RSS feedWhy China’s RMB exodus IS the story
There is a huge developing story in China’s currency, the renminbi.
After years of structural under-valuation, things are changing.
China faces what we have described before as a “dollar shortage”
Markets Live transcript 16 May 2012
Markets Live chat transcript for the chat ending at 11:02 on 16 May 2012. Participants in this chat were: Paul Murphy neil collins Bryce Elder/FT
PMMorning
PMEarly warning
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
The eurzone is having a really bad Wednesday: Yields are spiking and equities are tumbling: the charts are here.
Do not trust the FRA-OIS spread! Izzy took a look at the FRA-OIS spread and wondered why it is so weirdly stable given that Grexit fears are hitting new extremes.
Tis an ugly morning in euroland
The Greek fall-out continues with Spanish 10-year yields hitting 6.5 per cent, their highest level in almost six months:
Italian 10-year paper breaching 6 per cent for the first time since late January:
Plug-pulling in Athens
First, a detail from the FT’s take on Greece’s political turmoil:
Several Athens bankers voiced concern on Tuesday over a sustained outflow of deposits of more than €5bn since May 6, reflecting increased political uncertainty.
The (hot) pasty tax strikes!
From Greggs’ trading update comes a warning that the government’s plans to add VAT tax to takeaway foods “could have a material impact on our sales and profits”, depending on the outcome of industry consultations.
Further reading
Elsewhere on Wednesday,
- The Whale’s harpooner?
- China’s real estate unravelling.
- Goldman’s legal slip-up.
- Romney gets some advice on how to act human.
- The history of the filibuster,
The 6am Cut London
Asian shares extended losses on Wednesday after Greece failed to form a coalition government, says the FT. The MSCI Asia Pacific index shed 0.7 per cent with Japan’s Nikkei 225 Stock Exchange off 0.5 per cent,
The Closer
ROUND-UP
Greece is heading for a fresh general election “after its political parties failed to form a national unity government because of opposition from the anti-bailout Syriza coalition. President Karolos Papoulias,
Goldman’s repo “optimizer”
An interesting passage from a recent CreditSights note on Goldman, following a meeting with the bank’s CFO, David Viniar (emphasis ours):
Lastly, Goldman explained that a further defense against a stressed funding situation driven by problems rolling over the repo book was what it referred to as its “secured funding excess.”
US Markets Live — now landing on Wednesdays
By popular demand… we’re moving US Markets Live to Wednesday from Friday from now on. This has pleased the rally monkey no end (and for obvious reasons he’s been a little down lately):
Same time,
Falling daily trading volumes: not so mysterious?
Kid Dynamite made a good point in the comments of our post on Monday about falling daily US trading volumes: they could just be a correction to the churning frenzy that took place during the crisis, not necessarily a signal that volumes are destined to keep falling perpetually.
The foreign-law distinction, encore
Holding foreign-law bonds in preference to domestic-law in peripheral eurozone sovereigns: such a cliché now, they built the Greek PSI around it.
It also made it possible (though it alone did not make it probable) for holdouts in the €435m May 2012 floating-rate note to get paid out in full on Wednesday.
Greece: when the lights go out
The desperate cunning scheme to get Greeks to pay property taxes by bundling them with electricity bills didn’t last long. You guessed it, people stopped paying their electricity bills and now it looks like the power company – which had to be bailed out last month – has stopped even trying to collect the levy.
Credit event of the year…(drumroll)
What would you think if this headline graced your inbox?
Managers triumph at credit event of the year
FT Alphaville immediately thought, wait a second, there’s an award for the best credit event? Like they are going to pick what the best default among corporates and sovereigns (that have CDS written on them) was? That’s kinda sick,
Do not trust the FRA-OIS spread!
An excellent point from Don Smith at ICAP on Tuesday.
If you’ve looked at the eurozone FRA-OIS spread recently and wondered why it is so weirdly stable given that Grexit fears are hitting new extremes,
Greek coalition talks fail and everybody hits the deck
Right… we *thought* everyone was pretty resigned to the attempted Greek coalition talks breaking down and elections being held again in June.
But then these few flashes hit the wires…
Greek politicians fail to agree government,
Your handy one-table guide to the cost of Grexit
Courtesy of Eric Dor, Director of research at the IESEG School of Management, Université Catholique de Lille:
As for the banks:
Assuming that the new national currency would depreciate by 50% against the euro,
EM correlations, charted
Presenting… the Bermuda Triangle of emerging markets FX!
Sort of. And one for emerging markets credit!
Those are a couple of fun charts from Goldman Sachs analysts on Tuesday, confirming what’s largely accepted - EMs are high-beta bets which are currently in RoRo mode – although Goldman also point out a few interesting little things via lots of lovely charts.
The state of the eurozone, credit edition
Have you been wondering how Greece’s “new” bonds are doing? As in, the ones that were given to all those debtholders when they finally agreed — or were voted into by collective action clauses — the restructuring in March.
An LNG headache, caused by an unconventional gas headache
Australia, we’ve heard a lot lately, is set to overtake Qatar as the world’s biggest LNG producer by about 2020. The first shipment from the big Western Australian Pluto development set sail last month and things looked somewhat rosy for Woodside Petroleum,
Markets Live transcript 15 May 2012
Markets Live chat transcript for the chat ending at 11:11 on 15 May 2012. Participants in this chat were: Paul Murphy Bryce Elder/FT PMHi PMWelcome PMto ML
The (early) Lunch Wrap
Good morning, New York…
FT ALPHAVILLE
Greece will not default today. An official stated that a €430m euro bond maturing on Tuesday will be paid on time (it had a 30-day grace period). The bond wasn’t part of the debt swap in March.
Greece to pay: no default today
From Reuters:
Greece will pay holders of a 430 million euro bond that matures on May 15, a government official said on Tuesday.
“The bond will be paid,” the official, who did not want to be named, told Reuters.
A German GDP beat on a divergent morning [updated]
The German economy grew five times faster than expected in the first quarter of the year, jumping 0.5 per cent. Admittedly expectations were for only 0.1 per cent growth but still, tis cheering news on a wet London morning – particularly considering the 0.2 per cent hit German GDP took in the last quarter of 2011.
Further reading
Elsewhere on Tuesday,
- Is the ‘wall of worry’ really in bonds?
- You know it’s end times when…
- Limit US banks to state borders. Done!
- Jim Rogers is selling his euros.
- European black cygnets are growing.
The 6am Cut London
Asian markets on Tuesday continued to suffer from fears about the eurozone, reports Bloomberg. Spanish and Italian 10-year borrowing costs shot up to their highest levels this year and European stock markets suffered their biggest one-day drop in three weeks.
The Closer
ROUND-UP
The 10-year Bund yield fell to a record low (Wall Street Journal) and the S&P 500 hit its lowest level since February, closing down 1.11 per cent at 1,338.35 (Reuters).
Ina Drew retired as chief of JPMorgan’s Chief Investment Office,
‘Your differences are small compared to the size of your debt to your country’
That’s our (no doubt dodgy it was: fixed) paraphrasing of President Karolos Papoulias of Greece, during Sunday’s talks with the leaders of the New Democrats, PASOK, and Syriza.
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