This week on FT Alphaville,
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Provocative from Moody’s Analytics:
In a seldom before seen manner, the US high-yield bond spread has been moving with the weighted average government bond yield of Italy and Spain. Though prohibited by current guidelines, Fed purchases of Italian and Spanish government bonds probably would do more to boost the US economy than additional purchases of US Treasury bonds. Read more
In addition to blessedly avoiding the inane “Let’s Twist Again” title of many a recent analyst note…
The rates gang at RBC warned before this week’s FOMC meeting that it would be more complicated this time round for the Fed to continue selling short-term Treasuries and buying long-term ones under Operation Twist. Read more
It’s all political at this point.
The goal going forward is to bring Europe into a state of sustainability. Only politicians can do that. So writes Nomura analyst Jens Nordvig. Read more
Perhaps you have heard: FT Alphaville hosted its first ever pub quiz on Thursday. A huge thank you to everyone who took part or dropped by to say hello.
Zero Hedge would perhaps be pleased to know that the Bonnie Tyler Durdens won the day, having narrowly beating Lionel’s Barbershop Quartet to the podium. Read more
Here’s an innovative way of looking at the Eurozone crisis. Not so much the periphery states being reckless, but some states taking advantage of what should have always been seen as a collective pool of wealth.
We’re talking a tragedy of the commons. Read more
As flagged earlier – the European Central Bank’s latest loosening of collateral criteria:
It’s an understatement to say that the last couple of years haven’t been great for Greco-Germanic relations.
On Friday night, however, the eurozone’s strongest and weakest nation get to fight it out – on the football pitch. They are through to the quarter-finals of the Euro2012 championships. With everything that’s happened, it’s hard to ignore the political overtones to the match. Read more
Isn’t it annoying when particular clients insist on being treated differently to everyone else? Like, just because your client is well, England, or Italy, or some other sovereign nation, doesn’t make them ‘special’. It’s also kind of annoying when they make regulations that make business tougher for banks and then still expect to be treated differently.
Interestingly though, the Bank of England just stopped asking for one such special exception when it comes to certain derivatives that it enters into on behalf of the nation in order to best manage its balance sheet and the Treasury’s foreign exchange reserves. Read more
Live markets commentary from FT.com
Moody’s cut 15 global banks’ credit ratings, although Morgan Stanley avoided a feared three-notch downgrade. Credit Suisse was the only bank to be downgraded by three notches, the FT reports. Morgan Stanley had lobbied furiously to avoid a full three-notch cut in the rating agency’s first large downgrade of banks since 2007, says the WSJ. Barclays was cut two notches and HSBC and RBS one notch each. Moody’s also cut Lloyds Banking Group by one notch. Citigroup attacked Moody’s “disproportionately adverse treatment of U.S. firms relative to banks in Europe,” Reuters reports.
US markets fell heavily into Thursday’s close, with the S&P 500 closing down 2.2 per cent on signs of a manufacturing slowdown. Energy stocks bore the brunt; US crude closed below $80 a barrel, says Reuters. Read more