Posts from Monday Jul 23 2012

The Closer

ROUND UP

Spanish funding fears depressed US stocks. Spain’s two-year bond yields rose by the most in one day since the beginning of the eurozone crisis (Financial Times). The Dow Jones Industrial Average recovered from a 239 point plunge at markets’ open, but still closed down 101 points at 12721.46 (Wall Street Journal). Read more

It’s Monday, it’s Moody’s, it’s negative on eurozone AAAs

Finland is a rare stable Aaa-rated credit in the eurozone, according to the ratings agency, which placed Germany, the Netherlands and Luxembourg on a negative outlook.

Possible contingent liabilities from rescuing Spain and/or Italy loomed large. Read more

Cnooc-Nexen, and a Brent outing

China buys two North Sea oil fields on the same day. Coincidence — or a sign of change coming to the oil market’s biggest benchmark?

In addition to Sinopec’s $1.5bn acquisition of a stake in Talisman… Cnooc’s $15bn play for Canada’s Nexen (at a 61 per cent premium to the share price!) might give the state offshore oil company a major bridgehead into the setting of the Brent crude price. Read more

Spain and Italy take gold for flailing, banning short-selling

From Reuters on Spain:

23-Jul-2012 13:34 – SPAIN’S MARKET REGULATOR SAYS BAN TO LAST 3 MONTHS, STARTING TODAY Read more

Two Chinese infrastructure problems

It’s not just excessive investment, particularly the fixed-asset sort, that’s a problem in China. It’s the wrong kind of investment that is the issue — projects that are simply uneconomic.

Exhibit 1: a somewhat ambitious airport-building programme, which is vexxing Gordon ChangRead more

A quick maturities reminder, featuring Spain and Italy

With Spain holding €44bn in reserves as of April and its borrowing costs soaring we thought a quick look at what it has coming down the tracks might be fun:


(In the interest of chart clarity we ignored any relatively tiddly, below €1bn, interest only payments. The above chart, and the one below, are sourced from Bloomberg.) Read more

Credibility

April:

 Read more

Not wanting to be left out, Spain’s CDS widen

Credit default swaps also want in on the “Spain’s [insert financial instrument] reach record highs” headlines. And they got their way on Monday morning:

 Read more

Markets Live transcript 23 Jul 2012

Live markets commentary from FT.com 

The (early) Lunch Wrap

Good morning New York…

FT ALPHAVILLE Read more

The cost of zero rates, broker edition

The FT’s Greg Meyer had a great piece out last week about the negative impact micro yields are having on the broker sector.

For a long time, the broker-dealer model has depended on the ability to reinvest customer funds to earn additional revenue. But in a zero-yield world that source of revenue is becoming constricted. Read more

Some Monday morning yield curves

That’s Germany at the bottom, Italy in the middle and Spain going basically flat from 3-year out (click to enlarge):

Spanish yields spiralling upwards

That’s Spanish 10-year bond yields hitting a new euro-era high of 7.434 per cent at pixel time according to Bloomberg data. Even more worryingly, Spanish short term borrowing costs continued to kick-up, with the 2-year composite yield touching 6.2 per cent as just about every tenor climbed. Read more

Further reading

Elsewhere on Monday,

- The ECB wields a LOT of power in Europe. Read more

The 6am Cut London

Fed FOMC voting member John Williams says that unless “further action” is taken, there would be a lack of progress in boosting the jobs market, and talked of the benefits of buying MBS rather than Treasuries, and of an ‘open-ended” QE programme that would reduce speculation around the exit.  But he declined to call directly for a Fed move. Williams, chairman of the Federal Reserve Bank of San Francisco, is regarded as close to the centre of gravity on the rate-setting FOMC (Financial Times).

UK stock market intermediation should be trimmed, a government-sponsored review into equities published today will say. The year-long review by economist and FT columnist John Kay says the complex chain – including fund managers, companies, pension trustees, investment consultants and independent financial advisers – increases costs and undermines efficiency. (Financial TimesRead more

Weekend news catch-up

Weekend headlines from the FT and other UK media:*

From The FTRead more