ROUND-UP
Equity markets fell pretty much everywhere today, though Spain in particular stood out as the IBEX decline 2.4 per cent and now close to its crisis era lows. There was a strong auction of Spanish sovereign debt earlier in the day, but it was followed a series of disappointing US economic indicators, including another jump in initial unemployment claims. (Financial Times) Read more
There seems to be something of a love-in going on between China and the IMF, though admittedly you have to wade through a weighty report to glimpse it.
Last weekend, finally, after years international pressure, China’s central bank said it was widening the renminbi’s daily trading band with the US dollar. Read more
Yep, nearly time to start talking about the next FOMC meeting, a two-day affair that begins this Tuesday.
Any big decisions regarding further quantitative easing are more likely to be taken later, closer to when Operation Twist is scheduled to end in mid-June. (Expect to see more stories using the “wait-and-see mode” formulation.) But on the schedule is the second iteration of the individual participants’ federal funds rate projections, and that could be interesting. Read more
Hedge funds are not happy.
Don’t everyone run to their defence at once now. Read more
Two heat maps from HSBC. The first is a typical correlation matrix across a range of assets in the world before Lehman collapsed. The second is post-Lehman. Red indicates strong positive correlation and blue indicates strong negative correlation. Greens and yellows appear when correlations are close to zero. Click each map to enlarge.
A “tempest in a teapot”. That’s how JP Morgan CEO Jamie Dimon described the fuss caused by the bank’s Chief Investment Office apparently entering into large credit trades. It may well be teapot-sized, for him. The point for some hedge funds is that even if it was a swimming pool, you’d feel a bit cramped if Shamu joined you for your morning laps.
Which is to say that, for those actually trading credit indices, the thing that is such a big deal is whether the trading behaviour of JP Morgan’s CIO distorted the market. Less of a big deal is whether JP Morgan is going to land itself in trouble if the trades aren’t actually hedges but proprietary bets, hence go against the Volcker Rule. Read more
As well as warning that eastern Europe has the most exposure to a eurozone credit freeze, the IMF has given us a handy, visual guide to eurozone contagion (click to enlarge):
Live markets commentary from FT.com
Good morning, New York…
FT ALPHAVILLE Read more
From Reuters:
09:39 RTRS – SPAIN SELLS 1116 MLN EUROS IN 2014 BONDS Read more
By Matt Steinglass, the FT’s Netherlands correspondent
The last thing Eelco Blok, chief executive of KPN, needed this week was an unforced error. Read more
A $2.6tn European bank deleveraging could jeopardise financial stability, says the IMF. The fund warned that banks’ plans to shrink their assets by almost 7% over the next 18 months could hit economic growth, reports the FT. The fund has so far raised $320bn in extra ‘firepower’ funding after Poland and Switzerland made commitments on Wednesday, reports Reuters.
Asian stock markets fell ahead of debt auctions from Spain and France, says Bloomberg. Read more
Asian shares fell and South Korea’s won dropped before Spain and France sell 13.5bn in debt. The yen weakened for a third day as Bank of Japan Governor Masaaki Shirakawa pledged to continue monetary easing, says Bloomberg. The MSCI Asia Pacific Index (MXAP) slipped 0.3 % as of 1:17 p.m. in Tokyo, led by declines in Japanese equities.
Asian markets Read more
