Huge Treasurys Futures Trade Roils Markets
http://jlne.ws/zxABkF
MSRB Adds New Improvements to EMMA
http://jlne.ws/wBCMwZ
Proprietary-Trading Firms Said to Face Dodd-Frank Swap Dealer Regulations
http://jlne.ws/AyxhEZ
Bernanke: 'Volcker Rule' Won't Be Set by July
http://jlne.ws/yyFvto
Speech: A Progress Report on Our Monetary Policy Framework (February 29, 2012) - Philadelphia Fed
http://jlne.ws/yP0kac
Fed’s Fisher: Mexico Besting U.S. in Many Areas
http://jlne.ws/Ak0y2Y
Fannie Mae to Seek $4.6 Billion More in Aid
http://jlne.ws/AirdQv
Coming tomorrow: Banking Outlook Conference highlights. Join the discussion starting at 8 am
http://ow.ly/9mHfo
Greece must take charge and change: EU's Hahn
http://jlne.ws/y8pTbf
Student Loan Debt Hits Home for Bernanke
http://jlne.ws/yVPsJP
Bernanke: Progress cutting unemployment could fade
http://jlne.ws/yu4o7x
U.S. targets Dubai bank over Iran dealings
http://jlne.ws/AkpzzL
Second cheap money round hard to resist for Europe banks
http://jlne.ws/xb9XYm
Bernanke: Monetary Stance Meets Fed Goals
http://jlne.ws/ABb8P6
Fourth-quarter U.S. GDP growth revised up to 3%
http://jlne.ws/AaTrrC
Rabu, 29 Februari 2012
Fed's Bernanke: Semiannual Monetary Policy Report to the Congress
Fed's Bernanke: Semiannual Monetary Policy Report to the Congress
Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
February 29, 2012
Chairman Bachus, Ranking Member Frank, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress. I will begin with a discussion of current economic conditions and the outlook and then turn to monetary policy.
The Economic Outlook
The recovery of the U.S. economy continues, but the pace of expansion has been uneven and modest by historical standards. After minimal gains in the first half of last year, real gross domestic product (GDP) increased at a 2-1/4 percent annual rate in the second half.1 The limited information available for 2012 is consistent with growth proceeding, in coming quarters, at a pace close to or somewhat above the pace that was registered during the second half of last year.
We have seen some positive developments in the labor market. Private payroll employment has increased by 165,000 jobs per month on average since the middle of last year, and nearly 260,000 new private-sector jobs were added in January. The job gains in recent months have been relatively widespread across industries. In the public sector, by contrast, layoffs by state and local governments have continued. The unemployment rate hovered around 9 percent for much of last year but has moved down appreciably since September, reaching 8.3 percent in January. New claims for unemployment insurance benefits have also moderated.
The decline in the unemployment rate over the past year has been somewhat more rapid than might have been expected, given that the economy appears to have been growing during that time frame at or below its longer-term trend; continued improvement in the job market is likely to require stronger growth in final demand and production. Notwithstanding the better recent data, the job market remains far from normal: The unemployment rate remains elevated, long-term unemployment is still near record levels, and the number of persons working part time for economic reasons is very high.2
Household spending advanced moderately in the second half of last year, boosted by a fourth-quarter surge in motor vehicle purchases that was facilitated by an easing of constraints on supply related to the earthquake in Japan. However, the fundamentals that support spending continue to be weak: Real household income and wealth were flat in 2011, and access to credit remained restricted for many potential borrowers. Consumer sentiment, which dropped sharply last summer, has since rebounded but remains relatively low.
In the housing sector, affordability has increased dramatically as a result of the decline in house prices and historically low interest rates on conventional mortgages. Unfortunately, many potential buyers lack the down payment and credit history required to qualify for loans; others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices. On the supply side of the market, about 30 percent of recent home sales have consisted of foreclosed or distressed properties, and home vacancy rates remain high, putting downward pressure on house prices. More-positive signs include a pickup in construction in the multifamily sector and recent increases in homebuilder sentiment.
Manufacturing production has increased 15 percent since the trough of the recession and has posted solid gains since the middle of last year, supported by the recovery in motor vehicle supply chains and ongoing increases in business investment and exports. Real business spending for equipment and software rose at an annual rate of about 12 percent over the second half of 2011, a bit faster than in the first half of the year. But real export growth, while remaining solid, slowed somewhat over the same period as foreign economic activity decelerated, particularly in Europe.
The members of the Board and the presidents of the Federal Reserve Banks recently projected that economic activity in 2012 will expand at or somewhat above the pace registered in the second half of last year. Specifically, their projections for growth in real GDP this year, provided in conjunction with the January meeting of the Federal Open Market Committee (FOMC), have a central tendency of 2.2 to 2.7 percent.3 These forecasts were considerably lower than the projections they made last June.4 A number of factors have played a role in this reassessment. First, the annual revisions to the national income and product accounts released last summer indicated that the recovery had been somewhat slower than previously estimated. In addition, fiscal and financial strains in Europe have weighed on financial conditions and global economic growth, and problems in U.S. housing and mortgage markets have continued to hold down not only construction and related industries, but also household wealth and confidence. Looking beyond 2012, FOMC participants expect that economic activity will pick up gradually as these headwinds fade, supported by a continuation of the highly accommodative stance for monetary policy.
With output growth in 2012 projected to remain close to its longer-run trend, participants did not anticipate further substantial declines in the unemployment rate over the course of this year. Looking beyond this year, FOMC participants expect the unemployment rate to continue to edge down only slowly toward levels consistent with the Committee's statutory mandate. In light of the somewhat different signals received recently from the labor market than from indicators of final demand and production, however, it will be especially important to evaluate incoming information to assess the underlying pace of economic recovery.
At our January meeting, participants agreed that strains in global financial markets posed significant downside risks to the economic outlook. Investors' concerns about fiscal deficits and the levels of government debt in a number of European countries have led to substantial increases in sovereign borrowing costs, stresses in the European banking system, and associated reductions in the availability of credit and economic activity in the euro area. To help prevent strains in Europe from spilling over to the U.S. economy, the Federal Reserve in November agreed to extend and to modify the terms of its swap lines with other major central banks, and it continues to monitor the European exposures of U.S. financial institutions.
A number of constructive policy actions have been taken of late in Europe, including the European Central Bank's program to extend three-year collateralized loans to European financial institutions. Most recently, European policymakers agreed on a new package of measures for Greece, which combines additional official-sector loans with a sizable reduction of Greek debt held by the private sector. However, critical fiscal and financial challenges remain for the euro zone, the resolution of which will require concerted action on the part of European authorities. Further steps will also be required to boost growth and competitiveness in a number of countries. We are in frequent contact with our counterparts in Europe and will continue to follow the situation closely.
As I discussed in my July testimony, inflation picked up during the early part of 2011.5 A surge in the prices of oil and other commodities, along with supply disruptions associated with the disaster in Japan that put upward pressure on motor vehicle prices, pushed overall inflation to an annual rate of more than 3 percent over the first half of last year.6 As we had expected, however, these factors proved transitory, and inflation moderated to an annual rate of 1-1/2 percent during the second half of the year--close to its average pace in the preceding two years. In the projections made in January, the Committee anticipated that, over coming quarters, inflation will run at or below the 2 percent level we judge most consistent with our statutory mandate. Specifically, the central tendency of participants' forecasts for inflation in 2012 ranged from 1.4 to 1.8 percent, about unchanged from the projections made last June.7 Looking farther ahead, participants expected the subdued level of inflation to persist beyond this year. Since these projections were made, gasoline prices have moved up, primarily reflecting higher global oil prices--a development that is likely to push up inflation temporarily while reducing consumers' purchasing power. We will continue to monitor energy markets carefully. Longer-term inflation expectations, as measured by surveys and financial market indicators, appear consistent with the view that inflation will remain subdued.
Monetary Policy
Against this backdrop of restrained growth, persistent downside risks to the outlook for real activity, and moderating inflation, the Committee took several steps to provide additional monetary accommodation during the second half of 2011 and early 2012. These steps included changes to the forward rate guidance included in the Committee's post-meeting statements and adjustments to the Federal Reserve's holdings of Treasury and agency securities.
The target range for the federal funds rate remains at 0 to 1/4 percent, and the forward guidance language in the FOMC policy statement provides an indication of how long the Committee expects that target range to be appropriate. In August, the Committee clarified the forward guidance language, noting that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--were likely to warrant exceptionally low levels for the federal funds rate at least through the middle of 2013. By providing a longer time horizon than had previously been expected by the public, the statement tended to put downward pressure on longer-term interest rates. At the January 2012 FOMC meeting, the Committee amended the forward guidance further, extending the horizon over which it expects economic conditions to warrant exceptionally low levels of the federal funds rate to at least through late 2014.
In addition to the adjustments made to the forward guidance, the Committee modified its policies regarding the Federal Reserve's holdings of securities. In September, the Committee put in place a maturity extension program that combines purchases of longer-term Treasury securities with sales of shorter-term Treasury securities. The objective of this program is to lengthen the average maturity of our securities holdings without generating a significant change in the size of our balance sheet. Removing longer-term securities from the market should put downward pressure on longer-term interest rates and help make financial market conditions more supportive of economic growth than they otherwise would have been. To help support conditions in mortgage markets, the Committee also decided at its September meeting to reinvest principal received from its holdings of agency debt and agency mortgage-backed securities (MBS) in agency MBS, rather than continuing to reinvest those proceeds in longer-term Treasury securities as had been the practice since August 2010. The Committee reviews the size and composition of its securities holdings regularly and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in the context of price stability.
Before concluding, I would like to say a few words about the statement of longer-run goals and policy strategy that the FOMC issued at the conclusion of its January meeting. The statement reaffirms our commitment to our statutory objectives, given to us by the Congress, of price stability and maximum employment. Its purpose is to provide additional transparency and increase the effectiveness of monetary policy. The statement does not imply a change in how the Committee conducts policy.
Transparency is enhanced by providing greater specificity about our objectives. Because the inflation rate over the longer run is determined primarily by monetary policy, it is feasible and appropriate for the Committee to set a numerical goal for that key variable. The FOMC judges that an inflation rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with its statutory mandate. While maximum employment stands on an equal footing with price stability as an objective of monetary policy, the maximum level of employment in an economy is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market; it is therefore not feasible for any central bank to specify a fixed goal for the longer-run level of employment. However, the Committee can estimate the level of maximum employment and use that estimate to inform policy decisions. In our most recent projections in January, for example, FOMC participants' estimates of the longer-run, normal rate of unemployment had a central tendency of 5.2 to 6.0 percent.8 As I noted a moment ago, the level of maximum employment in an economy is subject to change; for instance, it can be affected by shifts in the structure of the economy and by a range of economic policies. If at some stage the Committee estimated that the maximum level of employment had increased, for example, we would adjust monetary policy accordingly.
The dual objectives of price stability and maximum employment are generally complementary. Indeed, at present, with the unemployment rate elevated and the inflation outlook subdued, the Committee judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives. However, in cases where these objectives are not complementary, the Committee follows a balanced approach in promoting them, taking into account the magnitudes of the deviations of inflation and employment from levels judged to be consistent with the dual mandate, as well as the potentially different time horizons over which employment and inflation are projected to return to such levels.
Thank you. I would be pleased to take your questions.
Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
February 29, 2012
Chairman Bachus, Ranking Member Frank, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress. I will begin with a discussion of current economic conditions and the outlook and then turn to monetary policy.
The Economic Outlook
The recovery of the U.S. economy continues, but the pace of expansion has been uneven and modest by historical standards. After minimal gains in the first half of last year, real gross domestic product (GDP) increased at a 2-1/4 percent annual rate in the second half.1 The limited information available for 2012 is consistent with growth proceeding, in coming quarters, at a pace close to or somewhat above the pace that was registered during the second half of last year.
We have seen some positive developments in the labor market. Private payroll employment has increased by 165,000 jobs per month on average since the middle of last year, and nearly 260,000 new private-sector jobs were added in January. The job gains in recent months have been relatively widespread across industries. In the public sector, by contrast, layoffs by state and local governments have continued. The unemployment rate hovered around 9 percent for much of last year but has moved down appreciably since September, reaching 8.3 percent in January. New claims for unemployment insurance benefits have also moderated.
The decline in the unemployment rate over the past year has been somewhat more rapid than might have been expected, given that the economy appears to have been growing during that time frame at or below its longer-term trend; continued improvement in the job market is likely to require stronger growth in final demand and production. Notwithstanding the better recent data, the job market remains far from normal: The unemployment rate remains elevated, long-term unemployment is still near record levels, and the number of persons working part time for economic reasons is very high.2
Household spending advanced moderately in the second half of last year, boosted by a fourth-quarter surge in motor vehicle purchases that was facilitated by an easing of constraints on supply related to the earthquake in Japan. However, the fundamentals that support spending continue to be weak: Real household income and wealth were flat in 2011, and access to credit remained restricted for many potential borrowers. Consumer sentiment, which dropped sharply last summer, has since rebounded but remains relatively low.
In the housing sector, affordability has increased dramatically as a result of the decline in house prices and historically low interest rates on conventional mortgages. Unfortunately, many potential buyers lack the down payment and credit history required to qualify for loans; others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices. On the supply side of the market, about 30 percent of recent home sales have consisted of foreclosed or distressed properties, and home vacancy rates remain high, putting downward pressure on house prices. More-positive signs include a pickup in construction in the multifamily sector and recent increases in homebuilder sentiment.
Manufacturing production has increased 15 percent since the trough of the recession and has posted solid gains since the middle of last year, supported by the recovery in motor vehicle supply chains and ongoing increases in business investment and exports. Real business spending for equipment and software rose at an annual rate of about 12 percent over the second half of 2011, a bit faster than in the first half of the year. But real export growth, while remaining solid, slowed somewhat over the same period as foreign economic activity decelerated, particularly in Europe.
The members of the Board and the presidents of the Federal Reserve Banks recently projected that economic activity in 2012 will expand at or somewhat above the pace registered in the second half of last year. Specifically, their projections for growth in real GDP this year, provided in conjunction with the January meeting of the Federal Open Market Committee (FOMC), have a central tendency of 2.2 to 2.7 percent.3 These forecasts were considerably lower than the projections they made last June.4 A number of factors have played a role in this reassessment. First, the annual revisions to the national income and product accounts released last summer indicated that the recovery had been somewhat slower than previously estimated. In addition, fiscal and financial strains in Europe have weighed on financial conditions and global economic growth, and problems in U.S. housing and mortgage markets have continued to hold down not only construction and related industries, but also household wealth and confidence. Looking beyond 2012, FOMC participants expect that economic activity will pick up gradually as these headwinds fade, supported by a continuation of the highly accommodative stance for monetary policy.
With output growth in 2012 projected to remain close to its longer-run trend, participants did not anticipate further substantial declines in the unemployment rate over the course of this year. Looking beyond this year, FOMC participants expect the unemployment rate to continue to edge down only slowly toward levels consistent with the Committee's statutory mandate. In light of the somewhat different signals received recently from the labor market than from indicators of final demand and production, however, it will be especially important to evaluate incoming information to assess the underlying pace of economic recovery.
At our January meeting, participants agreed that strains in global financial markets posed significant downside risks to the economic outlook. Investors' concerns about fiscal deficits and the levels of government debt in a number of European countries have led to substantial increases in sovereign borrowing costs, stresses in the European banking system, and associated reductions in the availability of credit and economic activity in the euro area. To help prevent strains in Europe from spilling over to the U.S. economy, the Federal Reserve in November agreed to extend and to modify the terms of its swap lines with other major central banks, and it continues to monitor the European exposures of U.S. financial institutions.
A number of constructive policy actions have been taken of late in Europe, including the European Central Bank's program to extend three-year collateralized loans to European financial institutions. Most recently, European policymakers agreed on a new package of measures for Greece, which combines additional official-sector loans with a sizable reduction of Greek debt held by the private sector. However, critical fiscal and financial challenges remain for the euro zone, the resolution of which will require concerted action on the part of European authorities. Further steps will also be required to boost growth and competitiveness in a number of countries. We are in frequent contact with our counterparts in Europe and will continue to follow the situation closely.
As I discussed in my July testimony, inflation picked up during the early part of 2011.5 A surge in the prices of oil and other commodities, along with supply disruptions associated with the disaster in Japan that put upward pressure on motor vehicle prices, pushed overall inflation to an annual rate of more than 3 percent over the first half of last year.6 As we had expected, however, these factors proved transitory, and inflation moderated to an annual rate of 1-1/2 percent during the second half of the year--close to its average pace in the preceding two years. In the projections made in January, the Committee anticipated that, over coming quarters, inflation will run at or below the 2 percent level we judge most consistent with our statutory mandate. Specifically, the central tendency of participants' forecasts for inflation in 2012 ranged from 1.4 to 1.8 percent, about unchanged from the projections made last June.7 Looking farther ahead, participants expected the subdued level of inflation to persist beyond this year. Since these projections were made, gasoline prices have moved up, primarily reflecting higher global oil prices--a development that is likely to push up inflation temporarily while reducing consumers' purchasing power. We will continue to monitor energy markets carefully. Longer-term inflation expectations, as measured by surveys and financial market indicators, appear consistent with the view that inflation will remain subdued.
Monetary Policy
Against this backdrop of restrained growth, persistent downside risks to the outlook for real activity, and moderating inflation, the Committee took several steps to provide additional monetary accommodation during the second half of 2011 and early 2012. These steps included changes to the forward rate guidance included in the Committee's post-meeting statements and adjustments to the Federal Reserve's holdings of Treasury and agency securities.
The target range for the federal funds rate remains at 0 to 1/4 percent, and the forward guidance language in the FOMC policy statement provides an indication of how long the Committee expects that target range to be appropriate. In August, the Committee clarified the forward guidance language, noting that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--were likely to warrant exceptionally low levels for the federal funds rate at least through the middle of 2013. By providing a longer time horizon than had previously been expected by the public, the statement tended to put downward pressure on longer-term interest rates. At the January 2012 FOMC meeting, the Committee amended the forward guidance further, extending the horizon over which it expects economic conditions to warrant exceptionally low levels of the federal funds rate to at least through late 2014.
In addition to the adjustments made to the forward guidance, the Committee modified its policies regarding the Federal Reserve's holdings of securities. In September, the Committee put in place a maturity extension program that combines purchases of longer-term Treasury securities with sales of shorter-term Treasury securities. The objective of this program is to lengthen the average maturity of our securities holdings without generating a significant change in the size of our balance sheet. Removing longer-term securities from the market should put downward pressure on longer-term interest rates and help make financial market conditions more supportive of economic growth than they otherwise would have been. To help support conditions in mortgage markets, the Committee also decided at its September meeting to reinvest principal received from its holdings of agency debt and agency mortgage-backed securities (MBS) in agency MBS, rather than continuing to reinvest those proceeds in longer-term Treasury securities as had been the practice since August 2010. The Committee reviews the size and composition of its securities holdings regularly and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in the context of price stability.
Before concluding, I would like to say a few words about the statement of longer-run goals and policy strategy that the FOMC issued at the conclusion of its January meeting. The statement reaffirms our commitment to our statutory objectives, given to us by the Congress, of price stability and maximum employment. Its purpose is to provide additional transparency and increase the effectiveness of monetary policy. The statement does not imply a change in how the Committee conducts policy.
Transparency is enhanced by providing greater specificity about our objectives. Because the inflation rate over the longer run is determined primarily by monetary policy, it is feasible and appropriate for the Committee to set a numerical goal for that key variable. The FOMC judges that an inflation rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with its statutory mandate. While maximum employment stands on an equal footing with price stability as an objective of monetary policy, the maximum level of employment in an economy is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market; it is therefore not feasible for any central bank to specify a fixed goal for the longer-run level of employment. However, the Committee can estimate the level of maximum employment and use that estimate to inform policy decisions. In our most recent projections in January, for example, FOMC participants' estimates of the longer-run, normal rate of unemployment had a central tendency of 5.2 to 6.0 percent.8 As I noted a moment ago, the level of maximum employment in an economy is subject to change; for instance, it can be affected by shifts in the structure of the economy and by a range of economic policies. If at some stage the Committee estimated that the maximum level of employment had increased, for example, we would adjust monetary policy accordingly.
The dual objectives of price stability and maximum employment are generally complementary. Indeed, at present, with the unemployment rate elevated and the inflation outlook subdued, the Committee judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives. However, in cases where these objectives are not complementary, the Committee follows a balanced approach in promoting them, taking into account the magnitudes of the deviations of inflation and employment from levels judged to be consistent with the dual mandate, as well as the potentially different time horizons over which employment and inflation are projected to return to such levels.
Thank you. I would be pleased to take your questions.
Selasa, 28 Februari 2012
Top Interest Rate Headlines 02-28-12: Deutsche Bank Says Waugh to Step Down as CEO for Americas
Deutsche Bank Says Waugh to Step Down as CEO for Americas
BusinessWeek
Deutsche Bank AG, Germany's biggest lender, said Seth Waugh has decided to step down as chief executive officer for the Americas, without giving a reason.
http://jlne.ws/y8iD0B
HSBC says it may face criminal charges for transactions
Reuters via Yahoo! News
(Reuters) - HSBC Holdings Plc said on Monday it will likely face criminal or civil charges from an expanding investigation into its ties to allegedly illegal money transactions, including some tied to Iran.
http://jlne.ws/xqZcxP
Barclays faces block on tax schemes
By Megan Murphy, Patrick Jenkins and Vanessa Houlder - Financial Times
Barclays has been blocked from implementing two “highly abusive” tax schemes that could have cost the Treasury £500m, despite the bank’s commitment to a new code of practice in which it pledged not to engage in tax avoidance.
http://jlne.ws/yiJ5qV
Whodunit at MF Global
WSJ
Almost four months after the bankruptcy of futures giant MF Global, clients still haven't been made whole and still haven't been told what happened to $1.6 billion of their money. Nor has anyone been charged with civil or criminal offenses. But a Journal report casts new doubt on the Congressional testimony of former CEO Jon Corzine.
http://jlne.ws/xShQLP
Banks may take on settlement houses at own game
Reuters via Yahoo! News
Banks are looking to break into the last bastion of Europe's securities market, the settling of trades, to meet growing pressure from regulators for safer trading backed with collateral.
http://jlne.ws/yYi1Ce
RBS to Move Australian Fixed-Income Trading to Singapore, U.K.
BusinessWeek
Royal Bank of Scotland Group Plc plans to relocate its Australian fixed-income and currency trading business to Singapore and London, according to an e- mailed response to questions from Bloomberg News.
http://jlne.ws/wQYHiZ
Santander takes control of Poland’s Kredyt
By Victor Mallet in Madrid and Jan Cienski in Warsaw - Financial Times
Santander of Spain, the eurozone’s biggest bank by market capitalisation, will take control of Poland’s Kredyt Bank from KBC of Belgium following a long-awaited deal announced on Tuesday.
http://jlne.ws/xG5ZTB
Market Participant Asks ISDA If Greek CDS Have Been Triggered
By Katy Burne Of DOW JONES NEWSWIRES
An unidentified market participant has asked a committee of the International Swaps and Derivatives Association to rule on whether the passage of legislation approving collective-action clauses for Greek debt should trigger payouts on credit-default swaps tied to Greek sovereign bonds.
http://jlne.ws/zfQzaN
BusinessWeek
Deutsche Bank AG, Germany's biggest lender, said Seth Waugh has decided to step down as chief executive officer for the Americas, without giving a reason.
http://jlne.ws/y8iD0B
HSBC says it may face criminal charges for transactions
Reuters via Yahoo! News
(Reuters) - HSBC Holdings Plc said on Monday it will likely face criminal or civil charges from an expanding investigation into its ties to allegedly illegal money transactions, including some tied to Iran.
http://jlne.ws/xqZcxP
Barclays faces block on tax schemes
By Megan Murphy, Patrick Jenkins and Vanessa Houlder - Financial Times
Barclays has been blocked from implementing two “highly abusive” tax schemes that could have cost the Treasury £500m, despite the bank’s commitment to a new code of practice in which it pledged not to engage in tax avoidance.
http://jlne.ws/yiJ5qV
Whodunit at MF Global
WSJ
Almost four months after the bankruptcy of futures giant MF Global, clients still haven't been made whole and still haven't been told what happened to $1.6 billion of their money. Nor has anyone been charged with civil or criminal offenses. But a Journal report casts new doubt on the Congressional testimony of former CEO Jon Corzine.
http://jlne.ws/xShQLP
Banks may take on settlement houses at own game
Reuters via Yahoo! News
Banks are looking to break into the last bastion of Europe's securities market, the settling of trades, to meet growing pressure from regulators for safer trading backed with collateral.
http://jlne.ws/yYi1Ce
RBS to Move Australian Fixed-Income Trading to Singapore, U.K.
BusinessWeek
Royal Bank of Scotland Group Plc plans to relocate its Australian fixed-income and currency trading business to Singapore and London, according to an e- mailed response to questions from Bloomberg News.
http://jlne.ws/wQYHiZ
Santander takes control of Poland’s Kredyt
By Victor Mallet in Madrid and Jan Cienski in Warsaw - Financial Times
Santander of Spain, the eurozone’s biggest bank by market capitalisation, will take control of Poland’s Kredyt Bank from KBC of Belgium following a long-awaited deal announced on Tuesday.
http://jlne.ws/xG5ZTB
Market Participant Asks ISDA If Greek CDS Have Been Triggered
By Katy Burne Of DOW JONES NEWSWIRES
An unidentified market participant has asked a committee of the International Swaps and Derivatives Association to rule on whether the passage of legislation approving collective-action clauses for Greek debt should trigger payouts on credit-default swaps tied to Greek sovereign bonds.
http://jlne.ws/zfQzaN
ISDA Accepts Question Related To A Potential Hellenic Republic Credit Event
NEWS RELEASE
For Immediate Release
ISDA Determinations Committee:
Accepts Question Related to a Potential Hellenic Republic Credit Event
LONDON, February 28, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA), as secretary to the Determinations Committees (the DCs), today announced that a question relating to a potential credit event with respect to the Hellenic Republic has been submitted to, and subsequently accepted for consideration by, the EMEA Determinations Committee.
In accordance with the Determinations Committee Rules, a meeting will be held at 11AM GMT on Thursday, March 1 to determine whether a credit event has occurred.
Further information regarding the question is available at www.isda.org/credit.
For Media Enquiries, Please Contact:
Lauren Dobbs, ISDA New York, +1 212 901 6019, ldobbs@isda.org
Claire Freer, ISDA London, +44 203 088 3578, cfreer@isda.org
About ISDA
Since 1985, ISDA has worked to make the global over-the-counter (OTC) derivatives markets safer and more efficient. Today, ISDA is one of the world’s largest global financial trade associations, with over 815 member institutions from 58 countries on six continents. These members include a broad range of OTC derivatives market participants: global, international and regional banks, asset managers, energy and commodities firms, government and supranational entities, insurers and diversified financial institutions, corporations, law firms, exchanges, clearinghouses and other service providers. Information about ISDA and its activities is available on the Association's web site: www.isda.org.
ISDA® is a registered trademark of the International Swaps and Derivatives Association, Inc.
For Immediate Release
ISDA Determinations Committee:
Accepts Question Related to a Potential Hellenic Republic Credit Event
LONDON, February 28, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA), as secretary to the Determinations Committees (the DCs), today announced that a question relating to a potential credit event with respect to the Hellenic Republic has been submitted to, and subsequently accepted for consideration by, the EMEA Determinations Committee.
In accordance with the Determinations Committee Rules, a meeting will be held at 11AM GMT on Thursday, March 1 to determine whether a credit event has occurred.
Further information regarding the question is available at www.isda.org/credit.
For Media Enquiries, Please Contact:
Lauren Dobbs, ISDA New York, +1 212 901 6019, ldobbs@isda.org
Claire Freer, ISDA London, +44 203 088 3578, cfreer@isda.org
About ISDA
Since 1985, ISDA has worked to make the global over-the-counter (OTC) derivatives markets safer and more efficient. Today, ISDA is one of the world’s largest global financial trade associations, with over 815 member institutions from 58 countries on six continents. These members include a broad range of OTC derivatives market participants: global, international and regional banks, asset managers, energy and commodities firms, government and supranational entities, insurers and diversified financial institutions, corporations, law firms, exchanges, clearinghouses and other service providers. Information about ISDA and its activities is available on the Association's web site: www.isda.org.
ISDA® is a registered trademark of the International Swaps and Derivatives Association, Inc.
Senin, 27 Februari 2012
Top Interest Rate Headlines 02-27-2012: Fed Releases Bank Plans To Fix Mortgage Servicing
Fed releases bank plans to fix mortgage servicing
MarketWatch
The Federal Reserve on Monday released action plans for correcting mortgage servicing delinquencies developed by nine large financial institutions after being sanctioned last year. The action plans are required by major banks that were sanctioned by the Fed last year for "negligence" in residential mortgage loan servicing and foreclosure processes.
http://jlne.ws/wX3PD5
NFA takes emergency enforcement action against Texas firm J Hansen Investments LLC and its principal, Jonathan Hansen
Press Release
National Futures Association (NFA) announced today that it has taken an emergency enforcement action against J Hansen Investments LLC (JHI) and its principal, Jonathan Hansen (Hansen). J Hansen Investments is an NFA Member commodity pool operator located in Houston, Texas and Hansen is also an NFA Associate.
http://jlne.ws/wVUCta
Federal Court in Illinois Orders Former Futures Trader David Sklena to Pay over $6.6 Million for Cheating Customers
Press Release
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court order requiring former Chicago Board of Trade (CBOT) floor trader and registered floor broker David Sklena of Skokie, Ill., to pay a disgorgement and civil monetary penalty of $6,608,750 for aiding and abetting another trader’s scheme to cheat customers who placed orders in Five-Year Treasury Note futures contracts.
http://jlne.ws/wSYubK
Draghi’s Unlimited Loans Are No Panacea
Bloomberg
European Central Bank President Mario Draghi’s success in quelling a bond-market rout across the euro region’s periphery masks a failure by the region’s banks to bolster their capital.
http://jlne.ws/yvc93f
Standard & Poor's Puts EFSF On Downgrade Watch—AGAIN
Business Insider
Standard & Poor's just placed the European Financial Stability Facility—the eurozone bailout fund—on creditwatch negative.
http://jlne.ws/wJgkhQ
A Buffett Heir, but Who?
WSJ.com
Warren Buffett on Saturday sought to reassure Berkshire Hathaway Inc. shareholders girding for an inevitable but anxiety-provoking leadership transition, stating that an unnamed individual has been chosen to eventually succeed him as the conglomerate's chief executive.
http://jlne.ws/yxpBGG
Volcker Punishes Small Bonds in Liquidity Trap: Credit Markets
SFGate - Bloomberg
Tougher regulations on risk-taking by banks and the growth of exchange-traded funds that buy the most actively traded junk bonds are penalizing smaller borrowers seeking capital.
http://jlne.ws/zosF4a
ECB Loan Program Eyed for Take-Up Size
WSJ.com
The European Central Bank is back in the spotlight this week as it prepares to launch the second round of its program to support the euro-zone banking system with the offer of unlimited three-year funds, even as concern lingers that it risks monetary instability if repeated too often.
http://jlne.ws/x3UMjs
Zoellick Sees China Heeding Suggestions
WSJ.com
A report by the World Bank and a prominent Chinese think tank recommends sweeping changes in the Chinese economy, including reducing the power of state-owned enterprises and breaking up monopolies, but doesn't examine the role of the institution that will have the biggest say in such changes: the Chinese Communist Party.
http://jlne.ws/whmfh2
Corporate Bond Issuance Can’t Match Demand, Citigroup Says
Bloomberg
There aren’t enough corporate bonds available to satisfy investor demand because the amount of securities that have matured this year is outstripping new issuance, according to analysts at Citigroup Inc. (C) in London.
http://jlne.ws/wfC3NS
G20 will be more involved only after the Eurozone increases
Ashraflaidi
G20 will be more involved only after the Eurozone increases financial firewall; Italian and German bond auctions; Eurozone M3 grew and Italian business confidence declined; ECB deposits remain elevated. Market turns to pending home sales and Dallas FED manufacturing. Remaining Premium trades are shorts in ES (Emini S&P500), AUDNZD & longs in gold & EURGBP. Longs in US crude and EURUSD were all done.
http://jlne.ws/wmnXc1
Central Bank of Hungary governor offers to donate salary
http://jlne.ws/wAwYrD
Banks to guzzle another 500 billion euros from ECB
Reuters
Banks will guzzle another half a trillion euros of cheap three-year loans offered by the European Central Bank on Wednesday, according to a Reuters poll of money market traders, who said the opportunity would be the last of its kind.
http://jlne.ws/AAOfck
MarketWatch
The Federal Reserve on Monday released action plans for correcting mortgage servicing delinquencies developed by nine large financial institutions after being sanctioned last year. The action plans are required by major banks that were sanctioned by the Fed last year for "negligence" in residential mortgage loan servicing and foreclosure processes.
http://jlne.ws/wX3PD5
NFA takes emergency enforcement action against Texas firm J Hansen Investments LLC and its principal, Jonathan Hansen
Press Release
National Futures Association (NFA) announced today that it has taken an emergency enforcement action against J Hansen Investments LLC (JHI) and its principal, Jonathan Hansen (Hansen). J Hansen Investments is an NFA Member commodity pool operator located in Houston, Texas and Hansen is also an NFA Associate.
http://jlne.ws/wVUCta
Federal Court in Illinois Orders Former Futures Trader David Sklena to Pay over $6.6 Million for Cheating Customers
Press Release
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court order requiring former Chicago Board of Trade (CBOT) floor trader and registered floor broker David Sklena of Skokie, Ill., to pay a disgorgement and civil monetary penalty of $6,608,750 for aiding and abetting another trader’s scheme to cheat customers who placed orders in Five-Year Treasury Note futures contracts.
http://jlne.ws/wSYubK
Draghi’s Unlimited Loans Are No Panacea
Bloomberg
European Central Bank President Mario Draghi’s success in quelling a bond-market rout across the euro region’s periphery masks a failure by the region’s banks to bolster their capital.
http://jlne.ws/yvc93f
Standard & Poor's Puts EFSF On Downgrade Watch—AGAIN
Business Insider
Standard & Poor's just placed the European Financial Stability Facility—the eurozone bailout fund—on creditwatch negative.
http://jlne.ws/wJgkhQ
A Buffett Heir, but Who?
WSJ.com
Warren Buffett on Saturday sought to reassure Berkshire Hathaway Inc. shareholders girding for an inevitable but anxiety-provoking leadership transition, stating that an unnamed individual has been chosen to eventually succeed him as the conglomerate's chief executive.
http://jlne.ws/yxpBGG
Volcker Punishes Small Bonds in Liquidity Trap: Credit Markets
SFGate - Bloomberg
Tougher regulations on risk-taking by banks and the growth of exchange-traded funds that buy the most actively traded junk bonds are penalizing smaller borrowers seeking capital.
http://jlne.ws/zosF4a
ECB Loan Program Eyed for Take-Up Size
WSJ.com
The European Central Bank is back in the spotlight this week as it prepares to launch the second round of its program to support the euro-zone banking system with the offer of unlimited three-year funds, even as concern lingers that it risks monetary instability if repeated too often.
http://jlne.ws/x3UMjs
Zoellick Sees China Heeding Suggestions
WSJ.com
A report by the World Bank and a prominent Chinese think tank recommends sweeping changes in the Chinese economy, including reducing the power of state-owned enterprises and breaking up monopolies, but doesn't examine the role of the institution that will have the biggest say in such changes: the Chinese Communist Party.
http://jlne.ws/whmfh2
Corporate Bond Issuance Can’t Match Demand, Citigroup Says
Bloomberg
There aren’t enough corporate bonds available to satisfy investor demand because the amount of securities that have matured this year is outstripping new issuance, according to analysts at Citigroup Inc. (C) in London.
http://jlne.ws/wfC3NS
G20 will be more involved only after the Eurozone increases
Ashraflaidi
G20 will be more involved only after the Eurozone increases financial firewall; Italian and German bond auctions; Eurozone M3 grew and Italian business confidence declined; ECB deposits remain elevated. Market turns to pending home sales and Dallas FED manufacturing. Remaining Premium trades are shorts in ES (Emini S&P500), AUDNZD & longs in gold & EURGBP. Longs in US crude and EURUSD were all done.
http://jlne.ws/wmnXc1
Central Bank of Hungary governor offers to donate salary
http://jlne.ws/wAwYrD
Banks to guzzle another 500 billion euros from ECB
Reuters
Banks will guzzle another half a trillion euros of cheap three-year loans offered by the European Central Bank on Wednesday, according to a Reuters poll of money market traders, who said the opportunity would be the last of its kind.
http://jlne.ws/AAOfck
Remarks by Treasury Secretary Tim Geithner at the G-20 Meeting of Finance Ministers and Central Bank Governors
Remarks by Treasury Secretary Tim Geithner at the G-20 Meeting of Finance Ministers and Central Bank Governors
2/26/2012
As Prepared for Delivery
MEXICO CITY - The risks to the global economy have diminished since the G-20 last met in Cannes, but we still face significant economic challenges. The U.S. economy is gradually getting stronger. Europe has acted to significantly reduce the risk of a catastrophic financial crisis. And even with weakness in European growth, we are seeing encouraging signs of resilience in many emerging economies.
The discussion of ministers and governors this weekend focused primarily on three key issues:
Europe and the global economic outlook;
Iran and oil markets; and
Financial reform.
Our colleagues in Europe gave us an update on their plans going forward to address the European financial crisis. We are encouraged by the progress that they have made over the last few months. A durable solution requires both a sustained period of economic reform and a substantial financial firewall to support those reforms. European policy makers recognize the magnitude of the challenges ahead and will be reviewing additional steps in the weeks ahead.
The G-20 is committed to making sure that the IMF has the resources it needs to help its members deal with the risks from Europe. There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and that the IMF cannot move forward without more clarity on Europe’s own plans.
Beyond Europe, the steps many emerging economies took last summer and fall have helped support global growth. While the right mix of policies will differ across countries, policy generally should be directed at reinforcing economic expansion.
Reorienting the economies of countries with large external surpluses toward domestic demand and greater exchange rate flexibility remain critical to a sustainable global recovery. Since China resumed exchange-rate reform in June of 2010, the renminbi has appreciated by around 12 percent against the dollar after taking into account China’s higher level of inflation. That’s welcome progress, and we believe it is in China’s interest and in the interest of the global economy for their exchange rate to continue to appreciate.
Other emerging economies in Asia with external surpluses also need to increase their exchange rate flexibility and adopt policies that support domestic sources of growth.
On Iran and oil, I had a series of encouraging conversations with countries planning to significantly reduce imports from Iran. We are seeing very effective cooperation from our partners on the financial front to help ensure that their banks cease transactions with the Central Bank of Iran and that Iranian banks find it harder than ever to facilitate Iran’s illicit nuclear activities or to help Iran evade sanctions.
We are working together to help ensure there are alternative sources of oil from major producers to help offset reductions in exports from Iran, and here too, I am encouraged.
We reviewed the global effort to strengthen safeguards against future risks in the financial system. We have made important progress on tougher capital standards. We’re seeing broad convergence on strategies for oversight and transparency in derivatives markets. There is very extensive consultation between the Federal Reserve, the FDIC, and their counterparts in other countries about how to manage crises and deal with the possible failure of large financial institutions.
This is an important year for financial reform in the United States, where we expect to have the major foundations of our reform in place by the end of 2012. Of course, it’s very important to us that we have a level playing field internationally. As we and others go forward in implementing our financial reforms we will be mindful of cross boarder impacts and committed to managing them carefully.
Let me conclude with a few points on the U.S. economy.
The U.S. economy is gradually getting stronger. Despite substantial headwinds, our economy has grown at an average annual rate of 2 1/2 percent over the last two and a half years. And we have seen encouraging signs of strength in recent indicators.
This recovery has been supported by a shift toward a more balanced pattern of growth in the United States, with stronger growth in private investment and exports. Productivity is up. Private savings is substantially higher than it was before the crisis, and our fiscal deficits are now falling. The U.S. current account deficit is now around 3 percent of GDP – down from a peak of around 6 percent before the crisis. The financial sector is much stronger.
Even with this progress, however, the damage inflicted by the crisis will still take some time to repair. Unemployment, while falling, is still very high. And the housing market remains weak.
Our focus now is on reforms that will help create a stronger foundation for future growth and broaden economic opportunity. Our strategy is to combine investments and reforms in education, innovation, and infrastructure with tax reforms and savings to restore long-term fiscal sustainability.
Thank you to our gracious hosts, President Calderon, Minister Meade and Governor Carstens and their teams, for hosting us this weekend.
###
2/26/2012
As Prepared for Delivery
MEXICO CITY - The risks to the global economy have diminished since the G-20 last met in Cannes, but we still face significant economic challenges. The U.S. economy is gradually getting stronger. Europe has acted to significantly reduce the risk of a catastrophic financial crisis. And even with weakness in European growth, we are seeing encouraging signs of resilience in many emerging economies.
The discussion of ministers and governors this weekend focused primarily on three key issues:
Europe and the global economic outlook;
Iran and oil markets; and
Financial reform.
Our colleagues in Europe gave us an update on their plans going forward to address the European financial crisis. We are encouraged by the progress that they have made over the last few months. A durable solution requires both a sustained period of economic reform and a substantial financial firewall to support those reforms. European policy makers recognize the magnitude of the challenges ahead and will be reviewing additional steps in the weeks ahead.
The G-20 is committed to making sure that the IMF has the resources it needs to help its members deal with the risks from Europe. There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and that the IMF cannot move forward without more clarity on Europe’s own plans.
Beyond Europe, the steps many emerging economies took last summer and fall have helped support global growth. While the right mix of policies will differ across countries, policy generally should be directed at reinforcing economic expansion.
Reorienting the economies of countries with large external surpluses toward domestic demand and greater exchange rate flexibility remain critical to a sustainable global recovery. Since China resumed exchange-rate reform in June of 2010, the renminbi has appreciated by around 12 percent against the dollar after taking into account China’s higher level of inflation. That’s welcome progress, and we believe it is in China’s interest and in the interest of the global economy for their exchange rate to continue to appreciate.
Other emerging economies in Asia with external surpluses also need to increase their exchange rate flexibility and adopt policies that support domestic sources of growth.
On Iran and oil, I had a series of encouraging conversations with countries planning to significantly reduce imports from Iran. We are seeing very effective cooperation from our partners on the financial front to help ensure that their banks cease transactions with the Central Bank of Iran and that Iranian banks find it harder than ever to facilitate Iran’s illicit nuclear activities or to help Iran evade sanctions.
We are working together to help ensure there are alternative sources of oil from major producers to help offset reductions in exports from Iran, and here too, I am encouraged.
We reviewed the global effort to strengthen safeguards against future risks in the financial system. We have made important progress on tougher capital standards. We’re seeing broad convergence on strategies for oversight and transparency in derivatives markets. There is very extensive consultation between the Federal Reserve, the FDIC, and their counterparts in other countries about how to manage crises and deal with the possible failure of large financial institutions.
This is an important year for financial reform in the United States, where we expect to have the major foundations of our reform in place by the end of 2012. Of course, it’s very important to us that we have a level playing field internationally. As we and others go forward in implementing our financial reforms we will be mindful of cross boarder impacts and committed to managing them carefully.
Let me conclude with a few points on the U.S. economy.
The U.S. economy is gradually getting stronger. Despite substantial headwinds, our economy has grown at an average annual rate of 2 1/2 percent over the last two and a half years. And we have seen encouraging signs of strength in recent indicators.
This recovery has been supported by a shift toward a more balanced pattern of growth in the United States, with stronger growth in private investment and exports. Productivity is up. Private savings is substantially higher than it was before the crisis, and our fiscal deficits are now falling. The U.S. current account deficit is now around 3 percent of GDP – down from a peak of around 6 percent before the crisis. The financial sector is much stronger.
Even with this progress, however, the damage inflicted by the crisis will still take some time to repair. Unemployment, while falling, is still very high. And the housing market remains weak.
Our focus now is on reforms that will help create a stronger foundation for future growth and broaden economic opportunity. Our strategy is to combine investments and reforms in education, innovation, and infrastructure with tax reforms and savings to restore long-term fiscal sustainability.
Thank you to our gracious hosts, President Calderon, Minister Meade and Governor Carstens and their teams, for hosting us this weekend.
###
Jumat, 24 Februari 2012
Top Interest Rate Headlines 02-24-2012: Bankers Urge G20 Growth Strategy, Euro-Zone Risks Remain
Bankers Urge G20 Growth Strategy, Euro-Zone Risks Remain
International bankers called on Group of 20 finance leaders on Friday to step up their efforts to promote economic growth, warning that spillover risks from the euro zone remain.
http://jlne.ws/zd2AiU
Dudley: Low interest rates help pay the national debt
The Federal Reserve takes a lot of heat from critics for keeping interest rates low. But there's an upside that most people overlook: Low interest rates save the government money.
http://jlne.ws/xn0y0i
Remarks at Panel Discussion on Fiscal Challenges - Federal Reserve Bank of New York
William C. Dudley, President and Chief Executive Officer
Remarks at Panel Discussion at 2012 U.S. Monetary Policy Forum, New York City
It is a pleasure to have the opportunity to speak here today on a panel with Charles Plosser of the Federal Reserve Bank of Philadelphia, and Juergen Stark, formerly of the European Central Bank. Our topic today is fiscal policy—for central bankers always dangerous waters to swim in. I will focus my remarks on the United States as others are better qualified to comment on the situation in Europe and elsewhere.
http://jlne.ws/yW7M5O
Measuring Housing's Drag on the Economy
Here’s a reminder about a problem that still doesn’t get the attention that it deserves: Housing has blown a giant smoking hole in the middle of our economy, and the consequences continue to impede the pace of recovery. A new paper presented Friday at a monetary policy conference in New York puts some interesting new numbers on the scope of the problem.
http://jlne.ws/yXbIu4
AP Poll Shows That Americans Prefer Spending Cuts To Tax Increases On Rich
More Americans are in favour of their government cutting down on its spending to balance the national budget rather than trying to do so by increasing the tax rate for the wealthy, revealed an Associated Press-GfK poll on Friday, as Republican and Democratic politicians continue to debate over the merits of either move.
http://jlne.ws/x5kzAo
Comments on “Housing, Monetary Policy, and the Recovery” by Michael Feroli, Ethan Harris, Amir Sufi, and Kenneth West
http://jlne.ws/ypTfRy
Japan shuts money manager after funds go missing
Japan's financial regulator has ordered money manager AIJ Investment Advisors Co. to halt operations for a month after the Tokyo firm was not able to account for nearly $2.3 billion in pension-fund assets, The Wall Street Journal reported on Friday. Japanese Financial Services Minister Shozaburo Jimi said that the case has prompted regulators to examine the operations of all 263 investment-management firms in Japan, the newspaper reported.
http://jlne.ws/AiLwnP
This weekend: A Group of 20 nations (G20) meeting of finance ministers and central bank governors in Mexico City.
http://jlne.ws/wai8yE
Greece Issues Formal Offer for Debt Writedown
Greece on Friday launched its official offer for a massive bond swap designed to knock euro107 billion ($142 billion) off its debt held by banks and other private investors.
http://jlne.ws/AcqGbD
New Mortgage Names Rise as Oligopoly Reconfigures
Much of the business ceded by B of A has been absorbed by Wells Fargo. Still, smaller lenders are making inroads as the giants scramble the playing field by shuttering origination channels, or exiting the business altogether.
http://jlne.ws/y5FStj
Graph: Median Sales Price for New Houses Sold in the United States
http://jlne.ws/yx5wXc
Investors eye GDP warrants dubiously
Market participants are attributing little value to warrants referencing Greek GDP included in the private sector involvement, while speculating the illiquidity of the instruments may secure favourable accounting for the new Greek bonds.
http://jlne.ws/ykbN5l
Deposit Flows Show Money Leaking to Germany
Money is leaking out of banks in southern Europe as customers scoop deposits out of Greece, Spain and Italy to move cash to less indebted nations such as Germany.
http://jlne.ws/yD36B3
ISDA Publishes IRS Swaps Compression Progress Report
http://jlne.ws/z1EHYy
Knight Capital Hires Former MF Global mortgage credit sales and trading experts
http://jlne.ws/xeaThK
Why the Federal Reserve can't fix housing
Housing is still one of the biggest drags on U.S. economic growth, but don't look to the Federal Reserve for help. The central bank may have few tools left to fix it.
http://jlne.ws/Athf1H
International bankers called on Group of 20 finance leaders on Friday to step up their efforts to promote economic growth, warning that spillover risks from the euro zone remain.
http://jlne.ws/zd2AiU
Dudley: Low interest rates help pay the national debt
The Federal Reserve takes a lot of heat from critics for keeping interest rates low. But there's an upside that most people overlook: Low interest rates save the government money.
http://jlne.ws/xn0y0i
Remarks at Panel Discussion on Fiscal Challenges - Federal Reserve Bank of New York
William C. Dudley, President and Chief Executive Officer
Remarks at Panel Discussion at 2012 U.S. Monetary Policy Forum, New York City
It is a pleasure to have the opportunity to speak here today on a panel with Charles Plosser of the Federal Reserve Bank of Philadelphia, and Juergen Stark, formerly of the European Central Bank. Our topic today is fiscal policy—for central bankers always dangerous waters to swim in. I will focus my remarks on the United States as others are better qualified to comment on the situation in Europe and elsewhere.
http://jlne.ws/yW7M5O
Measuring Housing's Drag on the Economy
Here’s a reminder about a problem that still doesn’t get the attention that it deserves: Housing has blown a giant smoking hole in the middle of our economy, and the consequences continue to impede the pace of recovery. A new paper presented Friday at a monetary policy conference in New York puts some interesting new numbers on the scope of the problem.
http://jlne.ws/yXbIu4
AP Poll Shows That Americans Prefer Spending Cuts To Tax Increases On Rich
More Americans are in favour of their government cutting down on its spending to balance the national budget rather than trying to do so by increasing the tax rate for the wealthy, revealed an Associated Press-GfK poll on Friday, as Republican and Democratic politicians continue to debate over the merits of either move.
http://jlne.ws/x5kzAo
Comments on “Housing, Monetary Policy, and the Recovery” by Michael Feroli, Ethan Harris, Amir Sufi, and Kenneth West
http://jlne.ws/ypTfRy
Japan shuts money manager after funds go missing
Japan's financial regulator has ordered money manager AIJ Investment Advisors Co. to halt operations for a month after the Tokyo firm was not able to account for nearly $2.3 billion in pension-fund assets, The Wall Street Journal reported on Friday. Japanese Financial Services Minister Shozaburo Jimi said that the case has prompted regulators to examine the operations of all 263 investment-management firms in Japan, the newspaper reported.
http://jlne.ws/AiLwnP
This weekend: A Group of 20 nations (G20) meeting of finance ministers and central bank governors in Mexico City.
http://jlne.ws/wai8yE
Greece Issues Formal Offer for Debt Writedown
Greece on Friday launched its official offer for a massive bond swap designed to knock euro107 billion ($142 billion) off its debt held by banks and other private investors.
http://jlne.ws/AcqGbD
New Mortgage Names Rise as Oligopoly Reconfigures
Much of the business ceded by B of A has been absorbed by Wells Fargo. Still, smaller lenders are making inroads as the giants scramble the playing field by shuttering origination channels, or exiting the business altogether.
http://jlne.ws/y5FStj
Graph: Median Sales Price for New Houses Sold in the United States
http://jlne.ws/yx5wXc
Investors eye GDP warrants dubiously
Market participants are attributing little value to warrants referencing Greek GDP included in the private sector involvement, while speculating the illiquidity of the instruments may secure favourable accounting for the new Greek bonds.
http://jlne.ws/ykbN5l
Deposit Flows Show Money Leaking to Germany
Money is leaking out of banks in southern Europe as customers scoop deposits out of Greece, Spain and Italy to move cash to less indebted nations such as Germany.
http://jlne.ws/yD36B3
ISDA Publishes IRS Swaps Compression Progress Report
http://jlne.ws/z1EHYy
Knight Capital Hires Former MF Global mortgage credit sales and trading experts
http://jlne.ws/xeaThK
Why the Federal Reserve can't fix housing
Housing is still one of the biggest drags on U.S. economic growth, but don't look to the Federal Reserve for help. The central bank may have few tools left to fix it.
http://jlne.ws/Athf1H
AIG Reports Fourth Quarter 2011 Net Income of $19.8 Billion
Fourth Quarter 2011 After-Tax Operating Income of $1.6 Billion
Fourth Quarter Net Income Includes Deferred Tax Asset Valuation Release of $17.7 Billion
February 23, 2012 04:19 PM Eastern Time
NEW YORK--(EON: Enhanced Online News)--American International Group, Inc. (NYSE: AIG) today reported net income attributable to AIG of $19.8 billion for the quarter ended December 31, 2011, compared to $11.2 billion in the prior year quarter. Diluted earnings per share were $10.43 for the fourth quarter and $16.60 for the prior year quarter. For the full year 2011, net income attributable to AIG was $17.8 billion compared to $7.8 billion in 2010. Diluted earnings per share were $9.44 for the full year and $11.60 for the prior year.
“Two years ago, skeptics – and even some supporters – thought it inconceivable that we would be in a position to post our second consecutive annual profit.”
Net income reflected a U.S. consolidated income tax group deferred tax asset valuation allowance release of $17.7 billion for the quarter and $16.6 billion for full year 2011. As previously disclosed, AIG established a framework for assessing the recoverability of its deferred tax assets. Based on the application of this framework, AIG concluded that it is more likely than not that a substantial portion of the deferred tax assets of the U.S. consolidated income tax group will be realized, and therefore released the valuation allowance equal to that portion in the fourth quarter 2011.
After-tax operating income in the 2011 fourth quarter was $1.6 billion, or $0.82 per diluted share compared to a loss of $2.2 billion, or $15.99 per diluted share in the corresponding prior year quarter. After-tax operating income for the full year of 2011 was $1.8 billion, or $1.02 per diluted share compared to a loss of $898 million, or $6.57 per diluted share in 2010.
Full year net income includes catastrophe losses totaling $3.3 billion in 2011, up from $1.1 billion in 2010, $1.7 billion in impairment charges and fair value adjustments at International Lease Finance Corporation (ILFC) related to its fleet during 2011, and a net $2.9 billion pre-tax loss on extinguishment of debt, primarily representing the accelerated amortization of the prepaid commitment fee asset related to the full repayment of the Federal Reserve Bank of New York Credit Facility, partially offset by a gain on the exchange of junior subordinated debentures for senior notes. Full year 2010 net income included pre-tax gains of $17.6 billion from the sale of properties and divested businesses and a $4.2 billion net charge to strengthen Chartis loss reserves. The January 2011 issuance of AIG common stock to the U.S. Department of the Treasury affected the determination of net income or losses attributable to AIG common shareholders and the weighted average shares outstanding, both of which are used to compute earnings per share.
“Fourth quarter and full year profitability reflects the tremendous commitment and focus on business fundamentals by everyone at AIG,” said Robert H. Benmosche, AIG President and Chief Executive Officer. “The quality of our earnings, against the backdrop of record natural catastrophes, enables this great company to again stand proud as a market leader. I am also extremely proud that when natural catastrophes strike, we stand with our customers and provide them with the peace of mind that we’re there for them.
“Two years ago, skeptics – and even some supporters – thought it inconceivable that we would be in a position to post our second consecutive annual profit,” Mr. Benmosche continued. “During 2011, we completely repaid the Federal Reserve Bank of New York Credit Facility and restructured the U.S. government ownership to provide the U.S. Department of the Treasury a clear exit path, while maintaining our investment grade ratings. We proved to investors that AIG is back and worthy of investor confidence through the $8.7 billion equity offering and our ability to raise capital at competitive rates in the public debt markets. We also completed much of the work necessary to stabilize and de-risk our businesses, among so many other critical accomplishments.
“In 2011, we began to prosper once again,” Mr. Benmosche concluded. “We have a high degree of confidence in our future earnings prospects, which is a critical element in our assessment supporting the release of the deferred tax asset valuation allowance. As we look to 2012 and beyond, we anticipate we’ll continue to be competitive in all areas of our core insurance businesses. We’re seeing markets hardening at Chartis. At SunAmerica, we have taken a leadership position to meet the critical needs of retirees, and at United Guaranty, we’ve become the market leader and we’re creating innovative products that help protect lenders, homeowners, communities, and local economies from mortgage default. In 2011, United Guaranty helped about 40,000 families stay in their homes.”
See the full AIG release here.
Fourth Quarter Net Income Includes Deferred Tax Asset Valuation Release of $17.7 Billion
February 23, 2012 04:19 PM Eastern Time
NEW YORK--(EON: Enhanced Online News)--American International Group, Inc. (NYSE: AIG) today reported net income attributable to AIG of $19.8 billion for the quarter ended December 31, 2011, compared to $11.2 billion in the prior year quarter. Diluted earnings per share were $10.43 for the fourth quarter and $16.60 for the prior year quarter. For the full year 2011, net income attributable to AIG was $17.8 billion compared to $7.8 billion in 2010. Diluted earnings per share were $9.44 for the full year and $11.60 for the prior year.
“Two years ago, skeptics – and even some supporters – thought it inconceivable that we would be in a position to post our second consecutive annual profit.”
Net income reflected a U.S. consolidated income tax group deferred tax asset valuation allowance release of $17.7 billion for the quarter and $16.6 billion for full year 2011. As previously disclosed, AIG established a framework for assessing the recoverability of its deferred tax assets. Based on the application of this framework, AIG concluded that it is more likely than not that a substantial portion of the deferred tax assets of the U.S. consolidated income tax group will be realized, and therefore released the valuation allowance equal to that portion in the fourth quarter 2011.
After-tax operating income in the 2011 fourth quarter was $1.6 billion, or $0.82 per diluted share compared to a loss of $2.2 billion, or $15.99 per diluted share in the corresponding prior year quarter. After-tax operating income for the full year of 2011 was $1.8 billion, or $1.02 per diluted share compared to a loss of $898 million, or $6.57 per diluted share in 2010.
Full year net income includes catastrophe losses totaling $3.3 billion in 2011, up from $1.1 billion in 2010, $1.7 billion in impairment charges and fair value adjustments at International Lease Finance Corporation (ILFC) related to its fleet during 2011, and a net $2.9 billion pre-tax loss on extinguishment of debt, primarily representing the accelerated amortization of the prepaid commitment fee asset related to the full repayment of the Federal Reserve Bank of New York Credit Facility, partially offset by a gain on the exchange of junior subordinated debentures for senior notes. Full year 2010 net income included pre-tax gains of $17.6 billion from the sale of properties and divested businesses and a $4.2 billion net charge to strengthen Chartis loss reserves. The January 2011 issuance of AIG common stock to the U.S. Department of the Treasury affected the determination of net income or losses attributable to AIG common shareholders and the weighted average shares outstanding, both of which are used to compute earnings per share.
“Fourth quarter and full year profitability reflects the tremendous commitment and focus on business fundamentals by everyone at AIG,” said Robert H. Benmosche, AIG President and Chief Executive Officer. “The quality of our earnings, against the backdrop of record natural catastrophes, enables this great company to again stand proud as a market leader. I am also extremely proud that when natural catastrophes strike, we stand with our customers and provide them with the peace of mind that we’re there for them.
“Two years ago, skeptics – and even some supporters – thought it inconceivable that we would be in a position to post our second consecutive annual profit,” Mr. Benmosche continued. “During 2011, we completely repaid the Federal Reserve Bank of New York Credit Facility and restructured the U.S. government ownership to provide the U.S. Department of the Treasury a clear exit path, while maintaining our investment grade ratings. We proved to investors that AIG is back and worthy of investor confidence through the $8.7 billion equity offering and our ability to raise capital at competitive rates in the public debt markets. We also completed much of the work necessary to stabilize and de-risk our businesses, among so many other critical accomplishments.
“In 2011, we began to prosper once again,” Mr. Benmosche concluded. “We have a high degree of confidence in our future earnings prospects, which is a critical element in our assessment supporting the release of the deferred tax asset valuation allowance. As we look to 2012 and beyond, we anticipate we’ll continue to be competitive in all areas of our core insurance businesses. We’re seeing markets hardening at Chartis. At SunAmerica, we have taken a leadership position to meet the critical needs of retirees, and at United Guaranty, we’ve become the market leader and we’re creating innovative products that help protect lenders, homeowners, communities, and local economies from mortgage default. In 2011, United Guaranty helped about 40,000 families stay in their homes.”
See the full AIG release here.
Kamis, 23 Februari 2012
February 23, 2012: Consumer Comfort Highest in Almost Four Years; Jobless Claims Hold Steady At Four-Year Low [NEWSLETTER]
February 23, 2012
Conversation Starter
Five Minutes With Bluford Putnam
Bluford Putnam has served as managing director and chief economist of CME Group since May 2011. He is responsible for leading economic analysis on global financial markets by identifying emerging trends, evaluating economic factors and forecasting their impact on CME Group and the company's business strategy. He also serves as CME Group's spokesperson on global economic conditions and manages external research initiatives. He recently talked with JLN Managing Editor Christine Nielsen.
Q) The head of the Philadelphia Federal Reserve Bank warned recently against efforts to accelerate the nation’s economic recovery, citing the threat of inflation. According to Charles Plosser, the Fed has taken several steps to help revive the economy, and with a very accommodative monetary policy already in place, officials must guard against the medium- and longer-term risks of inflation. Would you agree with his assessment?
A) FOMC members and the market participants have deep divisions over the current relative balance of the risks of higher inflation versus slipping back into recession. At the current time, my perspective is that both risks are now very low. If the FOMC, however, keeps the Federal funds rate near zero through the end of 2014, as they have suggested they may do, then I think the risks of inflation will trump recession risks. But my view is that the FOMC may not follow its own guidance if my U..S economic outlook proves correct and 2012 is a strong growth year with the unemployment rate in the 7.5 percent territory and falling by the fourth quarter. The Fed provides rate guidance, not commitments.
Q) How would you describe the current economy, and the outlook for the economy in the near term?
A) The 2012 outlook for the U.S. economy is the best it's been in years. We see 3.5 percent to 4 percent real GDP growth in 2012, with the unemployment rate falling through 8 percent and to 7.5 percent by the fourth quarter.
The really important thing to understand about 2012 is that it's not 2011. Those things that scared you to death in 2011 have pretty much diminished.
See the full interview here: http://jlne.ws/zQUNnX
----------------------------------------
CBOE Futures Exchange Puts Real Estate on the Radar
By Sarah Rudolph
CBOE Futures Exchange (CFE) launched futures on the Radar Logic 25-Metropolitan Statistical Area (MSA) RPX Composite Index on Feb. 2. We wanted to learn more about the index and the futures contracts, so JLN Options Newsletter editor Sarah Rudolph sat down to talk with John Angelos, director, institutional marketing, credit derivatives, at the Chicago Board Options Exchange.
The credit crisis was disastrous for the market in mortgage-backed securities and spelled the end for over-the-counter mortgage-backed-security (MBS) derivatives that could help hedge those portfolios. Now the CBOE Futures Exchange (CFE) is aiming to give the MBS market a tool to mitigate risk through new real estate futures contracts.
CFE’s entrance into the space is a revival of sorts, using the Radar Logic RPX Composite Index (RPX), which tracks U.S. residential housing values and is one of several Radar Logic 28-Day Real Estate indexes on which CFE is planning to offer futures contracts. CFE’s contracts follow an over-the-counter version of the RPX index that had traded for four years, up until the credit crisis, when the securitization market dried up and OTC trading disappeared, creating a void. But mortgage-backed-security portfolios haven’t disappeared; they still exist all over the U.S., and MBS portfolio managers need a new way to hedge their exposure, according to John Angelos of the CBOE.
The idea evolved from portfolio managers who came to Michael Feder, the owner of Radar Logic, to help them find a way to fill that void by creating a tool to mitigate their risk. They introduced Feder to the CFE, which came up with a futures contract based on the Radar Logic cash Index.
See the full interview here: http://jlne.ws/zeffr5
Lead Stories
Consumer Comfort Highest in Almost Four Years
Consumer confidence in the U.S. increased last week to the highest level since April 2008 as more Americans had a favorable view of their finances.
http://jlne.ws/yLjUB3
Jobless claims hold steady at 4-year low
Reuters via Yahoo! News
WASHINGTON (Reuters) - New claims for unemployment benefits were unchanged last week, holding at the lowest level since the early days of the 2007-2009 recession and giving a fresh sign the battered labor market is healing. Workers filed 351,000 initial claims for state unemployment benefits, the Labor Department said on Thursday.
http://jlne.ws/AqdvLe
**CN: What were you doing in the early days of the recession?
You know the deficit hawks. Now meet the deficit owls
Washington Post
About 11 years ago, James K. "Jamie" Galbraith recalls, hundreds of his fellow economists laughed at him. To his face. In the White House. It was April 2000, and Galbraith had been invited by President Bill Clinton to speak on a panel about the budget surplus. Galbraith was a logical choice.
http://jlne.ws/y11wxK
The Federal Reserve's Rule-Making Secrecy
Swampland
The Wall Street Journal has a thoroughly reported story today on the rise in regulatory secrecy at the Federal Reserve. On 45 of 47 of the draft or final regulatory measures voted on by members since the passage of the Dodd-Frank financial reform bill in July 2010.
http://jlne.ws/ybW1uQ
Fed's Fisher says economy brighter, no need for QE3
Reuters via Yahoo! News
(Reuters) - Dallas Federal Reserve Bank President Richard Fisher said on Thursday U.S. economic conditions were improving and repeated his view that further easing from the U.S. central bank was not needed. "The tone is a lot better. It's not brilliant; we don't have enough new hiring taking place, (but we're) definitely moving in the right direction," Fisher told CNBC television.
http://jlne.ws/zBbhfC
Volcker Said to Lobby SEC Chairman Personally on Volcker Rule
BusinessWeek
Former Federal Reserve chairman Paul Volcker met in person with U.S. Securities and Exchange Commission Chairman Mary Schapiro this week to discuss the proposed ban on proprietary trading named for him, according to a person familiar with the meeting.
http://jlne.ws/x4APM3
Federal Reserve Driven Inflation Hurts Savers
James Rickards is a hedge fund manager in New York City and the author of Currency Wars: The Making of the Next Global Crisis from Portfolio/Penguin.
http://jlne.ws/zFypVY
Libor Probe Said to Expose Collusion, Lack of Internal Controls
BusinessWeek
Global regulators have exposed flaws in banks' internal controls that may have allowed traders to manipulate interest rates around the world, two people with knowledge of the probe said.
http://jlne.ws/zwKgEq
New York Federal Reserve Said to Plan Sale of AIG-Linked Mortgage Bonds
Bloomberg
The Federal Reserve Bank of New York will seek bids for more of the mortgage bonds assumed in the government rescue of American International Group Inc. (AIG) after it was approached by a potential buyer, according to two people with knowledge of the plan.
http://jlne.ws/A0H8Je
Federal Reserve Chairman Bernanke says nation's community banks are stronger
New Haven Register
WASHINGTON - Federal Reserve Chairman Ben Bernanke says the health of the nation's community banks has strengthened, despite what he calls a frustratingly slow economic recovery.
http://jlne.ws/ACrObT
Community banks may get smaller TARP bills
The Standard-Times
WASHINGTON - Community banks that still owe billions of dollars to the Treasury Department's bailout program may get a break, as Treasury may sell the stakes it got in the banks via its Troubled Asset Relief Program (TARP) to third parties.
http://jlne.ws/wnaiGx
*CN: As of last month, 372 banks still owed $16.8 billion in TARP funds.
Tri-Party Repo Task Force to Take Diminished Reform Role
BusinessWeek
A Federal Reserve-sponsored group working to improve efficiency in the market for borrowing and lending securities will take a diminished role in efforts to cut systemic risk in the market for dealer financing.
http://jlne.ws/wGKgxm
Fed Regional Bank Directors Predicted 'Moderate' Growth in 2012
Bloomberg
Directors at the Federal Reserve's regional banks last month saw "moderate" growth in 2012 even as the U.S. economy showed signs of strengthening.
http://jlne.ws/wBetao
Obama to offer corporate tax reform plan
CNN
The Treasury Department will unveil President Barack Obama's corporate tax reform plan Wednesday -- a framework that would reduce the overall rate paid by corporations, a senior administration official told CNN.
http://jlne.ws/yVawgR
Geithner Bond Returns Trail Paulson While Beating Rubin
BusinessWeek
Timothy F. Geithner, who took over the Treasury Department in the midst of the worst financial crisis since the Great Depression and oversaw the almost doubling of U.S. public debt, has done better for investors than Robert Rubin while falling short of Henry Paulson.
http://jlne.ws/wccKVz
Greece readies launch of debt swap for rescue
Reuters via Yahoo! News
ATHENS (Reuters) - Greece's parliament was expected to endorse a debt swap with private bondholders on Thursday that forms the core of its 130-billion-euro bailout, despite new protests against tough budget cuts demanded in return for the rescue deal.
http://jlne.ws/w13JbX
Low Yields Likely To Linger, Barclays Says
Nasdaq
Even as equities-dominated portfolios have failed to bring home impressive returns for at least a decade, a structural change in the supply of low-risk assets
http://jlne.ws/xjh8wU
Strauss-Kahn Freed After Questioning in Prostitution Inquiry
Bloomberg
Dominique Strauss-Kahn, the former head of the International Monetary Fund, has been released from police custody after almost two days of questioning as part of an investigation into a French prostitution ring.
http://jlne.ws/A8nBpN
EU expects eurozone to suffer mild recession
Associated Press via Yahoo! News
The 17-nation eurozone economy will suffer a modest recession this year despite recent signs of stabilization, particularly in financial markets, the European Union's executive branch said Thursday.
http://jlne.ws/xQoOh2
Deutsche Bank Says ECB to Wind Down LTROs After Three-Year Loan
BusinessWeek
The European Central Bank's second tranche of three-year loans next week may mark the end of its "generous" provision of long-term funding, according to Deutsche Bank AG.
http://jlne.ws/wGxdxu
Fannie, Freddie legal fees: $110 million and counting
CNN Money
A watchdog agency said Wednesday that the legal tab for former leaders of mortgage finance giants Fannie Mae and Freddie Mac is at least $110 million.
http://jlne.ws/xg7mvx
Greece's Parliament approves terms of major debt-swap deal
http://jlne.ws/AxIcRA
Exchanges, Clearing Houses & MTFs
TriOptima and LCH.Clearnet Compression of Cleared Interest Rate Swaps Exceeds $100 Trillion in Notional
http://jlne.ws/yrVmPW
LCH.Clearnet Raise Discount On Spain,Italy Collateral Bonds
http://jlne.ws/AhDkGS
Firms & Banks
JPMorgan Wagers $72 Billion on Global Home Loans in Yield Hunt: Mortgages
Bloomberg via Yahoo! Finance
JPMorgan Chase & Co. (JPM) has more than tripled its holdings of mortgage securities without U.S.government guarantees to $72 billion.
http://jlne.ws/yvo9s2
Pimco Said to Quit Mortgage Bond Group
http://jlne.ws/yqOa7h
Regulators
CFTC Poised to Re-Propose Dodd-Frank Block Trade Regulation
BusinessWeek
The U.S. Commodity Futures Trading Commission is poised to re-propose Dodd-Frank Act regulations that would determine when swaps are big enough that their price and size don't need to be reported immediately to the public.
http://jlne.ws/yhnJqi
IMF Resources Talks Should Follow Europe Financial Firewall, Brainard Says
Bloomberg
Group of 20 nations should discuss possible further resources for the International Monetary Fund after Europe decides on its financial firewall, the U.S. Treasury Department's top international official said.
http://jlne.ws/z1eO53
Global News
Bank Of England Miles: Inflation To Keep Slowing In 2012
Nasdaq
http://jlne.ws/xbO6Vr
Fed's Inflation Target Stirs Japan Lawmaker Ire at BOJ Record
BusinessWeek
The Federal Reserve's decision to set a 2 percent inflation target last month had a ripple effect a continent away: Japanese lawmakers are invoking it as evidence that their own central bank comes up short.
http://jlne.ws/ynprjf
Gillard Urged to Follow Bernanke With Australia Loans: Mortgages
BusinessWeek
Australia's Prime Minister Julia Gillard may be forced to follow U.S. Federal Reserve Chairman Ben S. Bernanke by increasing mortgage purchases as house prices slump and the nation's biggest banks extend their grip on the home-loan market.
http://jlne.ws/wQipGs
Australia Central Bank Sees Scope for Further Rate Cuts: Economy
BusinessWeek
Australia's central bank said it has scope to ease monetary policy if needed, after keeping the benchmark interest rate unchanged this month as risks in Europe abated, minutes of its Feb. 7 meeting showed.
http://jlne.ws/AlEjQA
Polish Rates Likely to Rise on Growth Forecast
Bloomberg
Feb. 21 (Bloomberg) -- Andrzej Bratkowski, member of the Polish central bank's Monetary Policy Council, discusses the outlook for the economy, inflation and interest rates. He spoke yesterday with Bloomberg's David McQuaid in Warsaw.
http://jlne.ws/z8GKNL
Namibia's central bank leaves rates at 6.0 percent
Reuters via Yahoo! News
JOHANNESBURG (Reuters) - Namibia's central bank on Wednesday left its bank rate unchanged at 6.0 percent, citing concerns of "frail" economic growth. "Our estimate is that growth for 2011 is going to be just under 4 percent compared to 6.6 percent in 2010," central bank Governor Ipumbu Shiimi said at a briefing.
http://jlne.ws/A1qMgU
Turkish Central Bank Unexpectedly Cuts Its Maximum Lending Rate to 11.5%
Bloomberg
Turkey's central bank cut the maximum interest rate at which it lends to banks overnight to 11.5 percent from 12.5 percent, saying it was taking into account monetary easing in other economies. Bond yields dropped to a four-month low.
http://jlne.ws/AspGh4
Russia Central Bank Forex Reserves Feb 17 Down $4.7 Billion To 504.4 Billion
Nasdaq
http://jlne.ws/yoDmrc
Royal Bank of Scotland Posts a Wider-Than-Estimated Loss
BusinessWeek
Royal Bank of Scotland Group Plc, Britain's biggest government-owned lender, posted a wider full- year loss than analysts estimated after writing down Greek debt and compensating customers who were improperly sold insurance.
http://jlne.ws/xlLcXD
Thai Central Bank: 4Q11 GDP Contraction Worse Than Expected
Nasdaq
http://jlne.ws/zsp0yr
Euro-Area Central Banks Said to Swap Greek Portfolio Bonds
BusinessWeek
Euro-area central banks will swap the Greek bonds in their investment portfolios for similar securities to avoid enforced losses during a debt restructuring, a euro-area official said.
http://jlne.ws/wJ2LER
Conversation Starter
Five Minutes With Bluford Putnam
Bluford Putnam has served as managing director and chief economist of CME Group since May 2011. He is responsible for leading economic analysis on global financial markets by identifying emerging trends, evaluating economic factors and forecasting their impact on CME Group and the company's business strategy. He also serves as CME Group's spokesperson on global economic conditions and manages external research initiatives. He recently talked with JLN Managing Editor Christine Nielsen.
Q) The head of the Philadelphia Federal Reserve Bank warned recently against efforts to accelerate the nation’s economic recovery, citing the threat of inflation. According to Charles Plosser, the Fed has taken several steps to help revive the economy, and with a very accommodative monetary policy already in place, officials must guard against the medium- and longer-term risks of inflation. Would you agree with his assessment?
A) FOMC members and the market participants have deep divisions over the current relative balance of the risks of higher inflation versus slipping back into recession. At the current time, my perspective is that both risks are now very low. If the FOMC, however, keeps the Federal funds rate near zero through the end of 2014, as they have suggested they may do, then I think the risks of inflation will trump recession risks. But my view is that the FOMC may not follow its own guidance if my U..S economic outlook proves correct and 2012 is a strong growth year with the unemployment rate in the 7.5 percent territory and falling by the fourth quarter. The Fed provides rate guidance, not commitments.
Q) How would you describe the current economy, and the outlook for the economy in the near term?
A) The 2012 outlook for the U.S. economy is the best it's been in years. We see 3.5 percent to 4 percent real GDP growth in 2012, with the unemployment rate falling through 8 percent and to 7.5 percent by the fourth quarter.
The really important thing to understand about 2012 is that it's not 2011. Those things that scared you to death in 2011 have pretty much diminished.
See the full interview here: http://jlne.ws/zQUNnX
----------------------------------------
CBOE Futures Exchange Puts Real Estate on the Radar
By Sarah Rudolph
CBOE Futures Exchange (CFE) launched futures on the Radar Logic 25-Metropolitan Statistical Area (MSA) RPX Composite Index on Feb. 2. We wanted to learn more about the index and the futures contracts, so JLN Options Newsletter editor Sarah Rudolph sat down to talk with John Angelos, director, institutional marketing, credit derivatives, at the Chicago Board Options Exchange.
The credit crisis was disastrous for the market in mortgage-backed securities and spelled the end for over-the-counter mortgage-backed-security (MBS) derivatives that could help hedge those portfolios. Now the CBOE Futures Exchange (CFE) is aiming to give the MBS market a tool to mitigate risk through new real estate futures contracts.
CFE’s entrance into the space is a revival of sorts, using the Radar Logic RPX Composite Index (RPX), which tracks U.S. residential housing values and is one of several Radar Logic 28-Day Real Estate indexes on which CFE is planning to offer futures contracts. CFE’s contracts follow an over-the-counter version of the RPX index that had traded for four years, up until the credit crisis, when the securitization market dried up and OTC trading disappeared, creating a void. But mortgage-backed-security portfolios haven’t disappeared; they still exist all over the U.S., and MBS portfolio managers need a new way to hedge their exposure, according to John Angelos of the CBOE.
The idea evolved from portfolio managers who came to Michael Feder, the owner of Radar Logic, to help them find a way to fill that void by creating a tool to mitigate their risk. They introduced Feder to the CFE, which came up with a futures contract based on the Radar Logic cash Index.
See the full interview here: http://jlne.ws/zeffr5
Lead Stories
Consumer Comfort Highest in Almost Four Years
Consumer confidence in the U.S. increased last week to the highest level since April 2008 as more Americans had a favorable view of their finances.
http://jlne.ws/yLjUB3
Jobless claims hold steady at 4-year low
Reuters via Yahoo! News
WASHINGTON (Reuters) - New claims for unemployment benefits were unchanged last week, holding at the lowest level since the early days of the 2007-2009 recession and giving a fresh sign the battered labor market is healing. Workers filed 351,000 initial claims for state unemployment benefits, the Labor Department said on Thursday.
http://jlne.ws/AqdvLe
**CN: What were you doing in the early days of the recession?
You know the deficit hawks. Now meet the deficit owls
Washington Post
About 11 years ago, James K. "Jamie" Galbraith recalls, hundreds of his fellow economists laughed at him. To his face. In the White House. It was April 2000, and Galbraith had been invited by President Bill Clinton to speak on a panel about the budget surplus. Galbraith was a logical choice.
http://jlne.ws/y11wxK
The Federal Reserve's Rule-Making Secrecy
Swampland
The Wall Street Journal has a thoroughly reported story today on the rise in regulatory secrecy at the Federal Reserve. On 45 of 47 of the draft or final regulatory measures voted on by members since the passage of the Dodd-Frank financial reform bill in July 2010.
http://jlne.ws/ybW1uQ
Fed's Fisher says economy brighter, no need for QE3
Reuters via Yahoo! News
(Reuters) - Dallas Federal Reserve Bank President Richard Fisher said on Thursday U.S. economic conditions were improving and repeated his view that further easing from the U.S. central bank was not needed. "The tone is a lot better. It's not brilliant; we don't have enough new hiring taking place, (but we're) definitely moving in the right direction," Fisher told CNBC television.
http://jlne.ws/zBbhfC
Volcker Said to Lobby SEC Chairman Personally on Volcker Rule
BusinessWeek
Former Federal Reserve chairman Paul Volcker met in person with U.S. Securities and Exchange Commission Chairman Mary Schapiro this week to discuss the proposed ban on proprietary trading named for him, according to a person familiar with the meeting.
http://jlne.ws/x4APM3
Federal Reserve Driven Inflation Hurts Savers
James Rickards is a hedge fund manager in New York City and the author of Currency Wars: The Making of the Next Global Crisis from Portfolio/Penguin.
http://jlne.ws/zFypVY
Libor Probe Said to Expose Collusion, Lack of Internal Controls
BusinessWeek
Global regulators have exposed flaws in banks' internal controls that may have allowed traders to manipulate interest rates around the world, two people with knowledge of the probe said.
http://jlne.ws/zwKgEq
New York Federal Reserve Said to Plan Sale of AIG-Linked Mortgage Bonds
Bloomberg
The Federal Reserve Bank of New York will seek bids for more of the mortgage bonds assumed in the government rescue of American International Group Inc. (AIG) after it was approached by a potential buyer, according to two people with knowledge of the plan.
http://jlne.ws/A0H8Je
Federal Reserve Chairman Bernanke says nation's community banks are stronger
New Haven Register
WASHINGTON - Federal Reserve Chairman Ben Bernanke says the health of the nation's community banks has strengthened, despite what he calls a frustratingly slow economic recovery.
http://jlne.ws/ACrObT
Community banks may get smaller TARP bills
The Standard-Times
WASHINGTON - Community banks that still owe billions of dollars to the Treasury Department's bailout program may get a break, as Treasury may sell the stakes it got in the banks via its Troubled Asset Relief Program (TARP) to third parties.
http://jlne.ws/wnaiGx
*CN: As of last month, 372 banks still owed $16.8 billion in TARP funds.
Tri-Party Repo Task Force to Take Diminished Reform Role
BusinessWeek
A Federal Reserve-sponsored group working to improve efficiency in the market for borrowing and lending securities will take a diminished role in efforts to cut systemic risk in the market for dealer financing.
http://jlne.ws/wGKgxm
Fed Regional Bank Directors Predicted 'Moderate' Growth in 2012
Bloomberg
Directors at the Federal Reserve's regional banks last month saw "moderate" growth in 2012 even as the U.S. economy showed signs of strengthening.
http://jlne.ws/wBetao
Obama to offer corporate tax reform plan
CNN
The Treasury Department will unveil President Barack Obama's corporate tax reform plan Wednesday -- a framework that would reduce the overall rate paid by corporations, a senior administration official told CNN.
http://jlne.ws/yVawgR
Geithner Bond Returns Trail Paulson While Beating Rubin
BusinessWeek
Timothy F. Geithner, who took over the Treasury Department in the midst of the worst financial crisis since the Great Depression and oversaw the almost doubling of U.S. public debt, has done better for investors than Robert Rubin while falling short of Henry Paulson.
http://jlne.ws/wccKVz
Greece readies launch of debt swap for rescue
Reuters via Yahoo! News
ATHENS (Reuters) - Greece's parliament was expected to endorse a debt swap with private bondholders on Thursday that forms the core of its 130-billion-euro bailout, despite new protests against tough budget cuts demanded in return for the rescue deal.
http://jlne.ws/w13JbX
Low Yields Likely To Linger, Barclays Says
Nasdaq
Even as equities-dominated portfolios have failed to bring home impressive returns for at least a decade, a structural change in the supply of low-risk assets
http://jlne.ws/xjh8wU
Strauss-Kahn Freed After Questioning in Prostitution Inquiry
Bloomberg
Dominique Strauss-Kahn, the former head of the International Monetary Fund, has been released from police custody after almost two days of questioning as part of an investigation into a French prostitution ring.
http://jlne.ws/A8nBpN
EU expects eurozone to suffer mild recession
Associated Press via Yahoo! News
The 17-nation eurozone economy will suffer a modest recession this year despite recent signs of stabilization, particularly in financial markets, the European Union's executive branch said Thursday.
http://jlne.ws/xQoOh2
Deutsche Bank Says ECB to Wind Down LTROs After Three-Year Loan
BusinessWeek
The European Central Bank's second tranche of three-year loans next week may mark the end of its "generous" provision of long-term funding, according to Deutsche Bank AG.
http://jlne.ws/wGxdxu
Fannie, Freddie legal fees: $110 million and counting
CNN Money
A watchdog agency said Wednesday that the legal tab for former leaders of mortgage finance giants Fannie Mae and Freddie Mac is at least $110 million.
http://jlne.ws/xg7mvx
Greece's Parliament approves terms of major debt-swap deal
http://jlne.ws/AxIcRA
Exchanges, Clearing Houses & MTFs
TriOptima and LCH.Clearnet Compression of Cleared Interest Rate Swaps Exceeds $100 Trillion in Notional
http://jlne.ws/yrVmPW
LCH.Clearnet Raise Discount On Spain,Italy Collateral Bonds
http://jlne.ws/AhDkGS
Firms & Banks
JPMorgan Wagers $72 Billion on Global Home Loans in Yield Hunt: Mortgages
Bloomberg via Yahoo! Finance
JPMorgan Chase & Co. (JPM) has more than tripled its holdings of mortgage securities without U.S.government guarantees to $72 billion.
http://jlne.ws/yvo9s2
Pimco Said to Quit Mortgage Bond Group
http://jlne.ws/yqOa7h
Regulators
CFTC Poised to Re-Propose Dodd-Frank Block Trade Regulation
BusinessWeek
The U.S. Commodity Futures Trading Commission is poised to re-propose Dodd-Frank Act regulations that would determine when swaps are big enough that their price and size don't need to be reported immediately to the public.
http://jlne.ws/yhnJqi
IMF Resources Talks Should Follow Europe Financial Firewall, Brainard Says
Bloomberg
Group of 20 nations should discuss possible further resources for the International Monetary Fund after Europe decides on its financial firewall, the U.S. Treasury Department's top international official said.
http://jlne.ws/z1eO53
Global News
Bank Of England Miles: Inflation To Keep Slowing In 2012
Nasdaq
http://jlne.ws/xbO6Vr
Fed's Inflation Target Stirs Japan Lawmaker Ire at BOJ Record
BusinessWeek
The Federal Reserve's decision to set a 2 percent inflation target last month had a ripple effect a continent away: Japanese lawmakers are invoking it as evidence that their own central bank comes up short.
http://jlne.ws/ynprjf
Gillard Urged to Follow Bernanke With Australia Loans: Mortgages
BusinessWeek
Australia's Prime Minister Julia Gillard may be forced to follow U.S. Federal Reserve Chairman Ben S. Bernanke by increasing mortgage purchases as house prices slump and the nation's biggest banks extend their grip on the home-loan market.
http://jlne.ws/wQipGs
Australia Central Bank Sees Scope for Further Rate Cuts: Economy
BusinessWeek
Australia's central bank said it has scope to ease monetary policy if needed, after keeping the benchmark interest rate unchanged this month as risks in Europe abated, minutes of its Feb. 7 meeting showed.
http://jlne.ws/AlEjQA
Polish Rates Likely to Rise on Growth Forecast
Bloomberg
Feb. 21 (Bloomberg) -- Andrzej Bratkowski, member of the Polish central bank's Monetary Policy Council, discusses the outlook for the economy, inflation and interest rates. He spoke yesterday with Bloomberg's David McQuaid in Warsaw.
http://jlne.ws/z8GKNL
Namibia's central bank leaves rates at 6.0 percent
Reuters via Yahoo! News
JOHANNESBURG (Reuters) - Namibia's central bank on Wednesday left its bank rate unchanged at 6.0 percent, citing concerns of "frail" economic growth. "Our estimate is that growth for 2011 is going to be just under 4 percent compared to 6.6 percent in 2010," central bank Governor Ipumbu Shiimi said at a briefing.
http://jlne.ws/A1qMgU
Turkish Central Bank Unexpectedly Cuts Its Maximum Lending Rate to 11.5%
Bloomberg
Turkey's central bank cut the maximum interest rate at which it lends to banks overnight to 11.5 percent from 12.5 percent, saying it was taking into account monetary easing in other economies. Bond yields dropped to a four-month low.
http://jlne.ws/AspGh4
Russia Central Bank Forex Reserves Feb 17 Down $4.7 Billion To 504.4 Billion
Nasdaq
http://jlne.ws/yoDmrc
Royal Bank of Scotland Posts a Wider-Than-Estimated Loss
BusinessWeek
Royal Bank of Scotland Group Plc, Britain's biggest government-owned lender, posted a wider full- year loss than analysts estimated after writing down Greek debt and compensating customers who were improperly sold insurance.
http://jlne.ws/xlLcXD
Thai Central Bank: 4Q11 GDP Contraction Worse Than Expected
Nasdaq
http://jlne.ws/zsp0yr
Euro-Area Central Banks Said to Swap Greek Portfolio Bonds
BusinessWeek
Euro-area central banks will swap the Greek bonds in their investment portfolios for similar securities to avoid enforced losses during a debt restructuring, a euro-area official said.
http://jlne.ws/wJ2LER
Rabu, 22 Februari 2012
Top Interest Rate Headlines 02-22-2012: Obama Introduces Plan To Cut Corporate Tax Rate
Obama Introduces Plan to Cut Corporate Tax Rate
The New York Times
President Obama asked Congress on Wednesday to scrub the corporate tax code of dozens of loopholes and subsidies to reduce the top rate to 28 percent, from 35 percent, while giving preferences to manufacturers that would set their maximum effective rate at 25 percent.
http://jlne.ws/ysTns8
Should Mortgage Rates Even Be Lower?
WSJ.com
Mortgage rates are the lowest on record. But by a key historical measure, they should be even lower. Over the past year, a wide gap ripped open between the mortgage rates house hunters see and a benchmark interest rate investors demand to buy bonds backed by home loans.
http://jlne.ws/xNqvl7
THE PRESIDENT’S FRAMEWORK FOR BUSINESS TAX REFORM
http://jlne.ws/xx4nSv
New NFA members take aggressive approach
FuturesMag.com
A point that is often missed in the coverage of MF Global is that this is a crime in progress and not merely a bad thing that happened that has to be cleared up. Every day that customers are not made whole the crime becomes worse and damage to the industry accrues.
http://jlne.ws/zSpiNJ
Greek Parliament to discuss austerity, bond swap deal as unions plan protest rally
The Washington Post With Bloomberg
A new €130 billion ($172 billion) bailout deal “binds Greece to euro” and will shield the country from default, the finance minister said Wednesday. Evangelos Venizelos made the remarks after the government conceded a new round of austerity measures will deepen the recession and cause the country to miss its target of generating a primary budget surplus in 2012.
http://jlne.ws/wmdOz3
NFA's Board of Directors elects Christopher Hehmeyer to serve as Chairman
Press Release
February 22, Chicago - The Board of Directors of National Futures Association (NFA) has elected Christopher K. Hehmeyer, Non-Executive Chairman at Penson GHCO, to serve a one-year term as Chairman. The Board also elected Paul J. Georgy, President of Allendale, Inc., to serve as Vice Chairman.
http://jlne.ws/zFdCSJ
CFPB Opens Inquiry Into Overdraft Fee Practices
The Consumer Financial Protection Bureau takes its road show to New York City Wednesday, Feb. 22, to ask bank customers about “their experiences with financial products and services.”
http://jlne.ws/wGpeD1
Jan. Existing Home Sales Rise 4.3% to 4.57M Unit Rate
The Bond Buyer
Existing home sales increased 4.3% in January to a seasonally adjusted 4.57 million-unit rate, after a downwardly revised 4.38 million unit rate in December originally reported as 4.61 million units, the National Association of Realtors announced Wednesday.
http://jlne.ws/A1457A
The New York Times
President Obama asked Congress on Wednesday to scrub the corporate tax code of dozens of loopholes and subsidies to reduce the top rate to 28 percent, from 35 percent, while giving preferences to manufacturers that would set their maximum effective rate at 25 percent.
http://jlne.ws/ysTns8
Should Mortgage Rates Even Be Lower?
WSJ.com
Mortgage rates are the lowest on record. But by a key historical measure, they should be even lower. Over the past year, a wide gap ripped open between the mortgage rates house hunters see and a benchmark interest rate investors demand to buy bonds backed by home loans.
http://jlne.ws/xNqvl7
THE PRESIDENT’S FRAMEWORK FOR BUSINESS TAX REFORM
http://jlne.ws/xx4nSv
New NFA members take aggressive approach
FuturesMag.com
A point that is often missed in the coverage of MF Global is that this is a crime in progress and not merely a bad thing that happened that has to be cleared up. Every day that customers are not made whole the crime becomes worse and damage to the industry accrues.
http://jlne.ws/zSpiNJ
Greek Parliament to discuss austerity, bond swap deal as unions plan protest rally
The Washington Post With Bloomberg
A new €130 billion ($172 billion) bailout deal “binds Greece to euro” and will shield the country from default, the finance minister said Wednesday. Evangelos Venizelos made the remarks after the government conceded a new round of austerity measures will deepen the recession and cause the country to miss its target of generating a primary budget surplus in 2012.
http://jlne.ws/wmdOz3
NFA's Board of Directors elects Christopher Hehmeyer to serve as Chairman
Press Release
February 22, Chicago - The Board of Directors of National Futures Association (NFA) has elected Christopher K. Hehmeyer, Non-Executive Chairman at Penson GHCO, to serve a one-year term as Chairman. The Board also elected Paul J. Georgy, President of Allendale, Inc., to serve as Vice Chairman.
http://jlne.ws/zFdCSJ
CFPB Opens Inquiry Into Overdraft Fee Practices
The Consumer Financial Protection Bureau takes its road show to New York City Wednesday, Feb. 22, to ask bank customers about “their experiences with financial products and services.”
http://jlne.ws/wGpeD1
Jan. Existing Home Sales Rise 4.3% to 4.57M Unit Rate
The Bond Buyer
Existing home sales increased 4.3% in January to a seasonally adjusted 4.57 million-unit rate, after a downwardly revised 4.38 million unit rate in December originally reported as 4.61 million units, the National Association of Realtors announced Wednesday.
http://jlne.ws/A1457A
Selasa, 21 Februari 2012
Top Interest Rate Headlines 02-21-12: Fed Writes Sweeping Rules From Behind Closed Doors
Fed Writes Sweeping Rules From Behind Closed Doors
BY VICTORIA MCGRANE AND JON HILSENRATH - WSJ
The Federal Reserve has operated almost entirely behind closed doors as it rewrites the rule book governing the U.S. financial system, a stark contrast with its push for transparency in its interest-rate policies and emergency-lending programs. While many Americans may not realize it, the Fed has taken on a much larger regulatory role than at any time in history.
http://jlne.ws/wk2HTR
NFA considering proposal to restore money lost by MF Global
By Lynne Marek - Crain's
(Crain's) — Two new reform-minded National Futures Association board members are pressing the group to help restore money lost by MF Global Inc.'s futures-trading customers and require futures commission merchants to disclose daily where customer funds are held.
http://jlne.ws/yJk1bl
You know the deficit hawks. Now meet the deficit owls.
Washington Post
About 11 years ago, James K. "Jamie" Galbraith recalls, hundreds of his fellow economists laughed at him. To his face. In the White House. It was April 2000, and Galbraith had been invited by President Bill Clinton to speak on a panel about the budget surplus. Galbraith was a logical choice. A public policy professor at the University of Texas and former head economist for the Joint Economic ...
http://jlne.ws/y11wxK
UBS Launches New E-Trading Platform For Credit-Default Swaps
By Katy Burne Of DOW JONES NEWSWIRES
Seeing that a pending regulatory overhaul of the $708 trillion private derivatives market will bring down the curtain on the lucrative business of dealing in swaps, UBS is looking for a new way to stay in the game. In a wholesale shift in how credit derivatives have been traded, the Swiss banking giant has launched an electronic market for credit-default swaps, allowing customers to buy or sell the insurance-like instruments directly with other customers on-screen or trade with the bank's own traders.
http://jlne.ws/wcrAcW
UBS Turning Whistleblower in Libor Probe Puts Pressure on Rivals
BusinessWeek
UBS AG's decision to become first- confessor as regulators probe the alleged manipulation of interest rates will ratchet up the risks for other banks that set the benchmark for $360 trillion of securities worldwide.
http://jlne.ws/wJ8Hbq
Trustee Finds No Missing MF Global Customer Cash JP Morgan Account
By PATRICK FITZGERALD
Louis Freeh, the bankruptcy trustee overseeing MF Global Holdings Ltd.'s Chapter 11 case, determined that none of the estimated $1.6 billion in missing customer cash ended up in a company account at J.P. Morgan Chase & Co. that he was reviewing.
http://jlne.ws/xRuqbc
Euro Zone Ministers Approve $171B Greek Aid Package
International Business Times
Euro zone finance ministers meeting in Brussels early Tuesday approved a $171 billion bailout package for Greece, sparing the nation a default and the continent a dramatic economic downturn.
http://jlne.ws/yuiupD
BY VICTORIA MCGRANE AND JON HILSENRATH - WSJ
The Federal Reserve has operated almost entirely behind closed doors as it rewrites the rule book governing the U.S. financial system, a stark contrast with its push for transparency in its interest-rate policies and emergency-lending programs. While many Americans may not realize it, the Fed has taken on a much larger regulatory role than at any time in history.
http://jlne.ws/wk2HTR
NFA considering proposal to restore money lost by MF Global
By Lynne Marek - Crain's
(Crain's) — Two new reform-minded National Futures Association board members are pressing the group to help restore money lost by MF Global Inc.'s futures-trading customers and require futures commission merchants to disclose daily where customer funds are held.
http://jlne.ws/yJk1bl
You know the deficit hawks. Now meet the deficit owls.
Washington Post
About 11 years ago, James K. "Jamie" Galbraith recalls, hundreds of his fellow economists laughed at him. To his face. In the White House. It was April 2000, and Galbraith had been invited by President Bill Clinton to speak on a panel about the budget surplus. Galbraith was a logical choice. A public policy professor at the University of Texas and former head economist for the Joint Economic ...
http://jlne.ws/y11wxK
UBS Launches New E-Trading Platform For Credit-Default Swaps
By Katy Burne Of DOW JONES NEWSWIRES
Seeing that a pending regulatory overhaul of the $708 trillion private derivatives market will bring down the curtain on the lucrative business of dealing in swaps, UBS is looking for a new way to stay in the game. In a wholesale shift in how credit derivatives have been traded, the Swiss banking giant has launched an electronic market for credit-default swaps, allowing customers to buy or sell the insurance-like instruments directly with other customers on-screen or trade with the bank's own traders.
http://jlne.ws/wcrAcW
UBS Turning Whistleblower in Libor Probe Puts Pressure on Rivals
BusinessWeek
UBS AG's decision to become first- confessor as regulators probe the alleged manipulation of interest rates will ratchet up the risks for other banks that set the benchmark for $360 trillion of securities worldwide.
http://jlne.ws/wJ8Hbq
Trustee Finds No Missing MF Global Customer Cash JP Morgan Account
By PATRICK FITZGERALD
Louis Freeh, the bankruptcy trustee overseeing MF Global Holdings Ltd.'s Chapter 11 case, determined that none of the estimated $1.6 billion in missing customer cash ended up in a company account at J.P. Morgan Chase & Co. that he was reviewing.
http://jlne.ws/xRuqbc
Euro Zone Ministers Approve $171B Greek Aid Package
International Business Times
Euro zone finance ministers meeting in Brussels early Tuesday approved a $171 billion bailout package for Greece, sparing the nation a default and the continent a dramatic economic downturn.
http://jlne.ws/yuiupD
Jumat, 17 Februari 2012
Top Interest Rate Headlines 02-17-2012: Congress Approves Payroll Tax Cut, Sending Measure To President Obama
Congress approves payroll tax cut, sending measure to President Obama
The Washington Post
http://jlne.ws/yZRaQl
Could ECB Greek Bond Swap Trigger Ratings Default?
WSJ.com
Greece's debt rating could fall into default in the coming days if past comments by ratings firms are any indication after the country completed a debt exchange on bonds held by the European Central Bank.
http://jlne.ws/yCGynh
Leaders of Germany, Greece and Italy optimistic a Greek bailout deal will be agreed next week
The Associated Press
Greece’s hopes to finally get its bailout and dodge default next month were boosted Friday, when key European leaders, including German Chancellor Angela Merkel, sounded confident a deal could be agreed.
http://jlne.ws/yF9dlt
Fitch Upgrades Iceland Rating To First Step Of Investment Grade
WSJ.com
Fitch Ratings lifted its rating on Iceland to investment grade, citing the nation's progress in stabilizing its economy and pushing ahead with structural reforms.
http://jlne.ws/yKbFOB
Italy police seize $6 trillion of fake U.S. T-bonds
Italian police said on Friday they had seized about $6 trillion worth of fake U.S. Treasury bonds and other securities in Switzerland, and arrested eight Italians accused of international fraud and other financial crimes.
http://jlne.ws/zdoK79
Fed Bank Of Dallas CEO On CBS 11
Federal Reserve Bank of Dallas President and CEO Richard W. Fisher joined CBS 11 Thursday afternoon to talk money, what the bank does, and to answer questions from viewers.
http://jlne.ws/wcuFG2
Portugal premier says not to seek more bailout funds
Portugal's prime minister ruled out on Friday any intention to seek more emergency funding or to extend a 78-billion-euro bailout, underlining that his government will meet fiscal goals and economic reforms to overcome the country's debt crisis
http://jlne.ws/xKM93J
The Washington Post
http://jlne.ws/yZRaQl
Could ECB Greek Bond Swap Trigger Ratings Default?
WSJ.com
Greece's debt rating could fall into default in the coming days if past comments by ratings firms are any indication after the country completed a debt exchange on bonds held by the European Central Bank.
http://jlne.ws/yCGynh
Leaders of Germany, Greece and Italy optimistic a Greek bailout deal will be agreed next week
The Associated Press
Greece’s hopes to finally get its bailout and dodge default next month were boosted Friday, when key European leaders, including German Chancellor Angela Merkel, sounded confident a deal could be agreed.
http://jlne.ws/yF9dlt
Fitch Upgrades Iceland Rating To First Step Of Investment Grade
WSJ.com
Fitch Ratings lifted its rating on Iceland to investment grade, citing the nation's progress in stabilizing its economy and pushing ahead with structural reforms.
http://jlne.ws/yKbFOB
Italy police seize $6 trillion of fake U.S. T-bonds
Italian police said on Friday they had seized about $6 trillion worth of fake U.S. Treasury bonds and other securities in Switzerland, and arrested eight Italians accused of international fraud and other financial crimes.
http://jlne.ws/zdoK79
Fed Bank Of Dallas CEO On CBS 11
Federal Reserve Bank of Dallas President and CEO Richard W. Fisher joined CBS 11 Thursday afternoon to talk money, what the bank does, and to answer questions from viewers.
http://jlne.ws/wcuFG2
Portugal premier says not to seek more bailout funds
Portugal's prime minister ruled out on Friday any intention to seek more emergency funding or to extend a 78-billion-euro bailout, underlining that his government will meet fiscal goals and economic reforms to overcome the country's debt crisis
http://jlne.ws/xKM93J
Kamis, 16 Februari 2012
February 16, 2012: Big Banks Expected Fed to Keep Rates Low Longer [NEWSLETTER]
February 16, 2012
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
Excerpts: Steven B. Kamin, Director, Division of International Finance
The European Financial Situation
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.
February 16, 2012
***For two years now, developments in Europe have played a critical role in shaping the tenor of global financial markets. The combination of high debts, large deficits, and poor growth prospects in several European countries using the euro has raised concerns about their fiscal sustainability. Such concerns were initially focused on Greece but have since spread to a number of other euro-area countries, leading to substantial increases in their sovereign borrowing costs. Pessimism about these countries' fiscal situation, in turn, has helped to undermine confidence in the strength of European financial institutions, increasing the institutions' borrowing costs and threatening to curtail their supply of credit. These developments have strained global financial markets and weighed on global economic activity.
***The changes in swap arrangements --have had some positive effects on dollar funding markets. Since the announcement of the changes at the end of November, the outstanding amount of dollar funding through the swap lines has increased substantially, to more than $100 billion, and several measures of the cost of dollar funding have declined.
That being said, many financial institutions, especially those from Europe, continue to find it difficult and costly to acquire dollar funding, in large part because investors remain uncertain about Europe's economic and financial prospects. Ultimately, the easing of strains in U.S. and global financial markets will require concerted action on the part of European authorities as they follow through on their announced plans to address their fiscal and financial difficulties. The situation in Europe is continuously evolving. Thus, we are closely monitoring events in the region and their spillovers to the U.S. economy and financial system.
See the full speech here.
Lead Stories
Big Banks Expected Fed to Keep Rates Low Longer
WSJ.com
Ahead of the last Federal Reserve meeting, Wall Street’s biggest banks expected the central bank to lengthen the period it saw interest rate rates staying very low, although not by as much as the Fed actually delivered. In a survey of the primary dealer banks that serve as counterparties to Fed market interventions, the median projection of the banks was that the Fed will raise interest rates in the second quarter of 2014. The survey of dealers was conducted in advance of the Jan. 24-25 Federal Open Market Committee. Dealers got the questions on Jan. 12, with the responses received by Jan. 17.
http://jlne.ws/woiILz
Federal Reserve Open Market Committee Meeting Minutes for Jan. 25 (Text)
Bloomberg
Following are the minutes of the Federal Reserve's Open Market Committee meeting that concluded on January 25.
http://jlne.ws/yjAVhI
Federal Reserve minutes show members divided over bond buys
Los Angeles Times
The Federal Reserve appears open to the idea of a third round of bond purchases to boost a still-modest recovery. But members remain divided over when or whether to take that step.
http://jlne.ws/AvQKzq
Moodys Unveils Broad Ratings Review of Major Banks
By JULIA WERDIGIER - NY Times
LONDON Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS and more than 100 other financial institutions might have their credit ratings cut by Moody’s Investors Service because of increasingly challenging market conditions.
http://jlne.ws/xIykdJ
Federal Reserve Board Approves Capital One Plan To Buy ING Bank
Nasdaq
http://jlne.ws/xbNZYZ
Fed Bond Purchase Option Kept in Reserve as Officials Weigh Data
BusinessWeek
Federal Reserve officials are keeping open the option of a third round of bond purchases in case the economy weakens or inflation stays low.
http://jlne.ws/y7KerZ
**CN: Policy makers willing to wait for evidence of weakness in the economy before taking further action are probably in the majority says a former senior staff economist in the central bank’s division of monetary affairs.
Fed Bond Purchase Option Kept in Reserve as Officials Weigh Data
BusinessWeek
Federal Reserve officials are keeping open the option of a third round of bond purchases in case the economy weakens or inflation stays low.
http://jlne.ws/y7KerZ
Federal Reserve Unlikely to Buy More Assets
New York Times
Minutes of the Jan. 24-25 meeting of the policy group show that the central bank continued to predict only modest economic growth this year.
http://jlne.ws/yV3B7g
Bernanke says community banks have strengthened
Associated Press via Yahoo! News
Federal Reserve Chairman Ben Bernanke said Thursday that the health of the nation's community banks has strengthened, despite what he described as a frustratingly slow economic recovery.
http://jlne.ws/yZiDRM
Fed's Tri-Party Repo Group Says More Work Needed on Dealer Funding Reforms
Bloomberg
A Federal Reserve-sponsored advisory panel formed to help devise ways to reduce risks and improve the efficiency of the market for borrowing and lending securities said further work was needed as the group concluded its efforts.
http://jlne.ws/AibWE3
Federal Reserve minutes show members divided over bond buys
Los Angeles Times
The Federal Reserve appears open to the idea of a third round of bond purchases to boost a still-modest recovery. But members remain divided over when or whether to take that step.
http://jlne.ws/AvQKzq
Zoellick to leave World Bank
By Alan Beattie in Washington - Financial Times
Robert Zoellick, president of the World Bank since 2007, announced on Wednesday he would step down when his current term ends on June 30. His departure will start a battle for a prized position that has traditionally been in the gift of the US but for which an emerging market candidate may make a bid.
http://jlne.ws/wTbZEx
The Federal Reserve's Explicit Goal: Devalue The Dollar 33%
Business Insider
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.
http://jlne.ws/xDYJBB
New York Fed to Take More Direct Role in Repo Market
Wall Street Journal Blogs
At issue is the state of the triparty repo market. This sector is the backbone of bond trading and its high-volume trades are very short term in nature. Since the financial crisis, the market has been beset by problems, among them issues with the documentation of trades.
http://jlne.ws/wKIuF7
Student Loans Near $1 Trillion Hurting Young Buyers: Mortgages
BusinessWeek
Roshell Schenck has a PhD in pharmacy and earns $125,000 a year, yet can't qualify for a mortgage for a house for herself and her 9-year-old daughter. The 2008 graduate of Lake Erie College of Osteopathic Medicine, in Erie, Pennsylvania, has more than $110,000 in student debt.
http://jlne.ws/xwFLrF
U.S TIC Flows
International Business Times
The U.S Department of the Treasury released the TIC flows for the month of December, where total Net TIC Flows rose to $87.1 billion, from a revised estimate of $42.9 billion. Net long -term TIC flows fell to $17.9 billion in December, down from a revised estimate of $61.3 billion and median estimate.
http://jlne.ws/Aupmhc
Broadway Financial Enters Definitive Agreement With U.S. Treasury Department
Business Wire
LOS ANGELES--(BUSINESS WIRE)--Broadway Financial Corporation (NasdaqCM:BYFC), the holding company of Broadway Federal Bank, f.s.b., today announced it has entered into an agreement with the U.S. Department of the Treasury (the "Treasury") pursuant to which the Treasury will exchange its Series D and E preferred stock in the Company for new common stock.
http://jlne.ws/zQTu7n
Treasury says it can skimp and save
UPI
WASHINGTON, Feb. 13 (UPI) -- U.S. Treasury Secretary Timothy Geither touted the department's proposed budget allocation as an effort to be thrifty, but also create jobs.
http://jlne.ws/wPqjBp
China's U.S. Mortgage Buying May Be Bet on QE3, Nomura Says
BusinessWeek
Chinese investors added U.S. government-backed mortgage securities and so-called agency debentures in December, signaling the country may be anticipating further purchases of housing debt by the Federal Reserve, according to Nomura Securities International analysts.
http://jlne.ws/yKqr4B
Foreign demand for US Treasury debt declines
Channel 8 San Diego
Foreign demand for U.S. Treasury debt fell slightly in December after hitting a record high the previous month.
http://jlne.ws/xtguPo
ECB Following US Lead in Handling Greece: Ross
CNBC
European policymakers are taking a page from their American counterparts in dealing with their sovereign debt crisis, a development that vulture investor Wilbur Ross considers positive.
http://jlne.ws/yIRwgg
Pimco: Foreclosure Deal Cheap for Banks
Bloomberg
In what the U.S. called the largest federal-state civil settlement in the nation's history, five banks including Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) yesterday committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments.
http://jlne.ws/ynKseT
Gross Buys Treasuries as Buffett Says Bonds Are 'Dangerous'
BusinessWeek
Pacific Investment Management Co.'s Bill Gross increased his holdings of Treasuries to the highest level since July 2010, while billionaire investor Warren Buffett called them "dangerous."
http://jlne.ws/wdWkFK
Simon Johnson: Paul Volcker vs. the Bank of Canada
New York Times
In opposing an American regulation limiting banks' proprietary trading, the Canadian central bank recommends an approach that would seriously undermine financial stability in the United States, Canada and other countries, an economist writes.
http://jlne.ws/zcPejl
The Volcker Rule's Unusual Critics
New York Times
While Wall Street is the chief critic of the rule, which bans banks from trading with their own money, the financial industry is finding sympathy from some unexpected quarters, including the owners of Red Lobster, Macy's and Safeway.
http://jlne.ws/w1I5We
CME Group Asks Regulators to Exempt Futures From Volcker Rule
By Matthew Leising
Feb. 15 (Bloomberg) -- CME Group Inc. is asking regulators to include futures contracts in a list of exempted investments that won’t be prohibited under the Volcker rule’s limits on proprietary trading. [...] Leaving futures contracts off the list probably was “inadvertent,” CME Group Chief Executive Officer Craig Donohue wrote to regulators in a Feb. 13 letter.
Woman Saves Baby as Car Hits House
http://jlne.ws/yeECdS
**CN: Not about rates, but so brightly shines a good deed in a weary world.
Events
Retail Banking in Europe
March 13 and 14, 2012
Marketforce And The IEA’s 13th Annual Conference
http://jlne.ws/wNoXDO
ISDA 27th Annual General Meeting
April 30 - May 2, 2012
Only ISDA Members Eligible To Attend
http://jlne.ws/yrvU5E
48th Annual Conference on Bank Structure and Competition
May 9 - May 11, 2012
Annual Conference On Bank Structure
http://jlne.ws/xwqkLK
Firms & Banks
State Street Launches SwapEx Initiative, Significantly Expanding End-to-End Derivatives Solution
Business Wire via Yahoo! Finance
State Street Corporation , one of the world's leading providers of financial services to institutional investors, today announced the expansion of its end-to-end derivatives solution to include an execution platform for the trading of derivatives products.
http://jlne.ws/A1XnxN
Ex-Citigroup Trader Denies Wrongdoing in Tibor Probe
BusinessWeek
An ex-Citigroup Inc. executive accused in a probe by Japanese regulators of suspected interest- rate manipulation denied wrongdoing and said authorities never questioned him before they issued findings.
http://jlne.ws/ySLbUl
UBS suspends traders in Libor probe
By Megan Murphy and Cynthia O’Murchu - Financial Times
UBS has suspended some of its most senior traders in connection with an international probe into the possible manipulation of interbank borrowing rates, in the latest controversy to hit the Swiss bank since the financial crisis.
http://jlne.ws/yEaO5Z
Wanted to Buy: MF Global Claims
By DAN STRUMPF - WSJ
Since MF Global Holdings Ltd. filed for bankruptcy protection last year, some customers of its failed brokerage have had little choice but to wait for the full return of their cash. That is beginning to change. Lately, investors that gobble up claims in bankruptcy or other distressed situations have begun approaching former MF Global customers with offers to buy their claims for cash, at a discount.
http://jlne.ws/zLvyhi
Citigroup Mortgage Unit to Pay $158.3 Million in Settlement
BusinessWeek
Citigroup Inc.'s Citimortgage unit agreed to pay $158.3 million to settle claims tied to its actions in a federal home-loan insurance program, the Manhattan U.S. Attorney's office said.
http://jlne.ws/AmbSdT
Deutsche Bank Sued in New York Over $512 Million in Mortgage Securities
Bloomberg
Deutsche Bank AG's Ace Securities was sued in New York state court for fraud for allegedly misrepresenting the quality of $512 million worth of residential mortgage-backed securities by Phoenix Light SF Ltd.
http://jlne.ws/yzWt1h
Morgan Stanley and Citi face losses on block trades
By Robin Wigglesworth, Capital Markets Correspondent - Financial Times
Morgan Stanley and Citigroup face potentially painful losses on two recent European share sales that went awry, highlighting the dangers of the currently aggressive bidding by banks for so-called ‘block trade’ work.
http://jlne.ws/Akb3Vn
Regulators
Atlanta Federal Reserve President On Valentine's Day: U.S. Economy Has Been 'Rather Frisky Lately'
The Huffington Post
Here's the Federal Reserve wishing you a Happy Valentine's Day.
http://jlne.ws/zSWIjF
Kocherlakota's priority: Federal Reserve transparency
MinnPost
Narayana Kocherlakota describes himself as a "pro-transparency" kind of guy. In the 28 months since he became president of the Federal Reserve Bank of Minneapolis, the affable former economics professor has given 39 speeches and issued 21 papers or policy statements, far outpacing his predecessor.
http://jlne.ws/zzhueU
Williams Says Fed Should Keep U.S. Monetary Throttle Wide Open
BusinessWeek
Federal Reserve Bank of San Francisco President John Williams said the U.S. central bank should keep trying to boost growth because it's missing its goals for employment and price stability, while stopping short of calling for more asset purchases for now.
http://jlne.ws/yJmHEs
Fed's Tarullo Abstains on Vote to Back Statement of Principles
Wall Street Journal Blogs
Not everyone at last month's Federal Open Market Committee signed off on the central bank's new statement of principles.
http://jlne.ws/xSeTdD
Dallas Fed President Fisher says more easing may be harmful
http://jlne.ws/zignz0 via Yahoo! Finance
Additional monetary accommodation may only fuel inflation fears, said Fed President Richard Fisher in a speech today, according to a transcript.
http://jlne.ws/xWR3dr
Nicaragua Central Bank Head Quits Amid Alba Spat With Ortega
BusinessWeek
Nicaragua's Central Bank President Antenor Rosales quit following a disagreement with President Daniel Ortega over the use of foreign currency reserves to fund a regional bank for the Venezuelan-led bloc of eight nations known as Alba.
http://jlne.ws/xBCzvL
Global News
BOJ signals more aggressive policy, sets inflation goal
Hartford Courant
TOKYO (Reuters) - The Bank of Japan boosted its asset buying program by $130 billion on Tuesday and in the face of political pressure set an inflation goal of 1 percent, signaling a more aggressive monetary policy to pull an ailing economy out of deflation.
http://jlne.ws/zKcB4K
Brazil's Economic Activity Rises in December for Second Straight Month
Bloomberg
Brazil's economy expanded in December for the second straight month, adding to evidence that Latin America's biggest economy recovered from a third-quarter contraction.
http://jlne.ws/xLHq2h
Sweden's Central Bank Cuts Main Rate to Ward Off Recession
BusinessWeek
Sweden's central bank cut its benchmark interest rate for a second consecutive meeting to prevent the largest Nordic economy from falling into a recession as Europe's debt crisis erodes export demand.
http://jlne.ws/AbIJec
Central Bank's Occupy policy enrages local business owners
Irish Central
Central Bank Governor Patrick Honohan angered business owners after saying last week that while he didn't welcome the Dame Street protesters, he had no plans to take action against them.
http://jlne.ws/AmxKfg
Ghana c.bank hikes rates, cites euro zone
Reuters via Yahoo! News
ACCRA (Reuters) - The Bank of Ghana's Monetary Policy Committee announced a one percentage point increase to 13.5 percent in its prime lending rate on Wednesday, the first hike in three years, citing risks from the euro zone debt crisis and currency volatility.
http://jlne.ws/zbk9Wj
Norway Policy Dilemma Pits House Debt Against Krone 'Headache'
BusinessWeek
Norway's overheated credit and property markets are vying with export-eroding krone gains for policy makers' attentions as officials risk fueling either an asset bubble or currency appreciation.
http://jlne.ws/wIKjv1
French banks' central bank liabilities hit
Reuters via Yahoo! News
PARIS (Reuters) - French banks' liabilities with the Bank of France hit a record high of 218 billion euros in December, of which 119.6 billion was used for monetary policy, the central bank said on Tuesday.
http://jlne.ws/xRWNs2
British Central Bank Sees 'Zigzag' Growth
New York Times
http://jlne.ws/xc44cM
Riksbank Cuts Repo Rate Amid European Woes
Nasdaq
http://jlne.ws/zADnsT
Disclaimer: The John Lothian, Environmental Markets, JLN Metals, JLN Managed Futures, JLN Interest Rates, JLN Options and JLN FX newsletters and blogs and MarketsWiki are products of John J. Lothian & Company, Inc. The opinions expressed in these publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers.
Futures and options trading involve risk. Past results are no indication of future performance.
Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any web site or newsletter content.
Copyright 2011 John J. Lothian & Company, Inc. All Rights Reserved.
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
Excerpts: Steven B. Kamin, Director, Division of International Finance
The European Financial Situation
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.
February 16, 2012
***For two years now, developments in Europe have played a critical role in shaping the tenor of global financial markets. The combination of high debts, large deficits, and poor growth prospects in several European countries using the euro has raised concerns about their fiscal sustainability. Such concerns were initially focused on Greece but have since spread to a number of other euro-area countries, leading to substantial increases in their sovereign borrowing costs. Pessimism about these countries' fiscal situation, in turn, has helped to undermine confidence in the strength of European financial institutions, increasing the institutions' borrowing costs and threatening to curtail their supply of credit. These developments have strained global financial markets and weighed on global economic activity.
***The changes in swap arrangements --have had some positive effects on dollar funding markets. Since the announcement of the changes at the end of November, the outstanding amount of dollar funding through the swap lines has increased substantially, to more than $100 billion, and several measures of the cost of dollar funding have declined.
That being said, many financial institutions, especially those from Europe, continue to find it difficult and costly to acquire dollar funding, in large part because investors remain uncertain about Europe's economic and financial prospects. Ultimately, the easing of strains in U.S. and global financial markets will require concerted action on the part of European authorities as they follow through on their announced plans to address their fiscal and financial difficulties. The situation in Europe is continuously evolving. Thus, we are closely monitoring events in the region and their spillovers to the U.S. economy and financial system.
See the full speech here.
Lead Stories
Big Banks Expected Fed to Keep Rates Low Longer
WSJ.com
Ahead of the last Federal Reserve meeting, Wall Street’s biggest banks expected the central bank to lengthen the period it saw interest rate rates staying very low, although not by as much as the Fed actually delivered. In a survey of the primary dealer banks that serve as counterparties to Fed market interventions, the median projection of the banks was that the Fed will raise interest rates in the second quarter of 2014. The survey of dealers was conducted in advance of the Jan. 24-25 Federal Open Market Committee. Dealers got the questions on Jan. 12, with the responses received by Jan. 17.
http://jlne.ws/woiILz
Federal Reserve Open Market Committee Meeting Minutes for Jan. 25 (Text)
Bloomberg
Following are the minutes of the Federal Reserve's Open Market Committee meeting that concluded on January 25.
http://jlne.ws/yjAVhI
Federal Reserve minutes show members divided over bond buys
Los Angeles Times
The Federal Reserve appears open to the idea of a third round of bond purchases to boost a still-modest recovery. But members remain divided over when or whether to take that step.
http://jlne.ws/AvQKzq
Moodys Unveils Broad Ratings Review of Major Banks
By JULIA WERDIGIER - NY Times
LONDON Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS and more than 100 other financial institutions might have their credit ratings cut by Moody’s Investors Service because of increasingly challenging market conditions.
http://jlne.ws/xIykdJ
Federal Reserve Board Approves Capital One Plan To Buy ING Bank
Nasdaq
http://jlne.ws/xbNZYZ
Fed Bond Purchase Option Kept in Reserve as Officials Weigh Data
BusinessWeek
Federal Reserve officials are keeping open the option of a third round of bond purchases in case the economy weakens or inflation stays low.
http://jlne.ws/y7KerZ
**CN: Policy makers willing to wait for evidence of weakness in the economy before taking further action are probably in the majority says a former senior staff economist in the central bank’s division of monetary affairs.
Fed Bond Purchase Option Kept in Reserve as Officials Weigh Data
BusinessWeek
Federal Reserve officials are keeping open the option of a third round of bond purchases in case the economy weakens or inflation stays low.
http://jlne.ws/y7KerZ
Federal Reserve Unlikely to Buy More Assets
New York Times
Minutes of the Jan. 24-25 meeting of the policy group show that the central bank continued to predict only modest economic growth this year.
http://jlne.ws/yV3B7g
Bernanke says community banks have strengthened
Associated Press via Yahoo! News
Federal Reserve Chairman Ben Bernanke said Thursday that the health of the nation's community banks has strengthened, despite what he described as a frustratingly slow economic recovery.
http://jlne.ws/yZiDRM
Fed's Tri-Party Repo Group Says More Work Needed on Dealer Funding Reforms
Bloomberg
A Federal Reserve-sponsored advisory panel formed to help devise ways to reduce risks and improve the efficiency of the market for borrowing and lending securities said further work was needed as the group concluded its efforts.
http://jlne.ws/AibWE3
Federal Reserve minutes show members divided over bond buys
Los Angeles Times
The Federal Reserve appears open to the idea of a third round of bond purchases to boost a still-modest recovery. But members remain divided over when or whether to take that step.
http://jlne.ws/AvQKzq
Zoellick to leave World Bank
By Alan Beattie in Washington - Financial Times
Robert Zoellick, president of the World Bank since 2007, announced on Wednesday he would step down when his current term ends on June 30. His departure will start a battle for a prized position that has traditionally been in the gift of the US but for which an emerging market candidate may make a bid.
http://jlne.ws/wTbZEx
The Federal Reserve's Explicit Goal: Devalue The Dollar 33%
Business Insider
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.
http://jlne.ws/xDYJBB
New York Fed to Take More Direct Role in Repo Market
Wall Street Journal Blogs
At issue is the state of the triparty repo market. This sector is the backbone of bond trading and its high-volume trades are very short term in nature. Since the financial crisis, the market has been beset by problems, among them issues with the documentation of trades.
http://jlne.ws/wKIuF7
Student Loans Near $1 Trillion Hurting Young Buyers: Mortgages
BusinessWeek
Roshell Schenck has a PhD in pharmacy and earns $125,000 a year, yet can't qualify for a mortgage for a house for herself and her 9-year-old daughter. The 2008 graduate of Lake Erie College of Osteopathic Medicine, in Erie, Pennsylvania, has more than $110,000 in student debt.
http://jlne.ws/xwFLrF
U.S TIC Flows
International Business Times
The U.S Department of the Treasury released the TIC flows for the month of December, where total Net TIC Flows rose to $87.1 billion, from a revised estimate of $42.9 billion. Net long -term TIC flows fell to $17.9 billion in December, down from a revised estimate of $61.3 billion and median estimate.
http://jlne.ws/Aupmhc
Broadway Financial Enters Definitive Agreement With U.S. Treasury Department
Business Wire
LOS ANGELES--(BUSINESS WIRE)--Broadway Financial Corporation (NasdaqCM:BYFC), the holding company of Broadway Federal Bank, f.s.b., today announced it has entered into an agreement with the U.S. Department of the Treasury (the "Treasury") pursuant to which the Treasury will exchange its Series D and E preferred stock in the Company for new common stock.
http://jlne.ws/zQTu7n
Treasury says it can skimp and save
UPI
WASHINGTON, Feb. 13 (UPI) -- U.S. Treasury Secretary Timothy Geither touted the department's proposed budget allocation as an effort to be thrifty, but also create jobs.
http://jlne.ws/wPqjBp
China's U.S. Mortgage Buying May Be Bet on QE3, Nomura Says
BusinessWeek
Chinese investors added U.S. government-backed mortgage securities and so-called agency debentures in December, signaling the country may be anticipating further purchases of housing debt by the Federal Reserve, according to Nomura Securities International analysts.
http://jlne.ws/yKqr4B
Foreign demand for US Treasury debt declines
Channel 8 San Diego
Foreign demand for U.S. Treasury debt fell slightly in December after hitting a record high the previous month.
http://jlne.ws/xtguPo
ECB Following US Lead in Handling Greece: Ross
CNBC
European policymakers are taking a page from their American counterparts in dealing with their sovereign debt crisis, a development that vulture investor Wilbur Ross considers positive.
http://jlne.ws/yIRwgg
Pimco: Foreclosure Deal Cheap for Banks
Bloomberg
In what the U.S. called the largest federal-state civil settlement in the nation's history, five banks including Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) yesterday committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments.
http://jlne.ws/ynKseT
Gross Buys Treasuries as Buffett Says Bonds Are 'Dangerous'
BusinessWeek
Pacific Investment Management Co.'s Bill Gross increased his holdings of Treasuries to the highest level since July 2010, while billionaire investor Warren Buffett called them "dangerous."
http://jlne.ws/wdWkFK
Simon Johnson: Paul Volcker vs. the Bank of Canada
New York Times
In opposing an American regulation limiting banks' proprietary trading, the Canadian central bank recommends an approach that would seriously undermine financial stability in the United States, Canada and other countries, an economist writes.
http://jlne.ws/zcPejl
The Volcker Rule's Unusual Critics
New York Times
While Wall Street is the chief critic of the rule, which bans banks from trading with their own money, the financial industry is finding sympathy from some unexpected quarters, including the owners of Red Lobster, Macy's and Safeway.
http://jlne.ws/w1I5We
CME Group Asks Regulators to Exempt Futures From Volcker Rule
By Matthew Leising
Feb. 15 (Bloomberg) -- CME Group Inc. is asking regulators to include futures contracts in a list of exempted investments that won’t be prohibited under the Volcker rule’s limits on proprietary trading. [...] Leaving futures contracts off the list probably was “inadvertent,” CME Group Chief Executive Officer Craig Donohue wrote to regulators in a Feb. 13 letter.
Woman Saves Baby as Car Hits House
http://jlne.ws/yeECdS
**CN: Not about rates, but so brightly shines a good deed in a weary world.
Events
Retail Banking in Europe
March 13 and 14, 2012
Marketforce And The IEA’s 13th Annual Conference
http://jlne.ws/wNoXDO
ISDA 27th Annual General Meeting
April 30 - May 2, 2012
Only ISDA Members Eligible To Attend
http://jlne.ws/yrvU5E
48th Annual Conference on Bank Structure and Competition
May 9 - May 11, 2012
Annual Conference On Bank Structure
http://jlne.ws/xwqkLK
Firms & Banks
State Street Launches SwapEx Initiative, Significantly Expanding End-to-End Derivatives Solution
Business Wire via Yahoo! Finance
State Street Corporation , one of the world's leading providers of financial services to institutional investors, today announced the expansion of its end-to-end derivatives solution to include an execution platform for the trading of derivatives products.
http://jlne.ws/A1XnxN
Ex-Citigroup Trader Denies Wrongdoing in Tibor Probe
BusinessWeek
An ex-Citigroup Inc. executive accused in a probe by Japanese regulators of suspected interest- rate manipulation denied wrongdoing and said authorities never questioned him before they issued findings.
http://jlne.ws/ySLbUl
UBS suspends traders in Libor probe
By Megan Murphy and Cynthia O’Murchu - Financial Times
UBS has suspended some of its most senior traders in connection with an international probe into the possible manipulation of interbank borrowing rates, in the latest controversy to hit the Swiss bank since the financial crisis.
http://jlne.ws/yEaO5Z
Wanted to Buy: MF Global Claims
By DAN STRUMPF - WSJ
Since MF Global Holdings Ltd. filed for bankruptcy protection last year, some customers of its failed brokerage have had little choice but to wait for the full return of their cash. That is beginning to change. Lately, investors that gobble up claims in bankruptcy or other distressed situations have begun approaching former MF Global customers with offers to buy their claims for cash, at a discount.
http://jlne.ws/zLvyhi
Citigroup Mortgage Unit to Pay $158.3 Million in Settlement
BusinessWeek
Citigroup Inc.'s Citimortgage unit agreed to pay $158.3 million to settle claims tied to its actions in a federal home-loan insurance program, the Manhattan U.S. Attorney's office said.
http://jlne.ws/AmbSdT
Deutsche Bank Sued in New York Over $512 Million in Mortgage Securities
Bloomberg
Deutsche Bank AG's Ace Securities was sued in New York state court for fraud for allegedly misrepresenting the quality of $512 million worth of residential mortgage-backed securities by Phoenix Light SF Ltd.
http://jlne.ws/yzWt1h
Morgan Stanley and Citi face losses on block trades
By Robin Wigglesworth, Capital Markets Correspondent - Financial Times
Morgan Stanley and Citigroup face potentially painful losses on two recent European share sales that went awry, highlighting the dangers of the currently aggressive bidding by banks for so-called ‘block trade’ work.
http://jlne.ws/Akb3Vn
Regulators
Atlanta Federal Reserve President On Valentine's Day: U.S. Economy Has Been 'Rather Frisky Lately'
The Huffington Post
Here's the Federal Reserve wishing you a Happy Valentine's Day.
http://jlne.ws/zSWIjF
Kocherlakota's priority: Federal Reserve transparency
MinnPost
Narayana Kocherlakota describes himself as a "pro-transparency" kind of guy. In the 28 months since he became president of the Federal Reserve Bank of Minneapolis, the affable former economics professor has given 39 speeches and issued 21 papers or policy statements, far outpacing his predecessor.
http://jlne.ws/zzhueU
Williams Says Fed Should Keep U.S. Monetary Throttle Wide Open
BusinessWeek
Federal Reserve Bank of San Francisco President John Williams said the U.S. central bank should keep trying to boost growth because it's missing its goals for employment and price stability, while stopping short of calling for more asset purchases for now.
http://jlne.ws/yJmHEs
Fed's Tarullo Abstains on Vote to Back Statement of Principles
Wall Street Journal Blogs
Not everyone at last month's Federal Open Market Committee signed off on the central bank's new statement of principles.
http://jlne.ws/xSeTdD
Dallas Fed President Fisher says more easing may be harmful
http://jlne.ws/zignz0 via Yahoo! Finance
Additional monetary accommodation may only fuel inflation fears, said Fed President Richard Fisher in a speech today, according to a transcript.
http://jlne.ws/xWR3dr
Nicaragua Central Bank Head Quits Amid Alba Spat With Ortega
BusinessWeek
Nicaragua's Central Bank President Antenor Rosales quit following a disagreement with President Daniel Ortega over the use of foreign currency reserves to fund a regional bank for the Venezuelan-led bloc of eight nations known as Alba.
http://jlne.ws/xBCzvL
Global News
BOJ signals more aggressive policy, sets inflation goal
Hartford Courant
TOKYO (Reuters) - The Bank of Japan boosted its asset buying program by $130 billion on Tuesday and in the face of political pressure set an inflation goal of 1 percent, signaling a more aggressive monetary policy to pull an ailing economy out of deflation.
http://jlne.ws/zKcB4K
Brazil's Economic Activity Rises in December for Second Straight Month
Bloomberg
Brazil's economy expanded in December for the second straight month, adding to evidence that Latin America's biggest economy recovered from a third-quarter contraction.
http://jlne.ws/xLHq2h
Sweden's Central Bank Cuts Main Rate to Ward Off Recession
BusinessWeek
Sweden's central bank cut its benchmark interest rate for a second consecutive meeting to prevent the largest Nordic economy from falling into a recession as Europe's debt crisis erodes export demand.
http://jlne.ws/AbIJec
Central Bank's Occupy policy enrages local business owners
Irish Central
Central Bank Governor Patrick Honohan angered business owners after saying last week that while he didn't welcome the Dame Street protesters, he had no plans to take action against them.
http://jlne.ws/AmxKfg
Ghana c.bank hikes rates, cites euro zone
Reuters via Yahoo! News
ACCRA (Reuters) - The Bank of Ghana's Monetary Policy Committee announced a one percentage point increase to 13.5 percent in its prime lending rate on Wednesday, the first hike in three years, citing risks from the euro zone debt crisis and currency volatility.
http://jlne.ws/zbk9Wj
Norway Policy Dilemma Pits House Debt Against Krone 'Headache'
BusinessWeek
Norway's overheated credit and property markets are vying with export-eroding krone gains for policy makers' attentions as officials risk fueling either an asset bubble or currency appreciation.
http://jlne.ws/wIKjv1
French banks' central bank liabilities hit
Reuters via Yahoo! News
PARIS (Reuters) - French banks' liabilities with the Bank of France hit a record high of 218 billion euros in December, of which 119.6 billion was used for monetary policy, the central bank said on Tuesday.
http://jlne.ws/xRWNs2
British Central Bank Sees 'Zigzag' Growth
New York Times
http://jlne.ws/xc44cM
Riksbank Cuts Repo Rate Amid European Woes
Nasdaq
http://jlne.ws/zADnsT
Disclaimer: The John Lothian, Environmental Markets, JLN Metals, JLN Managed Futures, JLN Interest Rates, JLN Options and JLN FX newsletters and blogs and MarketsWiki are products of John J. Lothian & Company, Inc. The opinions expressed in these publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers.
Futures and options trading involve risk. Past results are no indication of future performance.
Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any web site or newsletter content.
Copyright 2011 John J. Lothian & Company, Inc. All Rights Reserved.
Rabu, 15 Februari 2012
Top Interest Rate Headlines 02-15-2012: Some Fed Officials Saw Need For More Stimulus: Minutes
Some Fed officials saw need for more stimulus: minutes
http://jlne.ws/wtX07a
State Street Launches New E-Platform for Derivatives Trading
http://jlne.ws/w8Lvwo
Greek bailout decision postponed
http://jlne.ws/yiRsal
OPERATORS OF CALIFORNIA-BASED MORTGAGE MODIFICATION SCAM PLEAD GUILTY TO CONSPIRACY TO COMMIT FRAUD
http://jlne.ws/zAaOFW
Analysis: Greece heads for record books as economy slumps
http://jlne.ws/xaKgZp
Finance Ministers Debate Delaying Release of Bailout Funds
http://jlne.ws/zxTuII
Eurogroup’s Juncker: Substantial further progress has been made
http://jlne.ws/xsw2Wk
Strange twist: ECB balance sheet buoys euro
http://jlne.ws/wxcPY9
Hearing on President's Fiscal Year 2013 Budget Proposal With U.S. Depart Of the Treasury Secretary Timothy F. Geithner
http://jlne.ws/zhzVIY
NAHB Housing Index Jumps to 29 in February
http://jlne.ws/A2Wqju
Fed’s Fisher Dismisses QE3 as ‘Wall Street Fantasy’
http://jlne.ws/zEv5Lq
World Bank president Robert Zoellick to step down in June
http://jlne.ws/xic7y2
The Dodd-Frank Act’s Potential Effects on the Credit Rating Industry
http://jlne.ws/wvSUkL
World Bank's Zoellick to spell out plans: sources
http://jlne.ws/z4cT6b
http://jlne.ws/wtX07a
State Street Launches New E-Platform for Derivatives Trading
http://jlne.ws/w8Lvwo
Greek bailout decision postponed
http://jlne.ws/yiRsal
OPERATORS OF CALIFORNIA-BASED MORTGAGE MODIFICATION SCAM PLEAD GUILTY TO CONSPIRACY TO COMMIT FRAUD
http://jlne.ws/zAaOFW
Analysis: Greece heads for record books as economy slumps
http://jlne.ws/xaKgZp
Finance Ministers Debate Delaying Release of Bailout Funds
http://jlne.ws/zxTuII
Eurogroup’s Juncker: Substantial further progress has been made
http://jlne.ws/xsw2Wk
Strange twist: ECB balance sheet buoys euro
http://jlne.ws/wxcPY9
Hearing on President's Fiscal Year 2013 Budget Proposal With U.S. Depart Of the Treasury Secretary Timothy F. Geithner
http://jlne.ws/zhzVIY
NAHB Housing Index Jumps to 29 in February
http://jlne.ws/A2Wqju
Fed’s Fisher Dismisses QE3 as ‘Wall Street Fantasy’
http://jlne.ws/zEv5Lq
World Bank president Robert Zoellick to step down in June
http://jlne.ws/xic7y2
The Dodd-Frank Act’s Potential Effects on the Credit Rating Industry
http://jlne.ws/wvSUkL
World Bank's Zoellick to spell out plans: sources
http://jlne.ws/z4cT6b
Federal Open Market Committee Minutes - January 25
Press Release
Release Date: January 25, 2012
For immediate release
Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee's dual mandate.
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.
Release Date: January 25, 2012
For immediate release
Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee's dual mandate.
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.