicenter, Mohamed El- Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co. said.
http://jlne.ws/pgLhEE
Rate on 30-year mortgage stays at 60-year low
By Derek Kravitz, Associated Press
Fixed mortgage rates hovered at record lows for a third straight week. They are likely to fall even further now that the Federal Reserve said it would shuffle its holdings to drive down long-term interest rates.
http://jlne.ws/rldJh2
Congress flirts with government shutdown after bill fails
By Andy Sullivan, Reuters
Republican leaders were scrambling on Thursday to find the votes to keep the government funded after the embarrassing defeat of a spending bill threw into question Congress' ability to pass basic laws.
http://jlne.ws/nyHvKc
Fed Study: Low Mortgage Rates No Boon to Refinancing in 2010
By Mark Gongloff, WSJ.com
One of the few potential marginal benefits of the Fed’s policy decision yesterday could be to push mortgage rates lower, potentially fueling some more refinancing activity, which could put some cash back in people’s pockets.
http://jlne.ws/ogPPhp
Federal Open Market Committee Statement Sept. 21, 2011
Press Release
Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow. Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.
http://jlne.ws/noIqOG
Fed Will Shift Treasury Holdings to Longer-Term Securities
By Scott Lanman, Bloomberg
Federal Reserve policy makers will replace much of the short-term debt in their portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession.
http://jlne.ws/pB9ahK
Fed's Operation Twist
By Mark Gongloff, WSJ.com
The Fed announced $400 billion in Operation Twist through the end of June 12. The market initially sold off on the news, though it now seems to be clambering back. The market expected the Fed to announce Operation Twist, in an amount of $400 billion or more.
http://jlne.ws/oE9j4i
FOMC Announces $400B "Twist" to QE Program
Central Bank News
The US Federal Open Market Committee (FOMC) held the fed funds rate unchanged at 0 to 0.25 percent, and announced a refocus of its quantitative easing program (the so-called 'twist'). The Fed announced: "The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest ratesand help make broader financial conditions more accommodative."
http://jlne.ws/q6OImq
Bernanke Joins King Tolerating More Inflation as Economies Fail to Revive
Bloomberg
Inflation flashing red may be less of a green light for higher interest rates as global growth falters.
http://jlne.ws/qrt50D
Bernanke Lacks Tools to Prevent Double Dip, Stiglitz Says
By Benjamin Harvey, Bloomberg
Monetary policy changes aren’t enough to save the U.S. from a “double dip” recession, as the Federal Reserve has only limited ability to boost the economy, Nobel-prize winning economist Joseph Stiglitz said.
http://jlne.ws/r7p4Ph
Paul Volcker: Too-Big-To-Fail Problem 'Not Yet Convincingly Settled'
The Huffington Post
Too-big-to-fail may be here to stay, according to one former Fed chairman.
http://jlne.ws/oPk1y2
Central bank loan pledge lifts markets
By Ben Chu, NZ Herald News
The world's major central banks have pledged to extend large loans to Europe's fragile banking sector, boosting stock markets around the globe. The European Central Bank, the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank all announced, in co-ordinated statements yesterday, their intention to provide three-month dollar loans to the financial sector over the rest of the year.
http://jlne.ws/qbPhGw
House unexpectedly defeats spending bill
Reuters
Republican leaders were scrambling on Thursday to find the votes to keep the government funded after the embarrassing defeat of a spending bill threw into question Congress' ability to pass basic laws.
http://jlne.ws/nyHvKc
Obama Says ‘Coordinated Action’ Needed Globally For Economy
By Margaret Talev and Hans Nichols, Bloomberg
President Barack Obama said the global economic recovery is fragile and requires urgent, unified action to sustain it. “We acted together to avert a depression in 2009,” Obama said in the text of his remarks to the United Nations General Assembly today in New York. “We must take urgent and coordinated action once more.”
http://jlne.ws/r03oBC
Timothy Geithner: U.S. Tax Reform Necessary To Spur Investment
Reuters
Treasury Secretary Timothy Geithner said on Monday that comprehensive tax reform is necessary to make the United States a better environment for growth and investment.
http://jlne.ws/n93XvM
Readout Of Secretary Geithner's Participation In Today's ECOFIN Meeting
Press Release
Secretary Geithner attended today’s ECOFIN meeting at the invitation of the EU Presidency as part of his continuing support for implementation of the reforms that are essential to ensuring confidence in the European economy. At the meeting, he contributed thoughts and ideas on how European governments could develop instruments to ensure adequate firepower to address their challenges. Secretary Geithner encouraged his European counterparts to act decisively and to speak with one voice. He did not advocate or oppose any specific policy prescriptions.
http://jlne.ws/pVdEH4
EU set to speed recapitalisation of 16 banks
By Brooke Masters in London, Peggy Hollinger in Paris and Alex Barker, FT.com
European officials look set to speed up plans to recapitalise the 16 banks that came close to failing last summer’s pan-EU stress tests as part of a co-ordinated effort to reassure the markets about the strength of the 27-nation bloc’s banking sector.
http://jlne.ws/nEdhRg
HSBC's King misses memo on Italy
Financial News
HSBC's chief economist Stephen King came out with some colourful language about Italian creditors this morning, comparing them to baseball bat-wielding loan sharks. We assume he wasn't referring to his own bank – which has billions of dollars of exposure to the troubled country.
http://jlne.ws/nv75zt
EU's Rehn: euro zone won't allow uncontrolled Greek default
Reuters
European leaders will not allow an uncontrolled default of Greek debt and will not let the country leave the euro zone, the European Union's economic and monetary affairs commissioner said on Thursday.
http://jlne.ws/pFaPMy
Greece must shrink state to avoid default: lenders
Reuters
International lenders told Greece on Monday it must shrink its public sector to avoid running out of money within weeks, as investors spooked by political setbacks in Europe dumped risky euro zone assets.
http://jlne.ws/nTZ3et
Greece should default and abandon the euro
Nouriel Roubini, Financial Times
Greece is stuck in a vicious cycle of insolvency, low competitiveness and ever-deepening depression. Exacerbated by a draconian fiscal austerity, its public debt is heading towards 200 per cent of gross domestic product. To escape, Greece must now begin an orderly default, voluntarily exit the eurozone and return to the drachma.
http://jlne.ws/qW3U8q
ECB’s Stark: Bailouts are just buying time
By: Jamie Coleman, FX Street
Outgoing ECB chief economist Stark says the ongoing bailouts of euro zone countries does not solve problems per se. It is just mean to buy time.
http://jlne.ws/o7JuRg
Volcker Rule May Extend to Overseas Banks With U.S. Operations
By Cheyenne Hopkins and Ian Katz
Regulators writing a rule limiting proprietary trading by U.S. banks are considering extending the restrictions to overseas firms with operations in the country, according to four people familiar with the proposal.
http://jlne.ws/pXc49Q
Soros joins Forbes top 10 U.S. billionaires list
By Paula Rogo, Reuters
Investor George Soros, at 81, has for the first time made the list of the 10 wealthiest Americans, Forbes Magazine reported on Wednesday in the 2011 edition of its annual rich list.
http://jlne.ws/raKue2
Interbank Rates And CDS Costs Hit By Impatience With Europe
By Katy Burne Of DOW JONES NEWSWIRES
The rate that European banks charge to lend to one another rose Monday along with the cost of insuring banks' debt against default, underscoring how these financial institutions still question their peers' financial health while the region's fiscal crisis remains unresolved.
http://jlne.ws/oy5KP2
PIMCO | Global Central Bank Focus - Ya Gotta Believe!
This issue of the Global Central Bank Focus features commentary from Tony Crescenzi on monetary policy and investors’ faith, Ben Emons on the potential for competitive quantitative easing, Andrew Bosomworth on the European Central Bank, Lupin Rahman on emerging markets and Isaac Meng on China. Americans in their youth are fed a steady diet of optimism beginning appropriately in elementary school with inspiring history lessons about the dramatic birth of America in 1776. American history books are replete with animated pictures of the hodgepodge of ordinary people who spiritedly took to arms and valiantly fought against a formidable enemy to gain their independence. The story of the Revolution is indeed at the foundation of America’s optimism, and it has been reinforced time and time again throughout America’s renowned history by a plethora of inspirational events, many of which transpired as a result of sheer determination. America’s can-do spirit is captured well with this quote from Thomas Edison, the famous American inventor: “Genius is 1% inspiration, 99% perspiration.”
http://jlne.ws/psbKh1
Events
SEFCON II
Oct. 3, 2011
WMBAA To Examine Role And Operation Of Swap Execution Facilities Under Dodd-Frank
http://jlne.ws/pY4N7S
** CN: MarketsReformWiki's Doug Ashburn will be attending this event.
MarketsWiki Questions: Exploring Financial Technology
October 5, 2011, IIT Stuart School of Business
http://jlne.ws/oHRGmC
CMA/SCI New York CDS Seminar
October 6, 2011
CMA/SCI Discussions Will Focus On Dodd-Frank Regulations
http://jlne.ws/n7ukqG
7th Annual FIA Asia Derivatives Conference
November 29 - December 1, 2011
FIA looks at the futures and options industry in Asia
http://www.futuresindustry.org/asia-2011.asp
Economic News
Euro-zone PMI drop stokes recession fears
MarketWatch
Activity across the euro-zone manufacturing and service sectors contracted in September, according to a closely followed survey of purchasing managers released Thursday, stoking fears the 17-nation region could slip into recession as it struggles with a sovereign debt crisis and an uncertain global economic outlook.
http://jlne.ws/oK1sJd
Leading Economic Indicators Gain 0.3% in August
By Gary Siegel, The Bond Buyer
The composite index of Leading Economic Indicators grew 0.3% in August, the Conference Board reported Thursday.
http://jlne.ws/qdTjK0
40% of consumers slash spending
CNNMoney
Worries about the economy and the stock market caused 40% of consumers to cut their spending over the past two months, according to a study on financial security from Bankrate.com.
http://jlne.ws/o6hUAz
U.S. Household Worth Declines by $149B
By Shobhana Chandra, Bloomberg
Household wealth in the U.S. dropped in the second quarter for the first time in a year, hurt by falling share prices and declining home values. Net worth for households and non-profit groups decreased by $149 billion, a 1 percent drop at an annual pace, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington.
http://jlne.ws/p9S12F
August Existing-Home Sales Rise Despite Headwinds, Up Strongly From a Year Ago
MarketWatch
Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors(R). Monthly gains were seen in all regions.
http://jlne.ws/paNtlc
Exchanges, Clearing Houses & MTFs
NYSE Liffe To Launch Short Gilt Futures LP On Oct. 3 With Incentivized Liquidity Pool And Free Fees
Press Release
To further develop market liquidity, NYSE Liffe operates a wide range of liquidity provider incentive schemes in its futures and options contracts, where individual traders, members and end users can benefit from reduced exchange fees.
http://jlne.ws/nupipX
Jefferies Sues International Derivatives Clearing on Rate Swaps Contracts
By Chris Dolmetsch and Matthew Leising, Bloomberg
Jefferies Group Inc. (JEF) sued International Derivatives Clearing Group LLC, maccusing the Nasdaq OMX Group Inc. unit of fraud and breach of contract in connection with interest-rate swap futures contracts.
http://jlne.ws/qx6eoy
Houston Futures Exchange Announces Interest Rate Derivatives Acceptance
Press Release
The Houston Futures Exchange (HOUFEX) announces today that it will be accepting interest rate derivative products into its clearinghouses via one of the worlds leading electronic platform for processing over-the-counter (OTC) derivatives.
http://jlne.ws/qRbyUi
Firms & Banks
UBS Says Investment-Bank Operations Won't Be Sold
BY P.R. VENKAT AND SAM HOLMES, WSJ.com
UBS AG Chief Executive Oswald Grübel has ruled out a sale of the bank's investment-banking division, people familiar with the situation said Wednesday, while its chairman said the bank's fundamentals remain "solid."
http://jlne.ws/n3jIff
UBS Says Rogue Trading Losses Are Closer to $2.3 Billion
New York Times
The Swiss banking giant said unauthorized trades in index futures were at the center of rogue trading that led to a $2.3 billion loss.
http://jlne.ws/qbxtC8
UBS says trader hid loss with fake deals
By Megan Murphy and Sam Jones in London and Haig Simonian in Zurich, Financial Times
Kweku Adoboli, the trader charged with blowing a $2.3bn hole in the books of UBS, allegedly disguised huge lossmaking positions with fictitious counter-trades, the bank has stated, the same tactic used by Jérôme Kerviel who caused E4.9bn of losses at France’s Société Générale in 2008.
http://jlne.ws/pn1eq8
UBS Trading Losses: Financial Services Authority And Swiss Financial Market Supervisory Authority To Launch Investigation
Press Release
The Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority (FINMA) are launching a comprehensive independent investigation into the events surrounding the trading losses incurred by UBS AG in its London operations.
http://jlne.ws/quNeBS
Catastrophes push Lloyd’s to £697m loss
By Adam Jones, Financial Times
Lloyd’s of London posted a pre-tax loss of £697m for the first half of 2011 after the specialist insurance market shouldered heavy losses from catastrophes in Japan, Australia and New Zealand.
http://jlne.ws/n08Xqx
National Bank of Canada to Buy HSBC Unit for C$206 Million
Bloomberg
National Bank of Canada (NA) , the country's sixth-largest bank, agreed to buy the Canadian investment advisory business of HSBC Holdings Plc (HSBA) for C$206 million ($207 million) in cash.
http://jlne.ws/nHxuRP
Goldman Sachs Employee Fired, Fined, and Suspended For Personal Credit Card Expenses
Forbes
This back-office worker noted her personal expenses and timely paid them back but still wound up out of a job and in trouble with a regulator.
http://jlne.ws/qH5pDC
Pimco Launches New Fund To Capitalize On Long-Term Inflation
By Cynthia Lin, Of DOW JONES NEWSWIRES
Pacific Investment Management Co., one of the world's largest asset-management shops, is launching a new fund that aims to take advantage of inflationary trends by investing in a broad range of assets.
http://jlne.ws/r6zpke
Deutsche Bank Loses on Korea Bond Sales Amid Ban, Charges
BusinessWeek
Deutsche Bank AG, the world's top manager of foreign-currency debt sales, fell in South Korea's rankings of bond-sale managers following indictments of four employees and a six-month ban on its securities unit.
http://jlne.ws/qD3GEJ
BofA Said to Dismiss 13 Investment Bankers
By Hugh Son and Jeffrey McCracken, Bloomberg
Bank of America Corp. (BAC), the biggest U.S. lender, dismissed 13 investment bankers in its industrials group, including managing directors David Iwan and Egan Antill, said two people with direct knowledge of the actions.
http://jlne.ws/o5j4RB
BGC Partners Completes First Fully Electronic Thai Baht Interest Rate Swaps Transaction On BGC Trader
Press Release
BGC Partners, Inc. (NASDAQ: BGCP), (“BGC Partners” or “BGC”), a leading global brokerage company servicing the wholesale financial markets, announces its first fully electronic Thai Baht Interest Rate Swap (IRS) trade using BGC’s award-winning Volume Match tool on the BG Trader platform.
http://jlne.ws/rni2RQ
Bank of Canada's Carney sees risks but no new slump
Jeremy Torobin, The Globe And Mail
Bank of Canada Governor Mark Carney acknowledged Tuesday that the risk of another U.S. recession has risen and outlined a daunting prescription for European policy makers to stabilize the region’s banks and economies, but urged Canadians to forge ahead with steps needed to make the domestic economy more resilient.
http://jlne.ws/oOLcii
Nomura hires new US chief economist
Japanese investment bank Nomura has hired Lewis Alexander as managing director and US chief economist. Alexander was most recently at the US Treasury Department, where he was counselor to theSecretary of the Treasury.
http://jlne.ws/oEtVLQ
Credit Suisse Pays to End Tax Probe
BY NEIL MACLUCAS, WSJ
Credit Suisse Group said Monday it has headed off a potentially long legal dispute over tax evasion in Germany by agreeing to pay E150 million ($207 million) to resolve an investigation by the Düsseldorf public prosecutor's office.
http://jlne.ws/ptkDBo
State Street in swaps clearing platform launch
Sophie Baker, Financial News
State Street is the latest custodian to beef up its services in preparation for the US’s sweeping Dodd-Frank Act, with the launch of its swaps clearing platform.
http://jlne.ws/qhe0vj
Citigroup Raises Fees, 'Simplifies' Accounts
TheStreet.com
Citigroup raised its monthly service fee on basic checking and savings accounts, joining the wave of banks looking for offsets from lost revenues following new banking regulations. Customers would have to pay a flat $10 monthly service fee for the "Basic Banking" package, up from $8 currently. However, the bank said it would "simplify" banking relationships by offering ...
http://jlne.ws/oYlLqf
Nomura Regrets Its Day at the Auction
Forbes
Forbes put a skeptical spin on Nomura Holdings' purchase of the European and Asian operations of Lehman Brothers in late 2008. That view has been borne out by Nomura's stumbling performance in globalizing its investment banking. Now the big Japanese outfit, beset by losses and with a stock price at a modern low, is reducing European staff and taking a hard look elsewhere.
http://jlne.ws/ojhwUU
Regulators
IMF lowers economic outlook, sees danger ahead
By Ben Rooney, CNNMoney
The International Monetary Fund has lowered its global growth outlook, warning that "the global economy is in a dangerous new phase." The IMF, a global financial institution comprising 187 nations, released excerpts from the latest edition of its World Economic Outlook Tuesday, ahead of its fall meeting in Washington this weekend.
http://jlne.ws/n3cjDA
ECB delays T2S settlement project again
By Jeremy Grant in Toronto, Financial Times
The European Central Bank has confirmed that its ambitious project to streamline the region’s settlement systems, known as Target2Securities, would be delayed a second time. The move puts further strain on a project that was supposed to have started in 2014 and is the most ambitious plan yet to overhaul Europe’s settlement infrastructure.
http://jlne.ws/oiAd61
Consumer Bureau Readies Its New Financial Rules
By BEN PROTESS - NY Times
Raj Date, the former banker temporarily leading the Consumer Financial Protection Bureau, outlined a timeline on Tuesday for the Wall Street watchdog to unveil a string of new regulations.
http://jlne.ws/mVSwCb
Canada official warns on OTC clearing reforms
By Jeremy Grant and Bernard Simon in Toronto, Financial Times
A senior Bank of Canada official has warned against the danger of concentrating market risk in the hands of the big banks which control dealing in the world’s largest clearing houses for over-the-counter derivatives.
http://jlne.ws/mOHTOE
Regulators Use of Third Party to Probe UBS Trades 'Bizarre,' Analyst Says
Bloomberg
U.K. and Swiss regulators' use of a third party to investigate UBS AG (UBSN) 's $2.3 billion trading loss was called "bizarre" by an analyst who said the agencies should have the expertise to conduct the probe on their own.
http://jlne.ws/ntTPJh
OTC
OTC derivatives: Big challenges from central clearing
By Brian Bollen, Financial Times
Is this the most challenging time ever for custodians and their clients? For some big players, making particular reference to the proposed new central clearing requirements for over-the-counter derivatives as a means of increasing transparency and reducing risk, the answer is a clear yes. Central clearing will have a series of implications, and challenges, for clients and custodians.
http://jlne.ws/nc8hHw
Global News
Bank of China Halts Forex Trade With Europe Banks, Reuters Says
Bloomberg
Bank of China Ltd. (3988) has stopped trading foreign-exchange forwards and swaps with several European banks on concerns about the region’s debt crisis, Reuters reported, citing three unnamed people. The banks include Societe Generale (GLE) SA, Credit Agricole SA (ACA) and BNP Paribas, after Moody’s Investors Service lowered or put their credit ratings on review for possible downgrades, Reuters reported today.
http://jlne.ws/nY277a
Italy’s Credit Rating Is Lowered by S and P as Debt-Crisis Contagion Spreads
By Jeffrey Donovan, Bloomberg
Italy’s credit rating was cut by Standard and Poor’s, the country’s first downgrade in five years, as Greece’s worsening fiscal crisis fans concern that contagion will engulf countries such as Spain and Italy.
http://jlne.ws/oAw6vk
Dissent Persists on European Debt Crisis
By LAURENCE NORMAN,BERND RADOWITZ and COSTAS PARIS, WSJ.com
WROCLAW, Poland—Germany and Austria rejected calls to boost the euro zone's current bailout fund, and Germany's cabinet delayed discussing a proposed permanent rescue fund, even as the region's finance ministers met here in a bid to ease market tensions caused by escalating sovereign debt problems.
http://jlne.ws/nWj0Dn
Brazil Real Snaps Losing Streak on European Support for Greece
By Gabrielle Coppola and Josue Leonel, Bloomberg
Brazil’s real snapped a nine-day losing streak after European leaders’ pledge to support Greece and lend to euro-area banks spurred optimism policy makers will contain the region’s debt crisis.
http://jlne.ws/pwIkWh
Hungary Risks Bond Slump on Holdings, SocGen, Buda-Cash Say
By Andras Gergely, Bloomberg
Foreign investors’ holdings of Hungarian government debt surged to a record, posing the risk of a “significant” sell-off, according to Societe Generale (GLE) SA and Buda-Cash Brokerhaz Zrt.
http://jlne.ws/qc9bEk
Chile Keeps Rate at 5.25% on Signs of Slowing World Growth
By Randall Woods, Bloomberg
Chile’s central bank kept its benchmark interest rate unchanged yesterday for the third straight month and indicated that a tight labor market may prevent it from following Brazil and cutting rates next month.
http://jlne.ws/qyxW5R
Kenyan shilling steady vs dollar, c.bank watched
Reuters
The Kenyan shilling was steady against the dollar on Friday and traders said they expected the local currency to gain some support after the central bank lifted its key interest rate earlier in the week.
http://jlne.ws/n2x6aV
Bank Group Courts IMF, BRICs On EUR20B Greek Debt Proposal
WSJ.com
By Ian Talley Of DOW JONES NEWSWIRES
The bank industry group negotiating Greece's debt refinancing is asking the International Monetary Fund and major emerging markets to back a private-sector-led plan for Athens to buy back EUR20 billion ($27.6 billion) of its debt.
http://jlne.ws/o9w9pg
BRIC Outlier India May Raise Rates Further on Inflation Threat
By Kartik Goyal, Bloomberg
India’s central bank may extend its record interest-rate increases, economists predicted after Governor Duvvuri Subbarao said a “premature” change in the monetary policy stance may fan inflationary expectations.
http://jlne.ws/o2CMXz
Europe Can't Swap Its Banking Problem
By THOROLD BARKER, WSJ.com
It's the pattern investors have grown used to since the rolling financial crisis began in 2008. The market zeroes in on a point of weakness, policy makers finally apply a band aid, financial apocalypse is averted and the bears retreat before moving on to the next target.
http://jlne.ws/nGhr3w
Growing divergence seen in emerging market monetary policy
By Stefan Wagstyl in London, FT.com
For most central bankers in the developed world the only monetary policy question that matters is whether to loosen the purse strings. For their colleagues in emerging markets, the issue is not so simple: the Indian central bank’s decision on Friday to raise interest rates highlights a growing divergence in emerging market monetary policy.
http://jlne.ws/omY9iQ
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