Press Release
Standard & Poor's
* We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.
* We have also removed both the short- and long-term ratings from CreditWatch negative.
* The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.
* More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
* Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.
* The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.
TORONTO (Standard & Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services
said today that it lowered its long-term sovereign credit rating on the United
States of America to 'AA+' from 'AAA'. Standard & Poor's also said that the
outlook on the long-term rating is negative. At the same time, Standard &
Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard
& Poor's removed both ratings from CreditWatch, where they were placed on July
14, 2011, with negative implications.
The transfer and convertibility (T&C) assessment of the U.S.--our
assessment of the likelihood of official interference in the ability of
U.S.-based public- and private-sector issuers to secure foreign exchange for
debt service--remains 'AAA'.
We lowered our long-term rating on the U.S. because we believe that the
prolonged controversy over raising the statutory debt ceiling and the related
fiscal policy debate indicate that further near-term progress containing the
growth in public spending, especially on entitlements, or on reaching an
agreement on raising revenues is less likely than we previously assumed and
will remain a contentious and fitful process. We also believe that the fiscal
consolidation plan that Congress and the Administration agreed to this week
falls short of the amount that we believe is necessary to stabilize the
general government debt burden by the middle of the decade.
Our lowering of the rating was prompted by our view on the rising public
debt burden and our perception of greater policymaking uncertainty, consistent
with our criteria (see "Sovereign Government Rating Methodology and Assumptions
," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S.
federal government's other economic, external, and monetary credit attributes,
which form the basis for the sovereign rating, as broadly unchanged.
We have taken the ratings off CreditWatch because the Aug. 2 passage of
the Budget Control Act Amendment of 2011 has removed any perceived immediate
threat of payment default posed by delays to raising the government's debt
ceiling. In addition, we believe that the act provides sufficient clarity to
allow us to evaluate the likely course of U.S. fiscal policy for the next few
years.
The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed. The statutory debt
ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy. Despite this year's wide-ranging debate, in our
view, the differences between political parties have proven to be
extraordinarily difficult to bridge, and, as we see it, the resulting
agreement fell well short of the comprehensive fiscal consolidation program
that some proponents had envisaged until quite recently. Republicans and
Democrats have only been able to agree to relatively modest savings on
discretionary spending while delegating to the Select Committee decisions on
more comprehensive measures. It appears that for now, new revenues have
dropped down on the menu of policy options. In addition, the plan envisions
only minor policy changes on Medicare and little change in other entitlements,
the containment of which we and most other independent observers regard as key
to long-term fiscal sustainability.
Our opinion is that elected officials remain wary of tackling the
structural issues required to effectively address the rising U.S. public debt
burden in a manner consistent with a 'AAA' rating and with 'AAA' rated
sovereign peers (see Sovereign Government Rating Methodology and Assumptions,"
June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in
framing a consensus on fiscal policy weakens the government's ability to
manage public finances and diverts attention from the debate over how to
achieve more balanced and dynamic economic growth in an era of fiscal
stringency and private-sector deleveraging (ibid). A new political consensus
might (or might not) emerge after the 2012 elections, but we believe that by
then, the government debt burden will likely be higher, the needed medium-term
fiscal adjustment potentially greater, and the inflection point on the U.S.
population's demographics and other age-related spending drivers closer at
hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even
More Green, Now," June 21, 2011).
Standard & Poor's takes no position on the mix of spending and revenue
measures that Congress and the Administration might conclude is appropriate
for putting the U.S.'s finances on a sustainable footing.
The act calls for as much as $2.4 trillion of reductions in expenditure
growth over the 10 years through 2021. These cuts will be implemented in two
steps: the $917 billion agreed to initially, followed by an additional $1.5
trillion that the newly formed Congressional Joint Select Committee on Deficit
Reduction is supposed to recommend by November 2011. The act contains no
measures to raise taxes or otherwise enhance revenues, though the committee
could recommend them.
The act further provides that if Congress does not enact the committee's
recommendations, cuts of $1.2 trillion will be implemented over the same time
period. The reductions would mainly affect outlays for civilian discretionary
spending, defense, and Medicare. We understand that this fall-back mechanism
is designed to encourage Congress to embrace a more balanced mix of
expenditure savings, as the committee might recommend.
We note that in a letter to Congress on Aug. 1, 2011, the Congressional
Budget Office (CBO) estimated total budgetary savings under the act to be at
least $2.1 trillion over the next 10 years relative to its baseline
assumptions. In updating our own fiscal projections, with certain
modifications outlined below, we have relied on the CBO's latest "Alternate
Fiscal Scenario" of June 2011, updated to include the CBO assumptions
contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate
Fiscal Scenario" assumes a continuation of recent Congressional action
overriding existing law.
We view the act's measures as a step toward fiscal consolidation.
However, this is within the framework of a legislative mechanism that leaves
open the details of what is finally agreed to until the end of 2011, and
Congress and the Administration could modify any agreement in the future. Even
assuming that at least $2.1 trillion of the spending reductions the act
envisages are implemented, we maintain our view that the U.S. net general
government debt burden (all levels of government combined, excluding liquid
financial assets) will likely continue to grow. Under our revised base case
fiscal scenario--which we consider to be consistent with a 'AA+' long-term
rating and a negative outlook--we now project that net general government debt
would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and
85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high
in relation to those of peer credits and, as noted, would continue to rise
under the act's revised policy settings.
Compared with previous projections, our revised base case scenario now
assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012,
remain in place. We have changed our assumption on this because the majority
of Republicans in Congress continue to resist any measure that would raise
revenues, a position we believe Congress reinforced by passing the act. Key
macroeconomic assumptions in the base case scenario include trend real GDP
growth of 3% and consumer price inflation near 2% annually over the decade.
Our revised upside scenario--which, other things being equal, we view as
consistent with the outlook on the 'AA+' long-term rating being revised to
stable--retains these same macroeconomic assumptions. In addition, it
incorporates $950 billion of new revenues on the assumption that the 2001 and
2003 tax cuts for high earners lapse from 2013 onwards, as the Administration
is advocating. In this scenario, we project that the net general government
debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015
and to 78% by 2021.
Our revised downside scenario--which, other things being equal, we view
as being consistent with a possible further downgrade to a 'AA' long-term
rating--features less-favorable macroeconomic assumptions, as outlined below
and also assumes that the second round of spending cuts (at least $1.2
trillion) that the act calls for does not occur. This scenario also assumes
somewhat higher nominal interest rates for U.S. Treasuries. We still believe
that the role of the U.S. dollar as the key reserve currency confers a
government funding advantage, one that could change only slowly over time, and
that Fed policy might lean toward continued loose monetary policy at a time of
fiscal tightening. Nonetheless, it is possible that interest rates could rise
if investors re-price relative risks. As a result, our alternate scenario
factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to
the base and upside cases from 2013 onwards. In this scenario, we project the
net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and
to 101% by 2021.
Our revised scenarios also take into account the significant negative
revisions to historical GDP data that the Bureau of Economic Analysis
announced on July 29. From our perspective, the effect of these revisions
underscores two related points when evaluating the likely debt trajectory of
the U.S. government. First, the revisions show that the recent recession was
deeper than previously assumed, so the GDP this year is lower than previously
thought in both nominal and real terms. Consequently, the debt burden is
slightly higher. Second, the revised data highlight the sub-par path of the
current economic recovery when compared with rebounds following previous
post-war recessions. We believe the sluggish pace of the current economic
recovery could be consistent with the experiences of countries that have had
financial crises in which the slow process of debt deleveraging in the private
sector leads to a persistent drag on demand. As a result, our downside case
scenario assumes relatively modest real trend GDP growth of 2.5% and inflation
of near 1.5% annually going forward.
When comparing the U.S. to sovereigns with 'AAA' long-term ratings that
we view as relevant peers--Canada, France, Germany, and the U.K.--we also
observe, based on our base case scenarios for each, that the trajectory of the
U.S.'s net public debt is diverging from the others. Including the U.S., we
estimate that these five sovereigns will have net general government debt to
GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the
U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP
ratios will range between 30% (lowest, Canada) and 83% (highest, France), with
the U.S. debt burden at 79%. However, in contrast with the U.S., we project
that the net public debt burdens of these other sovereigns will begin to
decline, either before or by 2015.
Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our
T&C assessment reflects our view of the likelihood of the sovereign
restricting other public and private issuers' access to foreign exchange
needed to meet debt service. Although in our view the credit standing of the
U.S. government has deteriorated modestly, we see little indication that
official interference of this kind is entering onto the policy agenda of
either Congress or the Administration. Consequently, we continue to view this
risk as being highly remote.
The outlook on the long-term rating is negative. As our downside
alternate fiscal scenario illustrates, a higher public debt trajectory than we
currently assume could lead us to lower the long-term rating again. On the
other hand, as our upside scenario highlights, if the recommendations of the
Congressional Joint Select Committee on Deficit Reduction--independently or
coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax
cuts for high earners--lead to fiscal consolidation measures beyond the
minimum mandated, and we believe they are likely to slow the deterioration of
the government's debt dynamics, the long-term rating could stabilize at 'AA+'.
On Monday, we will issue separate releases concerning affected ratings in
the funds, government-related entities, financial institutions, insurance,
public finance, and structured finance sectors.
Senin, 08 Agustus 2011
Jumat, 05 Agustus 2011
Top Interest Rate Headlines 08-05-11: ECB Bond Buying Rescues Jobs Report Rally
ECB Bond Buying Rescues Jobs Report Rally
Stocks seesawed in a dizzying session on Wall Street, as early cheers for an improved July jobs report were quickly drowned out by another selloff before a hopeful signal out of Europe put the market back in positive territory Friday afternoon. With two hours to the closing bell stocks were back on the upside, thanks to a report that the European Central Bank is prepared to buy Italian and Spanish bonds in an effort to cool market fears and gain control of the debt crisis. In return, the governments of Spain and Italy would implement stricter reforms to their fiscal plans. Italian Prime Minister Silvio Berlusconi said the country would move to balance its budget by 2013, from 2014, in a speech Friday.
http://jlne.ws/pGvebS
How To Explain Negative Interest Rates
24/7 Wall St.
The floor for interest rates is ZERO. Right? Apparently not when extreme conditions arise. Those extreme conditions came today as investors moved solidly into the safety of very short-dated T-bills and the bidding was so intense for a while the real rate was actually a negative yield. The rate technically went to -0.01% on the 1-month bills and this came on the same day that both the S&P and DJIA went into formal correction territory.
http://jlne.ws/qsZA3F
Goldman Sachs: There's Now A 1 In 3 Chance The U.S. Will Plunge Into Recession Again
Business Insider
Goldman Sachs just decreased its growth prospects for the economy big time.
http://jlne.ws/pynWCg
Fannie Mae seeks $5.1 billion more from taxpayers
By David Lawder, Reuters
Mortgage finance giant Fannie Mae said it would ask for an additional $5.1 billion from taxpayers as a weaker housing market causes continued losses on loans made prior to 2009.
http://jlne.ws/mOR7sW
Bank to Charge New Fee to Hold Cash
By LIZ RAPPAPORT, WSJ.com
Bank of New York Mellon Corp. on Thursday took the extraordinary step of telling large clients it will charge them to hold cash.
http://jlne.ws/ppaXgX
Three Things the Fed Could Do Right Now
By Jon Hilsenrath, WSJ.com
Federal Reserve Chairman Ben Bernanke faces tough choices as he prepares for the central bank’s next policy meeting Tuesday and a speech at the Fed’s annual gathering in Jackson Hole, Wyo., later this month. The economy isn’t measuring up even to the Fed’s modest expectations. Inflation rose more than officials expected in the first half of the year. Even if he decides he wants to provide more monetary stimulus to the economy, his options aren’t very appealing.
http://jlne.ws/p54Akk
Italy to announce economic reforms
FT.com
http://jlne.ws/qbPAGd
Obama welcomes jobs report, but warns economy not producing enough jobs
The Globe And Mail
U.S. President Barack Obama hailed a positive jobs report Friday but said more job growth is needed and predicted the situation will improve over time.
http://jlne.ws/oOnz5V
Labor Force Participation Hits New Low
By Sara Murray, WSJ.com
Two years into the economic recovery labor force participation has hit a new low. The labor force participation rate, the share of Americans who are working or looking for jobs, declined to 63.9% in July from 64.1% a month earlier, the Labor Department said Friday. July’s numbers were a new low for the measure, which has dropped during the recession and slow recovery to its lowest percentage since the early 1980s.
http://jlne.ws/rsSamq
Beneath Jobs Report Surface Lies Some Ugly Truths
CNBC
Before getting too excited about the modest uptick in net job creation and a slight downward move in the unemployment rate, it’s probably worth a look under the hood.
http://jlne.ws/qS8LXN
ISDA Publishes Analysis of Counterparty Credit Risk Management in the US OTC Derivatives Markets
The International Swaps and Derivatives Association, Inc. (ISDA) today published a new analysis of counterparty credit risk management in the US over-the-counter (OTC) derivatives markets. The paper examines the extent of counterparty credit losses and notes the efficacy of credit mitigation techniques in the US banking system.
http://jlne.ws/hHMAsV
White House Chief Economist Goolsbee on US jobs report [Video]
http://jlne.ws/p6G9Bn
Credit Seen Safest Since 2008 as Clearinghouses Control Swaps
By Matthew Leising, Bloomberg
Credit markets, which inflicted more than $2 trillion of losses and writedowns on the world’s biggest financial institutions from 2007 through 2009, are now seen as the safest since before the financial crisis.
http://jlne.ws/pKrDgl
Mortgage Settlement Challenged
By GRETCHEN MORGENSON, NY Times
The New York attorney general is moving to block a proposed $8.5 billion settlement struck in June by Bank of New York Mellon and Bank of America over troubled loan pools issued by Countrywide. A lawsuit filed late Thursday accuses Bank of New York of fraud in its role as trustee overseeing the pools for investors.
http://jlne.ws/nUhU4n
ISDA Publishes Analysis of Counterparty Credit Risk Management in the US OTC Derivatives Markets
Press Release
NEW YORK, Friday, August 5, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) today published a new analysis of counterparty credit risk management in the US over-the-counter (OTC) derivatives markets. The paper examines the extent of counterparty credit losses and notes the efficacy of credit mitigation techniques in the US banking system.
http://jlne.ws/ohQFAa
Citi poaches bankers for derivatives relaunch
By Jeremy Grant, Financial Times
Citigroup has staked out its ambitions to capture business flowing from sweeping reform of the over-the-counter markets by poaching 14 bankers – mostly from JPMorgan – as the bank relaunches its exchange-traded derivatives business.
http://jlne.ws/ojU9fo
Greek and Irish blows knock RBS to $1.1 billion loss
By Sudip Kar-Gupta and Steve Slater, Reuters
Royal Bank of Scotland slid to a pretax loss of 678 million pounds ($1.1 billion) in the second quarter, bruised by writedowns on Greek government bonds and Irish customers struggling to repay loans.
http://jlne.ws/nxEaag
Goldman Said to Make Amends to Buyers After CMBS Deal Is Pulled
By Sarah Mulholland, Bloomberg
Goldman Sachs Group Inc., seeking to placate buyers and guard its reputation, is compensating investors for losses they incurred after a $1.5 billion commercial-mortgage bond deal was pulled last week. The bank is paying clients that purchased the securities and entered into contracts that protect against changes in interest rates and prices for the debt, according to two people familiar with the transaction who declined to be identified because the talks are private. The investors will be paid for contracts that lost money between when the deal was placed and its withdrawal five days later.
http://jlne.ws/pMM3fv
ESMA Published List Of Registered And Certified Credit Rating Agencies
Press Release
According to the Credit Rating Agencies Regulation ((EC) No 1060/2009), ESMA publishes today the list of those credit rating agencies that as of today were either registered or cirtified in the European Union.
http://jlne.ws/qrBIht
Opening Statement, Meeting Of The Commodity Futures Trading Commission, Chairman Gary Gensler
Press Release
http://jlne.ws/prGaE8
Statement Of Support On Three Final Rules Under The Dodd-Frank Act - CFTC Chairman Gary Gensler
Press Release
http://jlne.ws/ptAPwe
Morgan Stanley's head of fixed income calls it a day
By Sameera Anand, FinanceAsia
Ranodeb Roy, the head of Morgan Stanley’s Asia-Pacific fixed income division, is quitting the bank and will be replaced by Stephen Glynn, according to an internal memo that FinanceAsia has seen.
http://jlne.ws/ncAyxA
Deutsche Bank Exec Puts Up a Fight
By KEVIN ROOSE, NY Times
At first glance, Richard J. Byrne, the chief executive of Deutsche Bank Securities, doesn’t look much like a warrior. “He isn’t the prototypical person you’d see and think, ‘This guy’s going to beat me up,’ ” said Erik Owings, a professional mixed martial arts fighter who has trained Mr. Byrne since 2008. But given the right circumstances, “if Bruce Lee rose from the dead, Rich could choke him out.”
http://jlne.ws/rsMyvg
Stocks seesawed in a dizzying session on Wall Street, as early cheers for an improved July jobs report were quickly drowned out by another selloff before a hopeful signal out of Europe put the market back in positive territory Friday afternoon. With two hours to the closing bell stocks were back on the upside, thanks to a report that the European Central Bank is prepared to buy Italian and Spanish bonds in an effort to cool market fears and gain control of the debt crisis. In return, the governments of Spain and Italy would implement stricter reforms to their fiscal plans. Italian Prime Minister Silvio Berlusconi said the country would move to balance its budget by 2013, from 2014, in a speech Friday.
http://jlne.ws/pGvebS
How To Explain Negative Interest Rates
24/7 Wall St.
The floor for interest rates is ZERO. Right? Apparently not when extreme conditions arise. Those extreme conditions came today as investors moved solidly into the safety of very short-dated T-bills and the bidding was so intense for a while the real rate was actually a negative yield. The rate technically went to -0.01% on the 1-month bills and this came on the same day that both the S&P and DJIA went into formal correction territory.
http://jlne.ws/qsZA3F
Goldman Sachs: There's Now A 1 In 3 Chance The U.S. Will Plunge Into Recession Again
Business Insider
Goldman Sachs just decreased its growth prospects for the economy big time.
http://jlne.ws/pynWCg
Fannie Mae seeks $5.1 billion more from taxpayers
By David Lawder, Reuters
Mortgage finance giant Fannie Mae said it would ask for an additional $5.1 billion from taxpayers as a weaker housing market causes continued losses on loans made prior to 2009.
http://jlne.ws/mOR7sW
Bank to Charge New Fee to Hold Cash
By LIZ RAPPAPORT, WSJ.com
Bank of New York Mellon Corp. on Thursday took the extraordinary step of telling large clients it will charge them to hold cash.
http://jlne.ws/ppaXgX
Three Things the Fed Could Do Right Now
By Jon Hilsenrath, WSJ.com
Federal Reserve Chairman Ben Bernanke faces tough choices as he prepares for the central bank’s next policy meeting Tuesday and a speech at the Fed’s annual gathering in Jackson Hole, Wyo., later this month. The economy isn’t measuring up even to the Fed’s modest expectations. Inflation rose more than officials expected in the first half of the year. Even if he decides he wants to provide more monetary stimulus to the economy, his options aren’t very appealing.
http://jlne.ws/p54Akk
Italy to announce economic reforms
FT.com
http://jlne.ws/qbPAGd
Obama welcomes jobs report, but warns economy not producing enough jobs
The Globe And Mail
U.S. President Barack Obama hailed a positive jobs report Friday but said more job growth is needed and predicted the situation will improve over time.
http://jlne.ws/oOnz5V
Labor Force Participation Hits New Low
By Sara Murray, WSJ.com
Two years into the economic recovery labor force participation has hit a new low. The labor force participation rate, the share of Americans who are working or looking for jobs, declined to 63.9% in July from 64.1% a month earlier, the Labor Department said Friday. July’s numbers were a new low for the measure, which has dropped during the recession and slow recovery to its lowest percentage since the early 1980s.
http://jlne.ws/rsSamq
Beneath Jobs Report Surface Lies Some Ugly Truths
CNBC
Before getting too excited about the modest uptick in net job creation and a slight downward move in the unemployment rate, it’s probably worth a look under the hood.
http://jlne.ws/qS8LXN
ISDA Publishes Analysis of Counterparty Credit Risk Management in the US OTC Derivatives Markets
The International Swaps and Derivatives Association, Inc. (ISDA) today published a new analysis of counterparty credit risk management in the US over-the-counter (OTC) derivatives markets. The paper examines the extent of counterparty credit losses and notes the efficacy of credit mitigation techniques in the US banking system.
http://jlne.ws/hHMAsV
White House Chief Economist Goolsbee on US jobs report [Video]
http://jlne.ws/p6G9Bn
Credit Seen Safest Since 2008 as Clearinghouses Control Swaps
By Matthew Leising, Bloomberg
Credit markets, which inflicted more than $2 trillion of losses and writedowns on the world’s biggest financial institutions from 2007 through 2009, are now seen as the safest since before the financial crisis.
http://jlne.ws/pKrDgl
Mortgage Settlement Challenged
By GRETCHEN MORGENSON, NY Times
The New York attorney general is moving to block a proposed $8.5 billion settlement struck in June by Bank of New York Mellon and Bank of America over troubled loan pools issued by Countrywide. A lawsuit filed late Thursday accuses Bank of New York of fraud in its role as trustee overseeing the pools for investors.
http://jlne.ws/nUhU4n
ISDA Publishes Analysis of Counterparty Credit Risk Management in the US OTC Derivatives Markets
Press Release
NEW YORK, Friday, August 5, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) today published a new analysis of counterparty credit risk management in the US over-the-counter (OTC) derivatives markets. The paper examines the extent of counterparty credit losses and notes the efficacy of credit mitigation techniques in the US banking system.
http://jlne.ws/ohQFAa
Citi poaches bankers for derivatives relaunch
By Jeremy Grant, Financial Times
Citigroup has staked out its ambitions to capture business flowing from sweeping reform of the over-the-counter markets by poaching 14 bankers – mostly from JPMorgan – as the bank relaunches its exchange-traded derivatives business.
http://jlne.ws/ojU9fo
Greek and Irish blows knock RBS to $1.1 billion loss
By Sudip Kar-Gupta and Steve Slater, Reuters
Royal Bank of Scotland slid to a pretax loss of 678 million pounds ($1.1 billion) in the second quarter, bruised by writedowns on Greek government bonds and Irish customers struggling to repay loans.
http://jlne.ws/nxEaag
Goldman Said to Make Amends to Buyers After CMBS Deal Is Pulled
By Sarah Mulholland, Bloomberg
Goldman Sachs Group Inc., seeking to placate buyers and guard its reputation, is compensating investors for losses they incurred after a $1.5 billion commercial-mortgage bond deal was pulled last week. The bank is paying clients that purchased the securities and entered into contracts that protect against changes in interest rates and prices for the debt, according to two people familiar with the transaction who declined to be identified because the talks are private. The investors will be paid for contracts that lost money between when the deal was placed and its withdrawal five days later.
http://jlne.ws/pMM3fv
ESMA Published List Of Registered And Certified Credit Rating Agencies
Press Release
According to the Credit Rating Agencies Regulation ((EC) No 1060/2009), ESMA publishes today the list of those credit rating agencies that as of today were either registered or cirtified in the European Union.
http://jlne.ws/qrBIht
Opening Statement, Meeting Of The Commodity Futures Trading Commission, Chairman Gary Gensler
Press Release
http://jlne.ws/prGaE8
Statement Of Support On Three Final Rules Under The Dodd-Frank Act - CFTC Chairman Gary Gensler
Press Release
http://jlne.ws/ptAPwe
Morgan Stanley's head of fixed income calls it a day
By Sameera Anand, FinanceAsia
Ranodeb Roy, the head of Morgan Stanley’s Asia-Pacific fixed income division, is quitting the bank and will be replaced by Stephen Glynn, according to an internal memo that FinanceAsia has seen.
http://jlne.ws/ncAyxA
Deutsche Bank Exec Puts Up a Fight
By KEVIN ROOSE, NY Times
At first glance, Richard J. Byrne, the chief executive of Deutsche Bank Securities, doesn’t look much like a warrior. “He isn’t the prototypical person you’d see and think, ‘This guy’s going to beat me up,’ ” said Erik Owings, a professional mixed martial arts fighter who has trained Mr. Byrne since 2008. But given the right circumstances, “if Bruce Lee rose from the dead, Rich could choke him out.”
http://jlne.ws/rsMyvg
Kamis, 04 Agustus 2011
August 04, 2011: Obama, Bernanke Out Of Ammo To Boost Jobs, Growth [NEWSLETTER]
August 4, 2011
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
McKinsey & Company Report: Mapping Global Capital Markets 2011
The 2008 financial crisis and worldwide recession halted a three-decade expansion of global capital and banking markets. The total value of the world’s financial stock, comprising equity market capitalization and outstanding bonds and loans, has increased from $175 trillion in 2008 to $212 trillion at the end of 2010, surpassing the previous 2007 peak. Similarly, cross-border capital flows grew to $4.4 trillion in 2010 after declining for the two previous years. In its 2011 updated analysis of more than 75 countries on the size of their outstanding equity and debt, cross-border capital flows, and the stocks of foreign investment assets and liabilities, McKinsey Global Institute finds that the recovery of financial markets remains uneven across geographies and asset classes and significant risks remain. Emerging markets account for a disproportionate share of growth in capital-raising as mature economies struggle. Debt markets remain fragile in many parts of the world—the growth of government debt and of lending in China accounts for the majority of the increase in credit globally.
See the entire report here.
-- Christine Nielsen
Lead Stories
Analysis: Obama, Bernanke out of ammo to boost jobs, growth
By Alister Bull and Jonathan Spicer, Reuters
The United States has a jobs problem and there's not a lot President Barack Obama or Federal Reserve Chairman Ben Bernanke
can do about it.
http://jlne.ws/n2kECx
Treasuries: 'It's pretty grim'
CNN Money
It's ugly out there. Treasury prices have spiked -- then spiked some more, pushing the 10-year Treasury yield down to a nine-month
low of 2.57% Tuesday.
http://jlne.ws/oCPRXg
15-year fixed-rate mortgage at record low
By Amy Hoak, MarketWatch
Rates on 15-year fixed-rate mortgages and 5-year adjustable rate mortgages hit record lows this week, after signs surfaced that the
U.S. economy is weaker than previously thought, Freddie Mac‘s chief economist said on Thursday.
http://jlne.ws/ooLR1C
Plunging Mortgage Rates Won't Juice Housing
By: Diana Olick, CNBC
The one positive in all the uncertainty surrounding the nation's debt was a plunge in Treasury yields, which in turn sent mortgage rates
to record lows.
http://jlne.ws/oLf9Mh
Commercial/multifamily loan originations rise 107% in Q2
By KERRI PANCHUK, Housing Wire
Commercial and multifamily mortgage originations grew 107% in the second quarter compared to the year-ago period as financials
on all property types experienced greater stability and demand, according to the Mortgage Bankers Association.
http://jlne.ws/oabJiv
Sea Change in Map of Global Risk
BY MATTHIEU WIRZ AND MATT PHILLIPS, WSJ
The black-and-white borders of the bond market are graying. As the pristine credit rating of the U.S. remains under threat, and the
debt crisis in Europe rolls on, investors, traders and policy makers are grappling with fundamental changes in the global bond
markets.
http://jlne.ws/pd6Cqu
Japan acts to tame yen, follows Swiss move
By Stanley White and Leika Kihara, Reuters
Japan sold one trillion yen ($12.5 billion) and loosened its monetary reins on Thursday, joining Switzerland in efforts to tame
currencies buoyed by safe-haven demand from investors fretting about the deteriorating health of the global economy.
http://jlne.ws/nZ6K10
ECB buying bonds, increases liquidity to banks
By Marc Jones, Reuters
The European Central Bank resumed buying government bonds from the market and offered a new round of funding to commercial
banks on Thursday in response to a worsening euro zone debt crisis.
http://jlne.ws/r9woim
Trichet Says ECB Resumed Bond Buying as Debt Crisis Spreads
By Jana Randow and Jeff Black, Bloomberg Businessweek
European Central Bank President Jean- Claude Trichet said the ECB has resumed bond purchases and will offer banks more cash to
stop the region’s debt crisis from engulfing Italy and Spain and hurting the economy.
http://jlne.ws/nh4w52
Treasury Resumes SLGS Sales
By Lynn Hume, The Bond Buyer
The Treasury Department resumed sales of state and local government series securities Tuesday night after President Obama signed
legislation to increase the federal debt limit beyond $14.3 trillion.
http://jlne.ws/qUZYtI
Obama signs debt limit compromise
By Brian Montopoli, CBS News
President Obama signed a hard-fought, last-minute compromise bill to avert economic catastrophe Tuesday, saying the deal to cut
spending and increase the nation's $14.3 trillion debt limit marked an "important first step to ensuring that as a nation we live within
our means."
http://jlne.ws/roJ9Re
No Day in Court for Bank Clients
BY ROBIN SIDEL, WSJ
Some small and regional U.S. banks are prohibiting unhappy customers from taking their complaints to court or joining class-action
lawsuits, instead requiring them to resolve disputes through arbitration. The banks are emboldened by a U.S. Supreme Court ruling in
April that said state laws can't supersede private contracts that require customers to present their complaints individually to an
arbitrator.
http://jlne.ws/p9SQWP
Fitch Comments on U.S. Debt Ceiling, Deficit Reduction Agreement and Sovereign Rating
Reuters/ Press Release
Fitch Ratings says that, as it expected, agreement was reached on an increase in the United States' debt ceiling and, commensurate
with its 'AAA' rating, the risk of sovereign default remains extremely low. While the agreement is clearly a step in the right direction,
the United States, as in much of Europe, must also confront tough choices on tax and spending against a weak economic back drop if
the budget deficit and government debt is to be cut to safer levels over the medium term.
http://jlne.ws/nQKnL7
Fitch Says U.S. Debt Deal ‘Commensurate’ With AAA Rating
Forbes
One of the three major credit ratings agencies is out with a signal that Congress’ deal to raise the debt ceiling will be enough to
maintain Uncle Sam’s AAA credit rating, for now.
http://jlne.ws/qrtI4p
Riley Of Fitch Ratings Says U.S. AAA Rating Not `Secure' Over Medium Term [Video]
http://jlne.ws/n9LclX
Moody’s puts Spain on review for downgrade
By Richard Milne in London and Sarah Mishkin in Hong Kong, Financial Times
Spain became the latest eurozone country to feel the pressure of credit rating agencies as Moody’s warned it was at risk of a
one-notch downgrade. The move follows a similar warning to Italy in June and comes as the eurozone’s third and fourth biggest
economies have endured a torrid time in the markets, as their borrowing costs shoot up.
http://jlne.ws/qobcZu
IMF Statement On U.S. Agreement To Raise Debt Ceiling
Press Release
http://jlne.ws/rd3tah
SIFMA Statement On Passage Of Debt Ceiling Agreement
Press Release
http://jlne.ws/qMpwMW
Forget About The Debt Ceiling Debate, Where’s The Economic Growth?
By Kevin Mahn, Forbes
It is my contention that the market has essentially priced in the belief that an agreement on raising the current debt ceiling will happen.
It is just now a question of when the agreement will be finalized and what the length and terms of the finalized agreement will be.
Unfortunately, the finalization of the agreement may not be enough to avert further consideration of a downgrade to the U.S. AAA
credit rating by the rating agencies.
http://jlne.ws/q9r6Ab
Lagarde role into Tapie affair to be probed
By Jennifer Thompson and James Boxell
http://jlne.ws/nDDo4g
Lagarde warns EU to speak with one voice
By Alan Beattie, Financial Times
Christine Lagarde, managing director of the International Monetary Fund, has said European authorities must ‘stick to the script’
European authorities should stop public bickering and speak with one voice to make the second rescue package for Greece work,
warned Christine Lagarde, the new managing director of the International Monetary Fund.
http://jlne.ws/qKL2Si
Where does our national debt come from? | The White House
http://jlne.ws/qmeeVm
Remarks by the President on the Status of Debt Ceiling Negotiations | The White House
Good morning, everybody. I want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit.
Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have
already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy
captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law...
http://jlne.ws/o6uuPt
Pressed by White House, Treasury Chief Expected to Stay On
By JACKIE CALMES
Timothy F. Geithner, the Treasury secretary and dean of President Obama’s economic team, is expected to stay through the
president’s term after intense White House pressure, according to officials familiar with the discussions.
http://jlne.ws/pCIElN
A Renewed Focus on the Fed’s Role
By BINYAMIN APPELBAUM and CATHERINE RAMPELL, The New York Times
Even as Congress escapes from its brush with default, political divisions have all but immobilized the levers of fiscal policy, raising
pressure on the Federal Reserve to address the nation’s economic lethargy.
http://jlne.ws/rr9KQo
Stock markets fall again in early trading
Los Angeles Times
Stock markets plunged this morning, with the Dow down about 250 points, as increasing pessimism about the economy overtook
investors around the globe.
http://jlne.ws/opzyj9
PIMCO | Investment Outlook - Kings of the Wild Frontier
“Over the years we’ve had some fun together – killin some ‘bars,’ drinkin moonshine – some even in these chambers. (Whiskey that
is – the ‘bars’ I’ve seen once or twice, but only when I was plum drunk). But the time for funnin is over. They’ll be no jokes from
David Crockett today.” Davy Crockett Speech to Congress, 1830. Figurative coonskin cap on head, I echo the sentiments of Davy
Crockett – Indian fighter, Alamo defender and Tennessee Congressman – not necessarily in that chronological order.
http://jlne.ws/plyaho
Investment banks hampered by high fixed costs
By Megan Murphy in London, Financial Times
European investment banks are being squeezed by fixed administrative expenses even as they slash pay and staff amid weak trading
conditions. Credit Suisse on Thursday became the latest bank to announce significant job cuts, revealing it was shedding 4 per cent of
its global headcount, about 2,000 employees, following a 52 per cent fall in net profits in the second quarter.
http://jlne.ws/psVNkv
OTC derivatives debate to cast light on swaps and futures
By Aline van Duyn, Financial Times
Nearly a year ago, BlackRock, one of the world’s biggest investment managers, sparked a fierce debate in the derivatives industry,
which continues to this day. In the wake of the financial crisis, regulators, politicians and some financial market participants had come
to view the privately traded, over-the-counter (OTC) derivatives markets as dangerously opaque and illiquid. To make it safer for the
financial system, there was a push to introduce many of the features of the exchange-traded, regulated futures markets to OTC
swaps.
http://jlne.ws/qsm85R
Some Bankers Never Learn
By GRETCHEN MORGENSON, NY Times
YOU’D think the mortgage bust would qualify as a teachable moment. But some people refuse to learn from mistakes — a list that
apparently includes certain mortgage bankers. Their industry is fighting a new rule that might prevent a repeat of the lending binge that
helped drive our economy off a cliff.
http://jlne.ws/qwEFaQ
Events
Making Sense of Credit Default Swaps
August 10, 2011
www.theIFM.org
Valuation and Pricing Methodologies of Debt Instruments - Auction Rate Securities
September 1, 2011
Madison Street Capital (MSC) Is Lead Presenter In This Financial Research Associates Webinar Segment
http://jlne.ws/pxF2sq
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
SEFCON II
October 3, 2011
WMBAA To Examine Role And Operation Of Swap Execution Facilities Under Dodd-Frank
http://jlne.ws/pY4N7S
Economic News
Heatwave boosts July US retail sales
By Barney Jopson, FT.com
http://jlne.ws/ojRgl4
U.S. manufacturing growth slows
DANIEL WAGNER, The Globe And Mail
Manufacturing activity in the U.S. barely grew in July, falling to the weakest level since just after the recession ended, a private trade
group said Monday.
http://jlne.ws/pckcDl
Data Reinforce Economic Malaise
BY CONOR DOUGHERTY AND JEFF BATER, WSJ.com
Americans stepped up their saving in June and cut spending, in a broad retrenchment that is both a cause of the slowing economic
recovery and a reaction to it.
http://jlne.ws/peGEIZ
Economy in U.S. Grows Less Than Forecast
By Shobhana Chandra, Bloomberg
The U.S. economy grew less than forecast in the second quarter, after almost stalling at the start of the year, as consumers
retrenched. Gross domestic product climbed at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was
less than earlier estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed
by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, rose 0.1 percent.
http://jlne.ws/qsr0u7
Exchanges, Clearing Houses & MTFs
TriOptima and LCH.Clearnet terminate SwapClear USD interest rate swaps with notional principal value of $7.1 trillion
Press Release
Japan sold one trillion yen ($12.5 billion) and loosened its monetary reins on Thursday, joining Switzerland in efforts to tame
currencies buoyed by safe-haven demand from investors fretting about the deteriorating health of the global economy.
http://jlne.ws/ntJSFf
CME Globex Enhancements for Interest Rate Products
Press Release
Effective Sunday, August 7, 2011 (trade date August 8), CME Globex enhancements to our CBOT interest rate products will take
place. Enhancements to our CME products will take place on Sunday, August 21 (trade date August 22).
http://jlne.ws/rbGdUg
Average daily volume of 10 million contracts at Eurex Group in July
Press Release
July volumes grew at Eurex Exchange and ISE/ Eurex Exchange: KOSPI Product with new peak in volumes
http://jlne.ws/oTK2SN
ELX ANNOUNCES JULY RESULTS WITH YEAR OVER YEAR GAIN IN ADV IN U.S. TREASURIES AND
EURODOLLAR FUTURES
Press Release
New York, Aug 1, 2011 – ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today solid July results with
strong yearoveryear average daily volume (ADV) performances in U.S. Treasury and Eurodollar futures contracts. ELX traded
1.2M contracts in July and celebrated its second year anniversary as an electronic futures exchange on July 10.
http://jlne.ws/o3Df6c
DTCC Greatly Expands Historical CDS Data Available On Website
By Katy Burne Of DOW JONES NEWSWIRES
The Depository Trust and Clearing Corp. has expanded the suite of data it makes publicly available on credit default swap
transactions, allowing interested parties to see weekly data going back to 2008. Until the change Tuesday night, buyers and sellers of
CDS as well as market observers could see net notional values for the most recent week, the prior week, the month before the
relevant date and for one year ago to that date.
http://jlne.ws/pKNeWs
A Derivatives-Trading Pioneer Looks to Launch New Venture
By KATY BURNE And JACOB BUNGE, Dow Jones
Sunil Hirani, a pioneer in the electronic trading of credit derivatives, is heading a new venture that aims to support the shift of
interest-rate swap business onto the screen from the telephone, according to people familiar with the situation. Mr. Hirani, 43 years
old, is returning to an entrepreneurial role in the derivatives sector after last year leaving Creditex, the dealer-to-dealer
credit-default-swap broker he co-founded and later sold to IntercontinentalExchange Inc.
http://jlne.ws/nz7r8e
Firms & Banks
Deutsche Bank Said Likely to Wait Until Next Year to Name Jain’s Successor
By Aaron Kirchfeld, Brett Foley and Jacqueline Simmons, Bloomberg
Deutsche Bank AG (DBK), Germany’s biggest bank, will probably wait until next year to name a successor to Anshu Jain at the
helm of the corporate and investment bank, three people familiar with the matter said.
http://jlne.ws/omAinH
MF Global Plans Bond Sale With Coupon Tied to Corzine’s Role
By Tim Catts and Matthew Leising, Bloomberg
MF Global Holdings Ltd. plans to sell bonds with an interest rate that will rise if Chairman and Chief Executive Officer Jon Corzine
receives a federal appointment from the U.S. president.
http://jlne.ws/qnSFit
Lind-Waldock Changes its Name to MF Global
Press Release
MF Global Holdings Ltd. (NYSE: MF), a broker-dealer providing trading and hedging solutions, today announced that
Lind-Waldock, the firm's flagship U.S. retail business, has changed its name to MF Global, effective immediately. Lind-Waldock was
acquired by MF Global in 2005.
http://jlne.ws/cto7bF
Five banks sign up to new EuroCCP service
By Philip Stafford, Financial Times
Five of Europe’s largest trading banks have agreed to use EuroCCP, the European clearing house, amid signs that a new system
designed to give traders more choice over where their trades are to be cleared is developing early momentum.
http://jlne.ws/riuAxS
Auerbach Grayson Launches Emerging And Frontier Market Fixed-Income Platform
Press Release
NEW YORK - Auerbach Grayson and Company LLP, a New York-based brokerage firm that specializes in providing global
trade execution and locally-generated research to US institutional investors, has launched a global fixed income and sales trading
platform for frontier and emerging markets.
http://jlne.ws/nEzD5B
N Rock expects to make profit by 2012
By Adam Jones, Financial Times
Any buyer of Northern Rock would have to endure losses until the second half of next year, the state-owned savings and mortgage
bank said on Wednesday.
http://jlne.ws/pNifb7
Ex-UBS banker charged in tax evasion
Bloomberg News
A former UBS AG banker was indicted on a charge of conspiring to help wealthy Americans evade taxes by hiding accounts in a
smaller Swiss regional bank.
http://jlne.ws/qGiZEg
UBS Said to End Talks to Move to NYC’s World Trade Center
By David M. Levitt and Christine Harper, Bloomberg
UBS AG, Switzerland’s biggest lender, is no longer in negotiations to lease space at lower Manhattan’s World Trade Center,
according to a person with knowledge of the situation.
http://jlne.ws/p4CDum
UBS Hires Bank of America Executive
By DEALBOOK, NY Times
UBS has recruited Mike Stewart, co-head of global equities at Bank of America, to become co-head of global securities and head of
securities in the Americas.
http://jlne.ws/qD7ioQ
HSBC to Cut 25,000 Jobs
By JULIA WERDIGIER, NY Times
HSBC, the biggest European bank, plans to eliminate 25,000 jobs in the next two years as part of a wide-ranging cost reduction
program.
http://jlne.ws/pvoXnZ
Morgan Stanley fills senior role in US FIG team
Richard Partington, Financial News
Morgan Stanley has appointed a new head of its banks team within its financial institutions group in North America, a post that has
been vacant since the previous head, John Esposito, left the role more than 18 months ago.
http://jlne.ws/rof7Vt
Bank of America Merrill Lynch Names Peter Johnson Head of Global Futures and OTC Clearing
Bank of America Merrill Lynch announced today that Peter Johnson will join the company as managing director and head of global
futures and OTC clearing. In this role, Johnson will assume global responsibility for all futures, options and OTC derivatives clearing.
http://jlne.ws/nZFcUG
RBS recruits as rivals cut
Matt Turner, Financial News
Royal Bank of Scotland, the UK government-backed bank, is still hiring for all functions and in all regions in equities, according to
sources, as its rivals get ready to embark on a round of cost-cutting.
http://jlne.ws/rkCeAe
Barclays Profit Tumbles
BY MICHAEL HADDON AND MARGOT PATRICK, WSJ
Barclays PLC said Tuesday its first-half net profit fell 38%, as it set aside £1 billion ($1.63 billion) to compensate customers who
were sold faulty insurance products and amid a sharp decline in revenue at its key investment-banking unit.
http://jlne.ws/qcfzla
Barclays Cuts 3,000 Jobs on Revenue Hit
By Howard Mustoe and Gavin Finch, Bloomberg
Britain’s second-largest bank by assets, said it’s eliminating about 3,000 jobs this year as second-quarter investment banking profit
fell by more than a quarter.
http://jlne.ws/qjoYyS
Greek exposure weighs on BNP Paribas
By Jennifer Thompson in Paris, Financial Times
BNP Paribas, the biggest holder of Greek bonds among French banks, has made a E534m provision as part of a pledge to play a
role in the Greek bail-out plan. Nevertheless, the strength of France’s biggest bank was proved as it posted a resilient set of
second-half results. Net income for the second quarter of 2011 rose 1.1 per cent to E2.13bn ($3.02bn) on revenue down 1.7 per
cent to E10.98bn, just missing the consensus estimate of analysts.
http://jlne.ws/pHcCt9
Citigroup, Goldman Commercial Mortgage Bond Traders Depart
By Sarah Mulholland and Donal Griffin, Bloomberg
The heads of commercial mortgage bond trading for Citigroup Inc. and Goldman Sachs Group Inc. have left the firms this week as
the market is roiled by sovereign debt crises and new deals are cut back or put on hold.
http://jlne.ws/n2my3N
Goldman-Citi Offering Is Pulled Over Ratings
BY AL YOON, WSJ
Goldman Sachs Group Inc. and Citigroup Inc. pulled a $1.48 billion commercial mortgage-backed security from the market late
Wednesday after an 11th-hour internal review by Standard & Poor's, throwing the CMBS world into disarray.
http://jlne.ws/rmYTVC
Total ICAP Electronic Broking Volumes for BrokerTec and EBS Platforms Increases 35%
Press Release
ICAP, the world’s premier interdealer broker, announced today that total electronic broking volumes for the month of July on the
BrokerTec and EBS platforms reached US$884.4billion, an increase of 35% year on year. Total average daily volumes on the EBS
platform were $180.5bn, up 36% year on year.
http://jlne.ws/p7scqL
Regulators
U.S. Swaps Regulators to Seek Comment on Overseas Reach
By Silla Brush, Bloomberg
U.S. financial regulators are planning to seek comment on when Dodd-Frank Act rules for the $601 trillion swaps market apply to
international transactions or firms conducting business overseas.
http://jlne.ws/nRKlDU
Bank's Haldane makes case for counter-cyclical haircuts
Reuters
Regulating lending by imposing higher collateral requirements, or "haircuts", in times of rising asset prices could be a useful tool to
promote financial stability, a top Bank of England official said on Monday.
http://jlne.ws/qi4noj
St. Louis Fed’s Bullard Discusses Monetary Policy and U.S. Economy
Federal Reserve Bank of St. Louis
On Friday, Federal Reserve Bank of St. Louis President James Bullard delivered remarks titled “Views on the U.S. Economy: A
Four-Part Story” as part of the keynote monetary policy discussion at the 3rd Annual Rocky Mountain Economic Summit in Jackson
Hole. Bullard said that “monetary policy is on hold in an ultra-easy mode,” which is “an appropriate setting for monetary policy
today.” Regarding the economic outlook, Bullard discussed why U.S. economic performance will likely improve in the second half of
this year. He stated that three of the four key uncertainties that have plagued the U.S. economy since February have been largely or
partially resolved, while one of them—the U.S. fiscal situation—is still on the table. “Once this last uncertainty is resolved, the path to
faster growth may be open,” he said.
http://jlne.ws/pTFwu3
Irish financial regulation to be strengthened
By Brooke Masters and Sharlene Goff in London, Financial Times
Ireland’s central bank would be given expanded powers to investigate the financial sector, direct institutions to change their business
practice and fine or suspend those that misbehave, under a bill unveiled on Thursday.
http://jlne.ws/ndvuA
FSA publishes new rules for platforms
Press Release
The Financial Services Authority (FSA) has today published rules on platforms regulation. This follows a review of the regulation of
platforms in the context of the objectives of the Retail Distribution Review (RDR).
http://jlne.ws/q8sa2x
Buyside's worries on OTC derivatives
Financial Times
Financial regulation in the US, as set out by Dodd-Frank, has been delayed and the European Market Infrastructure Regulation
(Emir) has also been put back as regulators realise they need more time. Jane Lowe, director of markets at the Investment
Management Association, is keen regulators take the time to look at two issues for the buy-side - extra-territoriality - and whether
some institutions will be regulated under Dodd-Frank and Emir, and "portability" of OTC derivatives contracts - another emerging
hot issue.
http://jlne.ws/qiSOVL
Global News
Berlusconi Vows Not to Resign
By RACHEL DONADIO, The New York Times
As markets continued to hammer Italy, Prime Minister Silvio Berlusconi on Wednesday rebutted calls for his resignation, saying
Italy’s economic fundamentals were strong and pledging that his government was “up to the task” of fostering economic growth.
http://jlne.ws/nBqmvp
Industrial producer prices stable in both euro area and EU27
Eurostat
In June 2011 compared with May 2011, the industrial producer price index1 remained stable in both the euro area2 (EA17) and the
EU272. In May3 prices fell by 0.2% and 0.3% respectively. In June 2011 compared with June 2010, industrial producer prices
gained 5.9% in the euro area and 6.9% in the EU27.
http://jlne.ws/pZrBS7
UK Official holdings of international reserves July 2011 - HM Treasury
Link to PDF
http://jlne.ws/qqJ8tI
Spanish and Italian borrowing costs soar
By Richard Milne, Capital Markets Editor, Financial Times
Spanish and Italian borrowing costs hit fresh peaks on Tuesday for the euro-era as the European debt crisis shot back to the centre
of investors’ attention.
http://jlne.ws/nMHRXX
How Andy Haldane gets his haircut
Posted by Tracy Alloway, Financial Times
It’s no coincidence that with the shift to central clearing looming on the horizon, the Bank of England’s director for financial stability is
talking about this subject. Haircuts, that is.
http://jlne.ws/p0hTvd
French Banks, Insurers to Lose $4.2 Billion in Greek Plan
BY WILLIAM HOROBIN, WSJ
The head of the French Banking Federation, François Perol, Friday said French banks and insurers will lose around E3 billion ($4.23
billion) by writing down the value of Greek bonds as part of the country's rescue plan, but said French financial institutions remain
"solid" and have little exposure to Greece overall.
http://jlne.ws/pPFsDq
Clearstream facilitates creation of local Middle East Triparty Repo market
Press Release
Clearstream: Clearstream has facilitated the first triparty repo trade where cash is lent from a Middle East cash provider. The
National Bank of Abu Dhabi (NBAD) is the first financial institution in the region accepting Middle East counterparties as cash takers
and Middle East assets, i.e. sovereign and corporate bonds out of the Gulf Cooperation Council (GCC) area , as collateral. This first
trade of National Bank of Abu Dhabi as local cash provider settled on 7 July 2011 through the Clearstream Global Liquidity Hub
infrastructure. So far, Middle East financial institutions would usually trade (triparty) repos with counterparts and collateral outside the
Middle East.
http://jlne.ws/q4hWNl
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.
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Conversation Starter
McKinsey & Company Report: Mapping Global Capital Markets 2011
The 2008 financial crisis and worldwide recession halted a three-decade expansion of global capital and banking markets. The total value of the world’s financial stock, comprising equity market capitalization and outstanding bonds and loans, has increased from $175 trillion in 2008 to $212 trillion at the end of 2010, surpassing the previous 2007 peak. Similarly, cross-border capital flows grew to $4.4 trillion in 2010 after declining for the two previous years. In its 2011 updated analysis of more than 75 countries on the size of their outstanding equity and debt, cross-border capital flows, and the stocks of foreign investment assets and liabilities, McKinsey Global Institute finds that the recovery of financial markets remains uneven across geographies and asset classes and significant risks remain. Emerging markets account for a disproportionate share of growth in capital-raising as mature economies struggle. Debt markets remain fragile in many parts of the world—the growth of government debt and of lending in China accounts for the majority of the increase in credit globally.
See the entire report here.
-- Christine Nielsen
Lead Stories
Analysis: Obama, Bernanke out of ammo to boost jobs, growth
By Alister Bull and Jonathan Spicer, Reuters
The United States has a jobs problem and there's not a lot President Barack Obama or Federal Reserve Chairman Ben Bernanke
can do about it.
http://jlne.ws/n2kECx
Treasuries: 'It's pretty grim'
CNN Money
It's ugly out there. Treasury prices have spiked -- then spiked some more, pushing the 10-year Treasury yield down to a nine-month
low of 2.57% Tuesday.
http://jlne.ws/oCPRXg
15-year fixed-rate mortgage at record low
By Amy Hoak, MarketWatch
Rates on 15-year fixed-rate mortgages and 5-year adjustable rate mortgages hit record lows this week, after signs surfaced that the
U.S. economy is weaker than previously thought, Freddie Mac‘s chief economist said on Thursday.
http://jlne.ws/ooLR1C
Plunging Mortgage Rates Won't Juice Housing
By: Diana Olick, CNBC
The one positive in all the uncertainty surrounding the nation's debt was a plunge in Treasury yields, which in turn sent mortgage rates
to record lows.
http://jlne.ws/oLf9Mh
Commercial/multifamily loan originations rise 107% in Q2
By KERRI PANCHUK, Housing Wire
Commercial and multifamily mortgage originations grew 107% in the second quarter compared to the year-ago period as financials
on all property types experienced greater stability and demand, according to the Mortgage Bankers Association.
http://jlne.ws/oabJiv
Sea Change in Map of Global Risk
BY MATTHIEU WIRZ AND MATT PHILLIPS, WSJ
The black-and-white borders of the bond market are graying. As the pristine credit rating of the U.S. remains under threat, and the
debt crisis in Europe rolls on, investors, traders and policy makers are grappling with fundamental changes in the global bond
markets.
http://jlne.ws/pd6Cqu
Japan acts to tame yen, follows Swiss move
By Stanley White and Leika Kihara, Reuters
Japan sold one trillion yen ($12.5 billion) and loosened its monetary reins on Thursday, joining Switzerland in efforts to tame
currencies buoyed by safe-haven demand from investors fretting about the deteriorating health of the global economy.
http://jlne.ws/nZ6K10
ECB buying bonds, increases liquidity to banks
By Marc Jones, Reuters
The European Central Bank resumed buying government bonds from the market and offered a new round of funding to commercial
banks on Thursday in response to a worsening euro zone debt crisis.
http://jlne.ws/r9woim
Trichet Says ECB Resumed Bond Buying as Debt Crisis Spreads
By Jana Randow and Jeff Black, Bloomberg Businessweek
European Central Bank President Jean- Claude Trichet said the ECB has resumed bond purchases and will offer banks more cash to
stop the region’s debt crisis from engulfing Italy and Spain and hurting the economy.
http://jlne.ws/nh4w52
Treasury Resumes SLGS Sales
By Lynn Hume, The Bond Buyer
The Treasury Department resumed sales of state and local government series securities Tuesday night after President Obama signed
legislation to increase the federal debt limit beyond $14.3 trillion.
http://jlne.ws/qUZYtI
Obama signs debt limit compromise
By Brian Montopoli, CBS News
President Obama signed a hard-fought, last-minute compromise bill to avert economic catastrophe Tuesday, saying the deal to cut
spending and increase the nation's $14.3 trillion debt limit marked an "important first step to ensuring that as a nation we live within
our means."
http://jlne.ws/roJ9Re
No Day in Court for Bank Clients
BY ROBIN SIDEL, WSJ
Some small and regional U.S. banks are prohibiting unhappy customers from taking their complaints to court or joining class-action
lawsuits, instead requiring them to resolve disputes through arbitration. The banks are emboldened by a U.S. Supreme Court ruling in
April that said state laws can't supersede private contracts that require customers to present their complaints individually to an
arbitrator.
http://jlne.ws/p9SQWP
Fitch Comments on U.S. Debt Ceiling, Deficit Reduction Agreement and Sovereign Rating
Reuters/ Press Release
Fitch Ratings says that, as it expected, agreement was reached on an increase in the United States' debt ceiling and, commensurate
with its 'AAA' rating, the risk of sovereign default remains extremely low. While the agreement is clearly a step in the right direction,
the United States, as in much of Europe, must also confront tough choices on tax and spending against a weak economic back drop if
the budget deficit and government debt is to be cut to safer levels over the medium term.
http://jlne.ws/nQKnL7
Fitch Says U.S. Debt Deal ‘Commensurate’ With AAA Rating
Forbes
One of the three major credit ratings agencies is out with a signal that Congress’ deal to raise the debt ceiling will be enough to
maintain Uncle Sam’s AAA credit rating, for now.
http://jlne.ws/qrtI4p
Riley Of Fitch Ratings Says U.S. AAA Rating Not `Secure' Over Medium Term [Video]
http://jlne.ws/n9LclX
Moody’s puts Spain on review for downgrade
By Richard Milne in London and Sarah Mishkin in Hong Kong, Financial Times
Spain became the latest eurozone country to feel the pressure of credit rating agencies as Moody’s warned it was at risk of a
one-notch downgrade. The move follows a similar warning to Italy in June and comes as the eurozone’s third and fourth biggest
economies have endured a torrid time in the markets, as their borrowing costs shoot up.
http://jlne.ws/qobcZu
IMF Statement On U.S. Agreement To Raise Debt Ceiling
Press Release
http://jlne.ws/rd3tah
SIFMA Statement On Passage Of Debt Ceiling Agreement
Press Release
http://jlne.ws/qMpwMW
Forget About The Debt Ceiling Debate, Where’s The Economic Growth?
By Kevin Mahn, Forbes
It is my contention that the market has essentially priced in the belief that an agreement on raising the current debt ceiling will happen.
It is just now a question of when the agreement will be finalized and what the length and terms of the finalized agreement will be.
Unfortunately, the finalization of the agreement may not be enough to avert further consideration of a downgrade to the U.S. AAA
credit rating by the rating agencies.
http://jlne.ws/q9r6Ab
Lagarde role into Tapie affair to be probed
By Jennifer Thompson and James Boxell
http://jlne.ws/nDDo4g
Lagarde warns EU to speak with one voice
By Alan Beattie, Financial Times
Christine Lagarde, managing director of the International Monetary Fund, has said European authorities must ‘stick to the script’
European authorities should stop public bickering and speak with one voice to make the second rescue package for Greece work,
warned Christine Lagarde, the new managing director of the International Monetary Fund.
http://jlne.ws/qKL2Si
Where does our national debt come from? | The White House
http://jlne.ws/qmeeVm
Remarks by the President on the Status of Debt Ceiling Negotiations | The White House
Good morning, everybody. I want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit.
Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have
already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy
captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law...
http://jlne.ws/o6uuPt
Pressed by White House, Treasury Chief Expected to Stay On
By JACKIE CALMES
Timothy F. Geithner, the Treasury secretary and dean of President Obama’s economic team, is expected to stay through the
president’s term after intense White House pressure, according to officials familiar with the discussions.
http://jlne.ws/pCIElN
A Renewed Focus on the Fed’s Role
By BINYAMIN APPELBAUM and CATHERINE RAMPELL, The New York Times
Even as Congress escapes from its brush with default, political divisions have all but immobilized the levers of fiscal policy, raising
pressure on the Federal Reserve to address the nation’s economic lethargy.
http://jlne.ws/rr9KQo
Stock markets fall again in early trading
Los Angeles Times
Stock markets plunged this morning, with the Dow down about 250 points, as increasing pessimism about the economy overtook
investors around the globe.
http://jlne.ws/opzyj9
PIMCO | Investment Outlook - Kings of the Wild Frontier
“Over the years we’ve had some fun together – killin some ‘bars,’ drinkin moonshine – some even in these chambers. (Whiskey that
is – the ‘bars’ I’ve seen once or twice, but only when I was plum drunk). But the time for funnin is over. They’ll be no jokes from
David Crockett today.” Davy Crockett Speech to Congress, 1830. Figurative coonskin cap on head, I echo the sentiments of Davy
Crockett – Indian fighter, Alamo defender and Tennessee Congressman – not necessarily in that chronological order.
http://jlne.ws/plyaho
Investment banks hampered by high fixed costs
By Megan Murphy in London, Financial Times
European investment banks are being squeezed by fixed administrative expenses even as they slash pay and staff amid weak trading
conditions. Credit Suisse on Thursday became the latest bank to announce significant job cuts, revealing it was shedding 4 per cent of
its global headcount, about 2,000 employees, following a 52 per cent fall in net profits in the second quarter.
http://jlne.ws/psVNkv
OTC derivatives debate to cast light on swaps and futures
By Aline van Duyn, Financial Times
Nearly a year ago, BlackRock, one of the world’s biggest investment managers, sparked a fierce debate in the derivatives industry,
which continues to this day. In the wake of the financial crisis, regulators, politicians and some financial market participants had come
to view the privately traded, over-the-counter (OTC) derivatives markets as dangerously opaque and illiquid. To make it safer for the
financial system, there was a push to introduce many of the features of the exchange-traded, regulated futures markets to OTC
swaps.
http://jlne.ws/qsm85R
Some Bankers Never Learn
By GRETCHEN MORGENSON, NY Times
YOU’D think the mortgage bust would qualify as a teachable moment. But some people refuse to learn from mistakes — a list that
apparently includes certain mortgage bankers. Their industry is fighting a new rule that might prevent a repeat of the lending binge that
helped drive our economy off a cliff.
http://jlne.ws/qwEFaQ
Events
Making Sense of Credit Default Swaps
August 10, 2011
www.theIFM.org
Valuation and Pricing Methodologies of Debt Instruments - Auction Rate Securities
September 1, 2011
Madison Street Capital (MSC) Is Lead Presenter In This Financial Research Associates Webinar Segment
http://jlne.ws/pxF2sq
FIA Treasury & Rates Forum
September 14, 2011FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
SEFCON II
October 3, 2011
WMBAA To Examine Role And Operation Of Swap Execution Facilities Under Dodd-Frank
http://jlne.ws/pY4N7S
Economic News
Heatwave boosts July US retail sales
By Barney Jopson, FT.com
http://jlne.ws/ojRgl4
U.S. manufacturing growth slows
DANIEL WAGNER, The Globe And Mail
Manufacturing activity in the U.S. barely grew in July, falling to the weakest level since just after the recession ended, a private trade
group said Monday.
http://jlne.ws/pckcDl
Data Reinforce Economic Malaise
BY CONOR DOUGHERTY AND JEFF BATER, WSJ.com
Americans stepped up their saving in June and cut spending, in a broad retrenchment that is both a cause of the slowing economic
recovery and a reaction to it.
http://jlne.ws/peGEIZ
Economy in U.S. Grows Less Than Forecast
By Shobhana Chandra, Bloomberg
The U.S. economy grew less than forecast in the second quarter, after almost stalling at the start of the year, as consumers
retrenched. Gross domestic product climbed at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was
less than earlier estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed
by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, rose 0.1 percent.
http://jlne.ws/qsr0u7
Exchanges, Clearing Houses & MTFs
TriOptima and LCH.Clearnet terminate SwapClear USD interest rate swaps with notional principal value of $7.1 trillion
Press Release
Japan sold one trillion yen ($12.5 billion) and loosened its monetary reins on Thursday, joining Switzerland in efforts to tame
currencies buoyed by safe-haven demand from investors fretting about the deteriorating health of the global economy.
http://jlne.ws/ntJSFf
CME Globex Enhancements for Interest Rate Products
Press Release
Effective Sunday, August 7, 2011 (trade date August 8), CME Globex enhancements to our CBOT interest rate products will take
place. Enhancements to our CME products will take place on Sunday, August 21 (trade date August 22).
http://jlne.ws/rbGdUg
Average daily volume of 10 million contracts at Eurex Group in July
Press Release
July volumes grew at Eurex Exchange and ISE/ Eurex Exchange: KOSPI Product with new peak in volumes
http://jlne.ws/oTK2SN
ELX ANNOUNCES JULY RESULTS WITH YEAR OVER YEAR GAIN IN ADV IN U.S. TREASURIES AND
EURODOLLAR FUTURES
Press Release
New York, Aug 1, 2011 – ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today solid July results with
strong yearoveryear average daily volume (ADV) performances in U.S. Treasury and Eurodollar futures contracts. ELX traded
1.2M contracts in July and celebrated its second year anniversary as an electronic futures exchange on July 10.
http://jlne.ws/o3Df6c
DTCC Greatly Expands Historical CDS Data Available On Website
By Katy Burne Of DOW JONES NEWSWIRES
The Depository Trust and Clearing Corp. has expanded the suite of data it makes publicly available on credit default swap
transactions, allowing interested parties to see weekly data going back to 2008. Until the change Tuesday night, buyers and sellers of
CDS as well as market observers could see net notional values for the most recent week, the prior week, the month before the
relevant date and for one year ago to that date.
http://jlne.ws/pKNeWs
A Derivatives-Trading Pioneer Looks to Launch New Venture
By KATY BURNE And JACOB BUNGE, Dow Jones
Sunil Hirani, a pioneer in the electronic trading of credit derivatives, is heading a new venture that aims to support the shift of
interest-rate swap business onto the screen from the telephone, according to people familiar with the situation. Mr. Hirani, 43 years
old, is returning to an entrepreneurial role in the derivatives sector after last year leaving Creditex, the dealer-to-dealer
credit-default-swap broker he co-founded and later sold to IntercontinentalExchange Inc.
http://jlne.ws/nz7r8e
Firms & Banks
Deutsche Bank Said Likely to Wait Until Next Year to Name Jain’s Successor
By Aaron Kirchfeld, Brett Foley and Jacqueline Simmons, Bloomberg
Deutsche Bank AG (DBK), Germany’s biggest bank, will probably wait until next year to name a successor to Anshu Jain at the
helm of the corporate and investment bank, three people familiar with the matter said.
http://jlne.ws/omAinH
MF Global Plans Bond Sale With Coupon Tied to Corzine’s Role
By Tim Catts and Matthew Leising, Bloomberg
MF Global Holdings Ltd. plans to sell bonds with an interest rate that will rise if Chairman and Chief Executive Officer Jon Corzine
receives a federal appointment from the U.S. president.
http://jlne.ws/qnSFit
Lind-Waldock Changes its Name to MF Global
Press Release
MF Global Holdings Ltd. (NYSE: MF), a broker-dealer providing trading and hedging solutions, today announced that
Lind-Waldock, the firm's flagship U.S. retail business, has changed its name to MF Global, effective immediately. Lind-Waldock was
acquired by MF Global in 2005.
http://jlne.ws/cto7bF
Five banks sign up to new EuroCCP service
By Philip Stafford, Financial Times
Five of Europe’s largest trading banks have agreed to use EuroCCP, the European clearing house, amid signs that a new system
designed to give traders more choice over where their trades are to be cleared is developing early momentum.
http://jlne.ws/riuAxS
Auerbach Grayson Launches Emerging And Frontier Market Fixed-Income Platform
Press Release
NEW YORK - Auerbach Grayson and Company LLP, a New York-based brokerage firm that specializes in providing global
trade execution and locally-generated research to US institutional investors, has launched a global fixed income and sales trading
platform for frontier and emerging markets.
http://jlne.ws/nEzD5B
N Rock expects to make profit by 2012
By Adam Jones, Financial Times
Any buyer of Northern Rock would have to endure losses until the second half of next year, the state-owned savings and mortgage
bank said on Wednesday.
http://jlne.ws/pNifb7
Ex-UBS banker charged in tax evasion
Bloomberg News
A former UBS AG banker was indicted on a charge of conspiring to help wealthy Americans evade taxes by hiding accounts in a
smaller Swiss regional bank.
http://jlne.ws/qGiZEg
UBS Said to End Talks to Move to NYC’s World Trade Center
By David M. Levitt and Christine Harper, Bloomberg
UBS AG, Switzerland’s biggest lender, is no longer in negotiations to lease space at lower Manhattan’s World Trade Center,
according to a person with knowledge of the situation.
http://jlne.ws/p4CDum
UBS Hires Bank of America Executive
By DEALBOOK, NY Times
UBS has recruited Mike Stewart, co-head of global equities at Bank of America, to become co-head of global securities and head of
securities in the Americas.
http://jlne.ws/qD7ioQ
HSBC to Cut 25,000 Jobs
By JULIA WERDIGIER, NY Times
HSBC, the biggest European bank, plans to eliminate 25,000 jobs in the next two years as part of a wide-ranging cost reduction
program.
http://jlne.ws/pvoXnZ
Morgan Stanley fills senior role in US FIG team
Richard Partington, Financial News
Morgan Stanley has appointed a new head of its banks team within its financial institutions group in North America, a post that has
been vacant since the previous head, John Esposito, left the role more than 18 months ago.
http://jlne.ws/rof7Vt
Bank of America Merrill Lynch Names Peter Johnson Head of Global Futures and OTC Clearing
Bank of America Merrill Lynch announced today that Peter Johnson will join the company as managing director and head of global
futures and OTC clearing. In this role, Johnson will assume global responsibility for all futures, options and OTC derivatives clearing.
http://jlne.ws/nZFcUG
RBS recruits as rivals cut
Matt Turner, Financial News
Royal Bank of Scotland, the UK government-backed bank, is still hiring for all functions and in all regions in equities, according to
sources, as its rivals get ready to embark on a round of cost-cutting.
http://jlne.ws/rkCeAe
Barclays Profit Tumbles
BY MICHAEL HADDON AND MARGOT PATRICK, WSJ
Barclays PLC said Tuesday its first-half net profit fell 38%, as it set aside £1 billion ($1.63 billion) to compensate customers who
were sold faulty insurance products and amid a sharp decline in revenue at its key investment-banking unit.
http://jlne.ws/qcfzla
Barclays Cuts 3,000 Jobs on Revenue Hit
By Howard Mustoe and Gavin Finch, Bloomberg
Britain’s second-largest bank by assets, said it’s eliminating about 3,000 jobs this year as second-quarter investment banking profit
fell by more than a quarter.
http://jlne.ws/qjoYyS
Greek exposure weighs on BNP Paribas
By Jennifer Thompson in Paris, Financial Times
BNP Paribas, the biggest holder of Greek bonds among French banks, has made a E534m provision as part of a pledge to play a
role in the Greek bail-out plan. Nevertheless, the strength of France’s biggest bank was proved as it posted a resilient set of
second-half results. Net income for the second quarter of 2011 rose 1.1 per cent to E2.13bn ($3.02bn) on revenue down 1.7 per
cent to E10.98bn, just missing the consensus estimate of analysts.
http://jlne.ws/pHcCt9
Citigroup, Goldman Commercial Mortgage Bond Traders Depart
By Sarah Mulholland and Donal Griffin, Bloomberg
The heads of commercial mortgage bond trading for Citigroup Inc. and Goldman Sachs Group Inc. have left the firms this week as
the market is roiled by sovereign debt crises and new deals are cut back or put on hold.
http://jlne.ws/n2my3N
Goldman-Citi Offering Is Pulled Over Ratings
BY AL YOON, WSJ
Goldman Sachs Group Inc. and Citigroup Inc. pulled a $1.48 billion commercial mortgage-backed security from the market late
Wednesday after an 11th-hour internal review by Standard & Poor's, throwing the CMBS world into disarray.
http://jlne.ws/rmYTVC
Total ICAP Electronic Broking Volumes for BrokerTec and EBS Platforms Increases 35%
Press Release
ICAP, the world’s premier interdealer broker, announced today that total electronic broking volumes for the month of July on the
BrokerTec and EBS platforms reached US$884.4billion, an increase of 35% year on year. Total average daily volumes on the EBS
platform were $180.5bn, up 36% year on year.
http://jlne.ws/p7scqL
Regulators
U.S. Swaps Regulators to Seek Comment on Overseas Reach
By Silla Brush, Bloomberg
U.S. financial regulators are planning to seek comment on when Dodd-Frank Act rules for the $601 trillion swaps market apply to
international transactions or firms conducting business overseas.
http://jlne.ws/nRKlDU
Bank's Haldane makes case for counter-cyclical haircuts
Reuters
Regulating lending by imposing higher collateral requirements, or "haircuts", in times of rising asset prices could be a useful tool to
promote financial stability, a top Bank of England official said on Monday.
http://jlne.ws/qi4noj
St. Louis Fed’s Bullard Discusses Monetary Policy and U.S. Economy
Federal Reserve Bank of St. Louis
On Friday, Federal Reserve Bank of St. Louis President James Bullard delivered remarks titled “Views on the U.S. Economy: A
Four-Part Story” as part of the keynote monetary policy discussion at the 3rd Annual Rocky Mountain Economic Summit in Jackson
Hole. Bullard said that “monetary policy is on hold in an ultra-easy mode,” which is “an appropriate setting for monetary policy
today.” Regarding the economic outlook, Bullard discussed why U.S. economic performance will likely improve in the second half of
this year. He stated that three of the four key uncertainties that have plagued the U.S. economy since February have been largely or
partially resolved, while one of them—the U.S. fiscal situation—is still on the table. “Once this last uncertainty is resolved, the path to
faster growth may be open,” he said.
http://jlne.ws/pTFwu3
Irish financial regulation to be strengthened
By Brooke Masters and Sharlene Goff in London, Financial Times
Ireland’s central bank would be given expanded powers to investigate the financial sector, direct institutions to change their business
practice and fine or suspend those that misbehave, under a bill unveiled on Thursday.
http://jlne.ws/ndvuA
FSA publishes new rules for platforms
Press Release
The Financial Services Authority (FSA) has today published rules on platforms regulation. This follows a review of the regulation of
platforms in the context of the objectives of the Retail Distribution Review (RDR).
http://jlne.ws/q8sa2x
Buyside's worries on OTC derivatives
Financial Times
Financial regulation in the US, as set out by Dodd-Frank, has been delayed and the European Market Infrastructure Regulation
(Emir) has also been put back as regulators realise they need more time. Jane Lowe, director of markets at the Investment
Management Association, is keen regulators take the time to look at two issues for the buy-side - extra-territoriality - and whether
some institutions will be regulated under Dodd-Frank and Emir, and "portability" of OTC derivatives contracts - another emerging
hot issue.
http://jlne.ws/qiSOVL
Global News
Berlusconi Vows Not to Resign
By RACHEL DONADIO, The New York Times
As markets continued to hammer Italy, Prime Minister Silvio Berlusconi on Wednesday rebutted calls for his resignation, saying
Italy’s economic fundamentals were strong and pledging that his government was “up to the task” of fostering economic growth.
http://jlne.ws/nBqmvp
Industrial producer prices stable in both euro area and EU27
Eurostat
In June 2011 compared with May 2011, the industrial producer price index1 remained stable in both the euro area2 (EA17) and the
EU272. In May3 prices fell by 0.2% and 0.3% respectively. In June 2011 compared with June 2010, industrial producer prices
gained 5.9% in the euro area and 6.9% in the EU27.
http://jlne.ws/pZrBS7
UK Official holdings of international reserves July 2011 - HM Treasury
Link to PDF
http://jlne.ws/qqJ8tI
Spanish and Italian borrowing costs soar
By Richard Milne, Capital Markets Editor, Financial Times
Spanish and Italian borrowing costs hit fresh peaks on Tuesday for the euro-era as the European debt crisis shot back to the centre
of investors’ attention.
http://jlne.ws/nMHRXX
How Andy Haldane gets his haircut
Posted by Tracy Alloway, Financial Times
It’s no coincidence that with the shift to central clearing looming on the horizon, the Bank of England’s director for financial stability is
talking about this subject. Haircuts, that is.
http://jlne.ws/p0hTvd
French Banks, Insurers to Lose $4.2 Billion in Greek Plan
BY WILLIAM HOROBIN, WSJ
The head of the French Banking Federation, François Perol, Friday said French banks and insurers will lose around E3 billion ($4.23
billion) by writing down the value of Greek bonds as part of the country's rescue plan, but said French financial institutions remain
"solid" and have little exposure to Greece overall.
http://jlne.ws/pPFsDq
Clearstream facilitates creation of local Middle East Triparty Repo market
Press Release
Clearstream: Clearstream has facilitated the first triparty repo trade where cash is lent from a Middle East cash provider. The
National Bank of Abu Dhabi (NBAD) is the first financial institution in the region accepting Middle East counterparties as cash takers
and Middle East assets, i.e. sovereign and corporate bonds out of the Gulf Cooperation Council (GCC) area , as collateral. This first
trade of National Bank of Abu Dhabi as local cash provider settled on 7 July 2011 through the Clearstream Global Liquidity Hub
infrastructure. So far, Middle East financial institutions would usually trade (triparty) repos with counterparts and collateral outside the
Middle East.
http://jlne.ws/q4hWNl
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.
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Rabu, 03 Agustus 2011
Top Interest Rate Headlines 08-03-11: Treasury Resumes SLGS Sales
Treasury Resumes SLGS Sales
By Lynn Hume, The Bond Buyer
The Treasury Department resumed sales of state and local government series securities Tuesday night after President Obama signed legislation to increase the federal debt limit beyond $14.3 trillion.
http://jlne.ws/qUZYtI
Riley Of Fitch Ratings Says U.S. AAA Rating Not `Secure' Over Medium Term [Video]
http://jlne.ws/n9LclX
Deutsche Bank Said Likely to Wait Until Next Year to Name Jain’s Successor
By Aaron Kirchfeld, Brett Foley and Jacqueline Simmons, Bloomberg
Deutsche Bank AG (DBK), Germany’s biggest bank, will probably wait until next year to name a successor to Anshu Jain at the helm of the corporate and investment bank, three people familiar with the matter said.
http://jlne.ws/omAinH
Berlusconi Vows Not to Resign
By RACHEL DONADIO, The New York Times
As markets continued to hammer Italy, Prime Minister Silvio Berlusconi on Wednesday rebutted calls for his resignation, saying Italy’s economic fundamentals were strong and pledging that his government was “up to the task” of fostering economic growth.
http://jlne.ws/nBqmvp
Plunging Mortgage Rates Won't Juice Housing
By: Diana Olick, CNBC
The one positive in all the uncertainty surrounding the nation's debt was a plunge in Treasury yields, which in turn sent mortgage rates to record lows.
http://jlne.ws/oLf9Mh
UK Official holdings of international reserves July 2011 - HM Treasury
Link to PDF
http://jlne.ws/qqJ8tI
Treasuries: 'It's pretty grim'
CNN Money
It's ugly out there. Treasury prices have spiked -- then spiked some more, pushing the 10-year Treasury yield down to a nine-month low of 2.57% Tuesday.
http://jlne.ws/oCPRXg
MF Global Plans Bond Sale With Coupon Tied to Corzine’s Role
By Tim Catts and Matthew Leising, Bloomberg
MF Global Holdings Ltd. plans to sell bonds with an interest rate that will rise if Chairman and Chief Executive Officer Jon Corzine receives a federal appointment from the U.S. president.
http://jlne.ws/qnSFit
Five banks sign up to new EuroCCP service
By Philip Stafford, Financial Times
Five of Europe’s largest trading banks have agreed to use EuroCCP, the European clearing house, amid signs that a new system designed to give traders more choice over where their trades are to be cleared is developing early momentum.
http://jlne.ws/riuAxS
A Derivatives-Trading Pioneer Looks to Launch New Venture
By KATY BURNE And JACOB BUNGE, Dow Jones
Sunil Hirani, a pioneer in the electronic trading of credit derivatives, is heading a new venture that aims to support the shift of interest-rate swap business onto the screen from the telephone, according to people familiar with the situation. Mr. Hirani, 43 years old, is returning to an entrepreneurial role in the derivatives sector after last year leaving Creditex, the dealer-to-dealer credit-default-swap broker he co-founded and later sold to IntercontinentalExchange Inc.
http://jlne.ws/nz7r8e
IMF Statement On U.S. Agreement To Raise Debt Ceiling
Press Release
http://jlne.ws/rd3tah
SIFMA Statement On Passage Of Debt Ceiling Agreement
Press Release
http://jlne.ws/qMpwMW
CME Globex Enhancements for Interest Rate Products
Press Release
Effective Sunday, August 7, 2011 (trade date August 8), CME Globex enhancements to our CBOT interest rate products will take place. Enhancements to our CME products will take place on Sunday, August 21 (trade date August 22).
http://jlne.ws/rbGdUg
Auerbach Grayson Launches Emerging And Frontier Market Fixed-Income Platform
Press Release
NEW YORK - Auerbach Grayson & Company LLP, a New York-based brokerage firm that specializes in providing global trade execution and locally-generated research to US institutional investors, has launched a global fixed income and sales trading platform for frontier and emerging markets.
http://jlne.ws/nEzD5B
N Rock expects to make profit by 2012
By Adam Jones, Financial Times
Any buyer of Northern Rock would have to endure losses until the second half of next year, the state-owned savings and mortgage bank said on Wednesday.
http://jlne.ws/pNifb7
Ex-UBS banker charged in tax evasion
Bloomberg News
A former UBS AG banker was indicted on a charge of conspiring to help wealthy Americans evade taxes by hiding accounts in a smaller Swiss regional bank.
http://jlne.ws/qGiZEg
Morgan Stanley fills senior role in US FIG team
Richard Partington, Financial News
Morgan Stanley has appointed a new head of its banks team within its financial institutions group in North America, a post that has been vacant since the previous head, John Esposito, left the role more than 18 months ago.
http://jlne.ws/rof7Vt
U.S. Swaps Regulators to Seek Comment on Overseas Reach
By Silla Brush, Bloomberg
U.S. financial regulators are planning to seek comment on when Dodd-Frank Act rules for the $601 trillion swaps market apply to international transactions or firms conducting business overseas.
http://jlne.ws/nRKlDU
By Lynn Hume, The Bond Buyer
The Treasury Department resumed sales of state and local government series securities Tuesday night after President Obama signed legislation to increase the federal debt limit beyond $14.3 trillion.
http://jlne.ws/qUZYtI
Riley Of Fitch Ratings Says U.S. AAA Rating Not `Secure' Over Medium Term [Video]
http://jlne.ws/n9LclX
Deutsche Bank Said Likely to Wait Until Next Year to Name Jain’s Successor
By Aaron Kirchfeld, Brett Foley and Jacqueline Simmons, Bloomberg
Deutsche Bank AG (DBK), Germany’s biggest bank, will probably wait until next year to name a successor to Anshu Jain at the helm of the corporate and investment bank, three people familiar with the matter said.
http://jlne.ws/omAinH
Berlusconi Vows Not to Resign
By RACHEL DONADIO, The New York Times
As markets continued to hammer Italy, Prime Minister Silvio Berlusconi on Wednesday rebutted calls for his resignation, saying Italy’s economic fundamentals were strong and pledging that his government was “up to the task” of fostering economic growth.
http://jlne.ws/nBqmvp
Plunging Mortgage Rates Won't Juice Housing
By: Diana Olick, CNBC
The one positive in all the uncertainty surrounding the nation's debt was a plunge in Treasury yields, which in turn sent mortgage rates to record lows.
http://jlne.ws/oLf9Mh
UK Official holdings of international reserves July 2011 - HM Treasury
Link to PDF
http://jlne.ws/qqJ8tI
Treasuries: 'It's pretty grim'
CNN Money
It's ugly out there. Treasury prices have spiked -- then spiked some more, pushing the 10-year Treasury yield down to a nine-month low of 2.57% Tuesday.
http://jlne.ws/oCPRXg
MF Global Plans Bond Sale With Coupon Tied to Corzine’s Role
By Tim Catts and Matthew Leising, Bloomberg
MF Global Holdings Ltd. plans to sell bonds with an interest rate that will rise if Chairman and Chief Executive Officer Jon Corzine receives a federal appointment from the U.S. president.
http://jlne.ws/qnSFit
Five banks sign up to new EuroCCP service
By Philip Stafford, Financial Times
Five of Europe’s largest trading banks have agreed to use EuroCCP, the European clearing house, amid signs that a new system designed to give traders more choice over where their trades are to be cleared is developing early momentum.
http://jlne.ws/riuAxS
A Derivatives-Trading Pioneer Looks to Launch New Venture
By KATY BURNE And JACOB BUNGE, Dow Jones
Sunil Hirani, a pioneer in the electronic trading of credit derivatives, is heading a new venture that aims to support the shift of interest-rate swap business onto the screen from the telephone, according to people familiar with the situation. Mr. Hirani, 43 years old, is returning to an entrepreneurial role in the derivatives sector after last year leaving Creditex, the dealer-to-dealer credit-default-swap broker he co-founded and later sold to IntercontinentalExchange Inc.
http://jlne.ws/nz7r8e
IMF Statement On U.S. Agreement To Raise Debt Ceiling
Press Release
http://jlne.ws/rd3tah
SIFMA Statement On Passage Of Debt Ceiling Agreement
Press Release
http://jlne.ws/qMpwMW
CME Globex Enhancements for Interest Rate Products
Press Release
Effective Sunday, August 7, 2011 (trade date August 8), CME Globex enhancements to our CBOT interest rate products will take place. Enhancements to our CME products will take place on Sunday, August 21 (trade date August 22).
http://jlne.ws/rbGdUg
Auerbach Grayson Launches Emerging And Frontier Market Fixed-Income Platform
Press Release
NEW YORK - Auerbach Grayson & Company LLP, a New York-based brokerage firm that specializes in providing global trade execution and locally-generated research to US institutional investors, has launched a global fixed income and sales trading platform for frontier and emerging markets.
http://jlne.ws/nEzD5B
N Rock expects to make profit by 2012
By Adam Jones, Financial Times
Any buyer of Northern Rock would have to endure losses until the second half of next year, the state-owned savings and mortgage bank said on Wednesday.
http://jlne.ws/pNifb7
Ex-UBS banker charged in tax evasion
Bloomberg News
A former UBS AG banker was indicted on a charge of conspiring to help wealthy Americans evade taxes by hiding accounts in a smaller Swiss regional bank.
http://jlne.ws/qGiZEg
Morgan Stanley fills senior role in US FIG team
Richard Partington, Financial News
Morgan Stanley has appointed a new head of its banks team within its financial institutions group in North America, a post that has been vacant since the previous head, John Esposito, left the role more than 18 months ago.
http://jlne.ws/rof7Vt
U.S. Swaps Regulators to Seek Comment on Overseas Reach
By Silla Brush, Bloomberg
U.S. financial regulators are planning to seek comment on when Dodd-Frank Act rules for the $601 trillion swaps market apply to international transactions or firms conducting business overseas.
http://jlne.ws/nRKlDU
Selasa, 02 Agustus 2011
Top Interest Rate Headlines 08-02-11: Fitch Says U.S. Debt Deal ‘Commensurate’ With AAA Rating
Fitch Says U.S. Debt Deal ‘Commensurate’ With AAA Rating
Forbes
One of the three major credit ratings agencies is out with a signal that Congress’ deal to raise the debt ceiling will be enough to maintain Uncle Sam’s AAA credit rating, for now.
http://jlne.ws/qrtI4p
Obama signs debt limit compromise
By Brian Montopoli, CBS News
President Obama signed a hard-fought, last-minute compromise bill to avert economic catastrophe Tuesday, saying the deal to cut spending and increase the nation's $14.3 trillion debt limit marked an "important first step to ensuring that as a nation we live within our means."
http://jlne.ws/roJ9Re
Fitch Comments on U.S. Debt Ceiling, Deficit Reduction Agreement & Sovereign Rating
Reuters/ Press Release
Fitch Ratings says that, as it expected, agreement was reached on an increase in the United States' debt ceiling and, commensurate with its 'AAA' rating, the risk of sovereign default remains extremely low. While the agreement is clearly a step in the right direction, the United States, as in much of Europe, must also confront tough choices on tax and spending against a weak economic back drop if the budget deficit and government debt is to be cut to safer levels over the medium term.
http://jlne.ws/nQKnL7
Sufficient number of senators pass debt limit bill
Associated Press
The Senate emphatically passed emergency legislation Tuesday to avoid a first-ever government default, rushing the legislation to President Barack Obama for his signature just hours before the deadline. The vote was 74-26.
http://jlne.ws/n2Va7s
A Renewed Focus on the Fed’s Role
By BINYAMIN APPELBAUM and CATHERINE RAMPELL, The New York Times
Even as Congress escapes from its brush with default, political divisions have all but immobilized the levers of fiscal policy, raising pressure on the Federal Reserve to address the nation’s economic lethargy.
http://jlne.ws/rr9KQo
Bank of Japan unlikely to intervene in forex market
By Timothy Ouyang, Channel News Asia
Amid growing speculation that the Bank of Japan (BOJ) may step in to intervene in the forex markets to stem the yen's rise, some analysts say it is unlikely to happen at its policy meeting later this week.
http://jlne.ws/mUCUyX
Barclays Cuts 3,000 Jobs on Revenue Hit
By Howard Mustoe and Gavin Finch, Bloomberg
Britain’s second- largest bank by assets, said it’s eliminating about 3,000 jobs this year as second-quarter investment banking profit fell by more than a quarter.
http://jlne.ws/qjoYyS
Total ICAP Electronic Broking Volumes for BrokerTec and EBS Platforms Increases 35%
Press Release
ICAP, the world’s premier interdealer broker, announced today that total electronic broking volumes for the month of July on the BrokerTec and EBS platforms reached US$884.4billion, an increase of 35% year on year. Total average daily volumes on the EBS platform were $180.5bn, up 36% year on year.
http://jlne.ws/p7scqL
PIMCO | Investment Outlook - Kings of the Wild Frontier
“Over the years we’ve had some fun together – killin some ‘bars,’ drinkin moonshine – some even in these chambers. (Whiskey that is – the ‘bars’ I’ve seen once or twice, but only when I was plum drunk). But the time for funnin is over. They’ll be no jokes from David Crockett today.”
Davy Crockett Speech to Congress, 1830. Figurative coonskin cap on head, I echo the sentiments of Davy Crockett – Indian fighter, Alamo defender and Tennessee Congressman – not necessarily in that chronological order.
http://jlne.ws/plyaho
Industrial producer prices stable in both euro area and EU27
Eurostat
In June 2011 compared with May 2011, the industrial producer price index1 remained stable in both the euro area2 (EA17) and the EU272. In May3 prices fell by 0.2% and 0.3% respectively. In June 2011 compared with June 2010, industrial producer prices gained 5.9% in the euro area and 6.9% in the EU27.
http://jlne.ws/pZrBS7
Data Reinforce Economic Malaise
BY CONOR DOUGHERTY AND JEFF BATER, WSJ.com
Americans stepped up their saving in June and cut spending, in a broad retrenchment that is both a cause of the slowing economic recovery and a reaction to it.
http://jlne.ws/peGEIZ
Lind-Waldock Changes its Name to MF Global
Press Release
MF Global Holdings Ltd. (NYSE: MF), a broker-dealer providing trading and hedging solutions, today announced that Lind-Waldock, the firm's flagship U.S. retail business, has changed its name to MF Global, effective immediately. Lind-Waldock was acquired by MF Global in 2005.
http://jlne.ws/cto7bF
Bank's Haldane makes case for counter-cyclical haircuts
Reuters
Regulating lending by imposing higher collateral requirements, or "haircuts", in times of rising asset prices could be a useful tool to promote financial stability, a top Bank of England official said on Monday.
http://jlne.ws/qi4noj
How Andy Haldane gets his haircut
Posted by Tracy Alloway, Financial Times
It’s no coincidence that with the shift to central clearing looming on the horizon, the Bank of England’s director for financial stability is talking about this subject. Haircuts, that is.
http://jlne.ws/p0hTvd
Spanish and Italian borrowing costs soar
By Richard Milne, Capital Markets Editor, Financial Times
Spanish and Italian borrowing costs hit fresh peaks on Tuesday for the euro-era as the European debt crisis shot back to the centre of investors’ attention.
http://jlne.ws/nMHRXX
ELX ANNOUNCES JULY RESULTS WITH YEAROVERYEAR GAIN IN ADV IN U.S. TREASURIES AND EURODOLLAR FUTURES
Press Release
New York, Aug 1, 2011 – ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today solid July results with strong yearoveryear average daily volume (ADV) performances in U.S. Treasury and Eurodollar futures contracts. ELX traded 1.2M contracts in July and celebrated its second year anniversary as an electronic futures exchange on July 10.
http://jlne.ws/o3Df6c
Average daily volume of 10 million contracts at Eurex Group in July
Press Release
July volumes grew at Eurex Exchange and ISE/ Eurex Exchange: KOSPI Product with new peak in volumes
http://jlne.ws/oTK2SN
Bank of America Merrill Lynch Names Peter Johnson Head of Global Futures and OTC Clearing
Bank of America Merrill Lynch announced today that Peter Johnson will join the company as managing director and head of global futures and OTC clearing. In this role, Johnson will assume global responsibility for all futures, options and OTC derivatives clearing.
http://jlne.ws/nZFcUG
RBS recruits as rivals cut
Matt Turner, Financial News
Royal Bank of Scotland, the UK government-backed bank, is still hiring for all functions and in all regions in equities, according to sources, as its rivals get ready to embark on a round of cost-cutting.
http://jlne.ws/rkCeAe
Barclays Profit Tumbles
BY MICHAEL HADDON AND MARGOT PATRICK, WSJ
Barclays PLC said Tuesday its first-half net profit fell 38%, as it set aside £1 billion ($1.63 billion) to compensate customers who were sold faulty insurance products and amid a sharp decline in revenue at its key investment-banking unit.
http://jlne.ws/qcfzla
Greek exposure weighs on BNP Paribas
By Jennifer Thompson in Paris, Financial Times
BNP Paribas, the biggest holder of Greek bonds among French banks, has made a E534m provision as part of a pledge to play a role in the Greek bail-out plan. Nevertheless, the strength of France’s biggest bank was proved as it posted a resilient set of second-half results. Net income for the second quarter of 2011 rose 1.1 per cent to E2.13bn ($3.02bn) on revenue down 1.7 per cent to E10.98bn, just missing the consensus estimate of analysts.
http://jlne.ws/pHcCt9
No Day in Court for Bank Clients
BY ROBIN SIDEL, WSJ
Some small and regional U.S. banks are prohibiting unhappy customers from taking their complaints to court or joining class-action lawsuits, instead requiring them to resolve disputes through arbitration. The banks are emboldened by a U.S. Supreme Court ruling in April that said state laws can't supersede private contracts that require customers to present their complaints individually to an arbitrator.
http://jlne.ws/p9SQWP
Buyside's worries on OTC derivatives
Financial Times
Financial regulation in the US, as set out by Dodd-Frank, has been delayed and the European Market Infrastructure Regulation (Emir) has also been put back as regulators realise they need more time. Jane Lowe, director of markets at the Investment Management Association, is keen regulators take the time to look at two issues for the buy-side - extra-territoriality - and whether some institutions will be regulated under Dodd-Frank and Emir, and "portability" of OTC derivatives contracts - another emerging hot issue.
http://jlne.ws/qiSOVL
FSA publishes new rules for platforms
Press Release
The Financial Services Authority (FSA) has today published rules on platforms regulation. This follows a review of the regulation of platforms in the context of the objectives of the Retail Distribution Review (RDR).
http://jlne.ws/q8sa2x
Clearstream facilitates creation of local Middle East Triparty Repo market
Press Release
Clearstream: Clearstream has facilitated the first triparty repo trade where cash is lent from a Middle East cash provider. The National Bank of Abu Dhabi (NBAD) is the first financial institution in the region accepting Middle East counterparties as cash takers and Middle East assets, i.e. sovereign and corporate bonds out of the Gulf Cooperation Council (GCC) area , as collateral. This first trade of National Bank of Abu Dhabi as local cash provider settled on 7 July 2011 through the Clearstream Global Liquidity Hub infrastructure. So far, Middle East financial institutions would usually trade (triparty) repos with counterparts and collateral outside the Middle East.
http://jlne.ws/q4hWNl
HSBC to hire 15,000 in emerging markets
By Joyce Woo, AFP
Global banking giant HSBC said Tuesday it would hire about 15,000 people in emerging markets by 2014 as it particularly looked to Asia's booming financial sector to power future growth.
http://jlne.ws/n0rhOf
Forbes
One of the three major credit ratings agencies is out with a signal that Congress’ deal to raise the debt ceiling will be enough to maintain Uncle Sam’s AAA credit rating, for now.
http://jlne.ws/qrtI4p
Obama signs debt limit compromise
By Brian Montopoli, CBS News
President Obama signed a hard-fought, last-minute compromise bill to avert economic catastrophe Tuesday, saying the deal to cut spending and increase the nation's $14.3 trillion debt limit marked an "important first step to ensuring that as a nation we live within our means."
http://jlne.ws/roJ9Re
Fitch Comments on U.S. Debt Ceiling, Deficit Reduction Agreement & Sovereign Rating
Reuters/ Press Release
Fitch Ratings says that, as it expected, agreement was reached on an increase in the United States' debt ceiling and, commensurate with its 'AAA' rating, the risk of sovereign default remains extremely low. While the agreement is clearly a step in the right direction, the United States, as in much of Europe, must also confront tough choices on tax and spending against a weak economic back drop if the budget deficit and government debt is to be cut to safer levels over the medium term.
http://jlne.ws/nQKnL7
Sufficient number of senators pass debt limit bill
Associated Press
The Senate emphatically passed emergency legislation Tuesday to avoid a first-ever government default, rushing the legislation to President Barack Obama for his signature just hours before the deadline. The vote was 74-26.
http://jlne.ws/n2Va7s
A Renewed Focus on the Fed’s Role
By BINYAMIN APPELBAUM and CATHERINE RAMPELL, The New York Times
Even as Congress escapes from its brush with default, political divisions have all but immobilized the levers of fiscal policy, raising pressure on the Federal Reserve to address the nation’s economic lethargy.
http://jlne.ws/rr9KQo
Bank of Japan unlikely to intervene in forex market
By Timothy Ouyang, Channel News Asia
Amid growing speculation that the Bank of Japan (BOJ) may step in to intervene in the forex markets to stem the yen's rise, some analysts say it is unlikely to happen at its policy meeting later this week.
http://jlne.ws/mUCUyX
Barclays Cuts 3,000 Jobs on Revenue Hit
By Howard Mustoe and Gavin Finch, Bloomberg
Britain’s second- largest bank by assets, said it’s eliminating about 3,000 jobs this year as second-quarter investment banking profit fell by more than a quarter.
http://jlne.ws/qjoYyS
Total ICAP Electronic Broking Volumes for BrokerTec and EBS Platforms Increases 35%
Press Release
ICAP, the world’s premier interdealer broker, announced today that total electronic broking volumes for the month of July on the BrokerTec and EBS platforms reached US$884.4billion, an increase of 35% year on year. Total average daily volumes on the EBS platform were $180.5bn, up 36% year on year.
http://jlne.ws/p7scqL
PIMCO | Investment Outlook - Kings of the Wild Frontier
“Over the years we’ve had some fun together – killin some ‘bars,’ drinkin moonshine – some even in these chambers. (Whiskey that is – the ‘bars’ I’ve seen once or twice, but only when I was plum drunk). But the time for funnin is over. They’ll be no jokes from David Crockett today.”
Davy Crockett Speech to Congress, 1830. Figurative coonskin cap on head, I echo the sentiments of Davy Crockett – Indian fighter, Alamo defender and Tennessee Congressman – not necessarily in that chronological order.
http://jlne.ws/plyaho
Industrial producer prices stable in both euro area and EU27
Eurostat
In June 2011 compared with May 2011, the industrial producer price index1 remained stable in both the euro area2 (EA17) and the EU272. In May3 prices fell by 0.2% and 0.3% respectively. In June 2011 compared with June 2010, industrial producer prices gained 5.9% in the euro area and 6.9% in the EU27.
http://jlne.ws/pZrBS7
Data Reinforce Economic Malaise
BY CONOR DOUGHERTY AND JEFF BATER, WSJ.com
Americans stepped up their saving in June and cut spending, in a broad retrenchment that is both a cause of the slowing economic recovery and a reaction to it.
http://jlne.ws/peGEIZ
Lind-Waldock Changes its Name to MF Global
Press Release
MF Global Holdings Ltd. (NYSE: MF), a broker-dealer providing trading and hedging solutions, today announced that Lind-Waldock, the firm's flagship U.S. retail business, has changed its name to MF Global, effective immediately. Lind-Waldock was acquired by MF Global in 2005.
http://jlne.ws/cto7bF
Bank's Haldane makes case for counter-cyclical haircuts
Reuters
Regulating lending by imposing higher collateral requirements, or "haircuts", in times of rising asset prices could be a useful tool to promote financial stability, a top Bank of England official said on Monday.
http://jlne.ws/qi4noj
How Andy Haldane gets his haircut
Posted by Tracy Alloway, Financial Times
It’s no coincidence that with the shift to central clearing looming on the horizon, the Bank of England’s director for financial stability is talking about this subject. Haircuts, that is.
http://jlne.ws/p0hTvd
Spanish and Italian borrowing costs soar
By Richard Milne, Capital Markets Editor, Financial Times
Spanish and Italian borrowing costs hit fresh peaks on Tuesday for the euro-era as the European debt crisis shot back to the centre of investors’ attention.
http://jlne.ws/nMHRXX
ELX ANNOUNCES JULY RESULTS WITH YEAROVERYEAR GAIN IN ADV IN U.S. TREASURIES AND EURODOLLAR FUTURES
Press Release
New York, Aug 1, 2011 – ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today solid July results with strong yearoveryear average daily volume (ADV) performances in U.S. Treasury and Eurodollar futures contracts. ELX traded 1.2M contracts in July and celebrated its second year anniversary as an electronic futures exchange on July 10.
http://jlne.ws/o3Df6c
Average daily volume of 10 million contracts at Eurex Group in July
Press Release
July volumes grew at Eurex Exchange and ISE/ Eurex Exchange: KOSPI Product with new peak in volumes
http://jlne.ws/oTK2SN
Bank of America Merrill Lynch Names Peter Johnson Head of Global Futures and OTC Clearing
Bank of America Merrill Lynch announced today that Peter Johnson will join the company as managing director and head of global futures and OTC clearing. In this role, Johnson will assume global responsibility for all futures, options and OTC derivatives clearing.
http://jlne.ws/nZFcUG
RBS recruits as rivals cut
Matt Turner, Financial News
Royal Bank of Scotland, the UK government-backed bank, is still hiring for all functions and in all regions in equities, according to sources, as its rivals get ready to embark on a round of cost-cutting.
http://jlne.ws/rkCeAe
Barclays Profit Tumbles
BY MICHAEL HADDON AND MARGOT PATRICK, WSJ
Barclays PLC said Tuesday its first-half net profit fell 38%, as it set aside £1 billion ($1.63 billion) to compensate customers who were sold faulty insurance products and amid a sharp decline in revenue at its key investment-banking unit.
http://jlne.ws/qcfzla
Greek exposure weighs on BNP Paribas
By Jennifer Thompson in Paris, Financial Times
BNP Paribas, the biggest holder of Greek bonds among French banks, has made a E534m provision as part of a pledge to play a role in the Greek bail-out plan. Nevertheless, the strength of France’s biggest bank was proved as it posted a resilient set of second-half results. Net income for the second quarter of 2011 rose 1.1 per cent to E2.13bn ($3.02bn) on revenue down 1.7 per cent to E10.98bn, just missing the consensus estimate of analysts.
http://jlne.ws/pHcCt9
No Day in Court for Bank Clients
BY ROBIN SIDEL, WSJ
Some small and regional U.S. banks are prohibiting unhappy customers from taking their complaints to court or joining class-action lawsuits, instead requiring them to resolve disputes through arbitration. The banks are emboldened by a U.S. Supreme Court ruling in April that said state laws can't supersede private contracts that require customers to present their complaints individually to an arbitrator.
http://jlne.ws/p9SQWP
Buyside's worries on OTC derivatives
Financial Times
Financial regulation in the US, as set out by Dodd-Frank, has been delayed and the European Market Infrastructure Regulation (Emir) has also been put back as regulators realise they need more time. Jane Lowe, director of markets at the Investment Management Association, is keen regulators take the time to look at two issues for the buy-side - extra-territoriality - and whether some institutions will be regulated under Dodd-Frank and Emir, and "portability" of OTC derivatives contracts - another emerging hot issue.
http://jlne.ws/qiSOVL
FSA publishes new rules for platforms
Press Release
The Financial Services Authority (FSA) has today published rules on platforms regulation. This follows a review of the regulation of platforms in the context of the objectives of the Retail Distribution Review (RDR).
http://jlne.ws/q8sa2x
Clearstream facilitates creation of local Middle East Triparty Repo market
Press Release
Clearstream: Clearstream has facilitated the first triparty repo trade where cash is lent from a Middle East cash provider. The National Bank of Abu Dhabi (NBAD) is the first financial institution in the region accepting Middle East counterparties as cash takers and Middle East assets, i.e. sovereign and corporate bonds out of the Gulf Cooperation Council (GCC) area , as collateral. This first trade of National Bank of Abu Dhabi as local cash provider settled on 7 July 2011 through the Clearstream Global Liquidity Hub infrastructure. So far, Middle East financial institutions would usually trade (triparty) repos with counterparts and collateral outside the Middle East.
http://jlne.ws/q4hWNl
HSBC to hire 15,000 in emerging markets
By Joyce Woo, AFP
Global banking giant HSBC said Tuesday it would hire about 15,000 people in emerging markets by 2014 as it particularly looked to Asia's booming financial sector to power future growth.
http://jlne.ws/n0rhOf
Senin, 01 Agustus 2011
Top Interest Rate Headlines 08-01-11: US Lawmakers To Vote On Last-Minute Debt Deal
US Lawmakers to Vote on Last-Minute Debt Deal
After months of vitriolic discord, Republican and Democratic lawmakers were expected to vote on Monday on a White House-backed deal to raise the U.S. borrowing limit and avert an unprecedented debt default. The Democratic-led Senate is expected to pass the deal, which raises the $14.3 trillion debt ceiling and cuts about $2.4 trillion from the deficit over the next decade.
http://jlne.ws/rtrbSH
For debt-ceiling deal to become law, what needs to happen by Tuesday
The Christian Science Monitor
Selling the debt-ceiling deal to a critical mass of lawmakers is a formidable political reach. Many conservatives say the deal doesn’t go far enough, while some liberals say the richest Americans should have to pay more taxes.
http://jlne.ws/pUsfL8
AAA verdict awaited on U.S. debt-limit deal
By William L. Watts, MarketWatch
Debt deal? Check. America’s AAA debt rating intact? We’ll see...
http://jlne.ws/q8bSW7
U.S. manufacturing growth slows
DANIEL WAGNER, The Globe And Mail
Manufacturing activity in the U.S. barely grew in July, falling to the weakest level since just after the recession ended, a private trade group said Monday.
http://jlne.ws/pckcDl
U.S. 10-year yields hit lowest since November
By Deborah Levine, MarketWatch
Treasury prices rose Monday, pushing 10-year yields to their lowest levels since November, after a weak U.S. manufacturing report was piled on top of worries about an upcoming vote to raise the federal debt ceiling and avoid a government default.
http://jlne.ws/qh0lzG
Fears rise as global output stalls
FT.com
http://jlne.ws/qhv66O
Sea Change in Map of Global Risk
BY MATTHIEU WIRZ AND MATT PHILLIPS, WSJ
The black-and-white borders of the bond market are graying. As the pristine credit rating of the U.S. remains under threat, and the debt crisis in Europe rolls on, investors, traders and policy makers are grappling with fundamental changes in the global bond markets.
http://jlne.ws/pd6Cqu
Some Bankers Never Learn
By GRETCHEN MORGENSON, NY Times
YOU’D think the mortgage bust would qualify as a teachable moment. But some people refuse to learn from mistakes — a list that apparently includes certain mortgage bankers. Their industry is fighting a new rule that might prevent a repeat of the lending binge that helped drive our economy off a cliff.
http://jlne.ws/qwEFaQ
OTC derivatives debate to cast light on swaps and futures
By Aline van Duyn, Financial Times
Nearly a year ago, BlackRock, one of the world’s biggest investment managers, sparked a fierce debate in the derivatives industry, which continues to this day. In the wake of the financial crisis, regulators, politicians and some financial market participants had come to view the privately traded, over-the-counter (OTC) derivatives markets as dangerously opaque and illiquid. To make it safer for the financial system, there was a push to introduce many of the features of the exchange-traded, regulated futures markets to OTC swaps.
http://jlne.ws/qsm85R
Lagarde warns EU to speak with one voice
By Alan Beattie, Financial Times
Christine Lagarde, managing director of the International Monetary Fund, has said European authorities must ‘stick to the script’ European authorities should stop public bickering and speak with one voice to make the second rescue package for Greece work, warned Christine Lagarde, the new managing director of the International Monetary Fund.
http://jlne.ws/qKL2Si
UBS Said to End Talks to Move to NYC’s World Trade Center
By David M. Levitt and Christine Harper, Bloomberg
UBS AG, Switzerland’s biggest lender, is no longer in negotiations to lease space at lower Manhattan’s World Trade Center, according to a person with knowledge of the situation.
http://jlne.ws/p4CDum
UBS Hires Bank of America Executive
By DEALBOOK, NY Times
UBS has recruited Mike Stewart, co-head of global equities at Bank of America, to become co-head of global securities and head of securities in the Americas.
http://jlne.ws/qD7ioQ
HSBC to Cut 25,000 Jobs
By JULIA WERDIGIER, NY Times
HSBC, the biggest European bank, plans to eliminate 25,000 jobs in the next two years as part of a wide-ranging cost reduction program.
http://jlne.ws/pvoXnZ
After months of vitriolic discord, Republican and Democratic lawmakers were expected to vote on Monday on a White House-backed deal to raise the U.S. borrowing limit and avert an unprecedented debt default. The Democratic-led Senate is expected to pass the deal, which raises the $14.3 trillion debt ceiling and cuts about $2.4 trillion from the deficit over the next decade.
http://jlne.ws/rtrbSH
For debt-ceiling deal to become law, what needs to happen by Tuesday
The Christian Science Monitor
Selling the debt-ceiling deal to a critical mass of lawmakers is a formidable political reach. Many conservatives say the deal doesn’t go far enough, while some liberals say the richest Americans should have to pay more taxes.
http://jlne.ws/pUsfL8
AAA verdict awaited on U.S. debt-limit deal
By William L. Watts, MarketWatch
Debt deal? Check. America’s AAA debt rating intact? We’ll see...
http://jlne.ws/q8bSW7
U.S. manufacturing growth slows
DANIEL WAGNER, The Globe And Mail
Manufacturing activity in the U.S. barely grew in July, falling to the weakest level since just after the recession ended, a private trade group said Monday.
http://jlne.ws/pckcDl
U.S. 10-year yields hit lowest since November
By Deborah Levine, MarketWatch
Treasury prices rose Monday, pushing 10-year yields to their lowest levels since November, after a weak U.S. manufacturing report was piled on top of worries about an upcoming vote to raise the federal debt ceiling and avoid a government default.
http://jlne.ws/qh0lzG
Fears rise as global output stalls
FT.com
http://jlne.ws/qhv66O
Sea Change in Map of Global Risk
BY MATTHIEU WIRZ AND MATT PHILLIPS, WSJ
The black-and-white borders of the bond market are graying. As the pristine credit rating of the U.S. remains under threat, and the debt crisis in Europe rolls on, investors, traders and policy makers are grappling with fundamental changes in the global bond markets.
http://jlne.ws/pd6Cqu
Some Bankers Never Learn
By GRETCHEN MORGENSON, NY Times
YOU’D think the mortgage bust would qualify as a teachable moment. But some people refuse to learn from mistakes — a list that apparently includes certain mortgage bankers. Their industry is fighting a new rule that might prevent a repeat of the lending binge that helped drive our economy off a cliff.
http://jlne.ws/qwEFaQ
OTC derivatives debate to cast light on swaps and futures
By Aline van Duyn, Financial Times
Nearly a year ago, BlackRock, one of the world’s biggest investment managers, sparked a fierce debate in the derivatives industry, which continues to this day. In the wake of the financial crisis, regulators, politicians and some financial market participants had come to view the privately traded, over-the-counter (OTC) derivatives markets as dangerously opaque and illiquid. To make it safer for the financial system, there was a push to introduce many of the features of the exchange-traded, regulated futures markets to OTC swaps.
http://jlne.ws/qsm85R
Lagarde warns EU to speak with one voice
By Alan Beattie, Financial Times
Christine Lagarde, managing director of the International Monetary Fund, has said European authorities must ‘stick to the script’ European authorities should stop public bickering and speak with one voice to make the second rescue package for Greece work, warned Christine Lagarde, the new managing director of the International Monetary Fund.
http://jlne.ws/qKL2Si
UBS Said to End Talks to Move to NYC’s World Trade Center
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UBS AG, Switzerland’s biggest lender, is no longer in negotiations to lease space at lower Manhattan’s World Trade Center, according to a person with knowledge of the situation.
http://jlne.ws/p4CDum
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By DEALBOOK, NY Times
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http://jlne.ws/qD7ioQ
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By JULIA WERDIGIER, NY Times
HSBC, the biggest European bank, plans to eliminate 25,000 jobs in the next two years as part of a wide-ranging cost reduction program.
http://jlne.ws/pvoXnZ
Top Interest Rate Headlines 08-01-11: White House Fact Sheet: Bipartisan Debt Deal: A Win for the Economy and Budget Discipline
The White House
Office of the Press SecretaryJuly 31, 2011
BIPARTISAN DEBT DEAL: A WIN FOR THE ECONOMY AND BUDGET DISCIPLINE
The debt deal announced today is a victory for bipartisan compromise, for the economy and for the American people. The agreement:
* Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
* Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
* Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
* Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
* Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.
Mechanics of the Debt Deal
* Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
* President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
* Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
* Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.
See the entire White House release on the agreement here.
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