China’s GDP growth fell to 7.6% in Q2, its slowest rate since early 2009. The number was in line with analysts’ expectations, however loan data for June was better than expected. (Financial Times) Further complicating the picture was an increase in fixed-asset investment growth, while electricity output growth fell sharply. (Bloomberg)
Asian shares rose on the Chinese loan data, breaking a six-day losing streak. Hong Kong’s Hang Seng index and China’s Shanghai Composite index each advanced 0.6%. (Financial Times)
Moody’s cut Italy’s government bond rating by two steps to Baa2 from A3 and said further downgrading is possible, pointing to higher funding costs, slower growth, and contagion risk from Greece and Spain. (FT Alphaville, Bloomberg)
Co-op nears cut-price Lloyds deal: However Lloyds would be in line for additional payments from the mutual over a period of years if the business performed well, according to people close to the process. (Financial Times)
Tim Geithner made recommendations on Libor reform to the BoE in 2008, documents show. Geithner was head of the NY Fed at the time, made six recommendations to remove incentives to manipulate that rate and establish a “credible reporting procedure”. It’s not clear what effect the recommendations had, if any, or whether he took other actions. (Washington Post)
Singapore’s GDP unexpectedly contracted in Q2 as manufacturing fell. The annualised rate was -1.1% compared to the March quarter, whereas the median estimate of a Bloomberg News survey was for 0.6% growth. (Bloomberg)
“Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22bn in combined regulatory penalties and damages to investors and counterparties, according to Morgan Stanley estimates.” (Financial Times)
“HSBC Holdings Plc’s North American head Irene Dorner and global legal chief Stuart Levey are expected to answer Senate investigators’ questions about the firm’s failure to protect against money laundering, according to two people familiar with the matter.” (Bloomberg)
Booz Allen Hamilton, majority-owned by Carlyle, plans to raise up to $2.25bn in debt to refinance existing borrowings and fund a $1bn special shareholder dividend. (Financial Times)
COMMENT AND CURIOS
- Gillian Tett: Corporate treasurers still holding onto cash. (Financial Times)
- Remains of former social media star Digg sold for $500k. (Wall Street Journal)
- A Spanish bank CDS problem. (Financial Times)
- PFGBest founder’s Romanian property empire. (Reuters)
- Vuvuzelas are off to the Olympics. (Bloomberg)
- Honeywell CEO says business needs to speak out on the fiscal cliff. (Financial Times)
OVERNIGHT MARKETS: UP
Asian markets
Nikkei 225 up +32.76 (+0.38%) at 8,753
Topix down -0.41 (-0.05%) at 747.08
Hang Seng up +86.15 (+0.45%) at 19,111
US markets
S&P 500 down -6.69 (-0.50%) at 1,335
DJIA down -31.26 (-0.25%) at 12,573
European markets
Eurofirst 300 down -10.30 (-0.99%) at 1,029
FTSE100 down -56.23 (-0.99%) at 5,608
CAC 40 down -22.07 (-0.70%) at 3,135
Dax down -34.50 (-0.53%) at 6,419
Currencies
€/$ 1.22 (1.22)
$/¥ 79.32 (79.28)
£/$ 1.54 (1.54)
Commodities ($)
Brent Crude (ICE) down -0.26 at 100.81
Light Crude (Nymex) down -0.17 at 85.91
100 Oz Gold (Comex) up +4.20 at 1,569
Copper (Comex) unchanged 0.00 at 341.15
10-year government bond yields (%)
US 1.48
UK 1.53
Germany 1.25
CDS (closing levels)
Markit iTraxx SovX Western Europe -1.89bps at 273.72bp
Markit iTraxx Europe +1.32bps at 168.31bp
Markit iTraxx Xover +8.54bps at 665.99bp
Markit CDX IG +1.68bps at 113.17bp
Sources: FT, Bloomberg, Markit