Posts from Thursday Jun 20 2013

The Closer

FURTHER FURTHER READING

- How the price of oil and gasoline could crash.

- RIP, American Dream?

- Gavyn Davies and John Authers on Ben Bernanke.  Read more

Bernanke and markets, crazed and confused

Before the presser on Wednesday, Ben Bernanke’s vague definition of “substantial improvement” in the outlook for labour markets resembled the old line about porn: he’ll know it when he sees it.

The phrase was originally intended to represent the scenario under which asset purchases would end, not when they would be slowed (or “tapered”). And the purpose of this round of quantitative easing was to “increase the near-term momentum” of the economy until growth was self-sustaining, and conducted in the context of price stability. Read more

Chinese monetary policy, with Maoist characteristics

We looked earlier on Thursday at whether the PBoC and other Chinese authorities have engineered the recent squeeze in China’s interbank markets (answer: yes) and why they might be choosing this moment to do so (answer: somewhat more complicated).

Chinese interbank rates according to Shibor are incredibly high — and yet, apart from the report of a special ‘targeted liquidity operation’ for the benefit of one, unnamed bank, the central bank appears to be resisting pleas to ease up on liquidity provision.

So, what gives? Read more

EMageddon: the Socratic dialogue

The level of debate for a lot of money in emerging markets on Thursday must have been whether or not to hide under the desk with a bottle of bourbon. So, kudos to Olgay Buyukkayali and Tony Volpon, top EM strategists at Nomura, for standing back and raising the tone a little…

The bank’s published a debate between the two about the sell-off. Tony’s vaguely bearish and Olgay’s vaguely bullish. But that doesn’t do justice to what’s quite a nuanced debate on EM: Read more

An unwind in the great Chinese over-invoicing carry-trade?

The popular explanation for the rise in Chinese repo rates is being linked to the government’s desire to rein in the shadow banking sector. That is to say the tightness is intentional.

But what if it isn’t. What if it has more to do with the unwind of yet another carry trade? Read more

Tin hat time, illustrated

Time for a rush into Gold? Nope. Read more

Quick, sell now George! (Updated)

 Read more

Moneybrokerese

A new word to you? Yes, well, we were searching for a suitable adjective to describe this:

20 June 2013
Tullett Prebon plc

Statement in relation to court proceedings

 Read more

Is it policy? China edition

This is really worth watching. China’s money markets have spiked again after the central bank rebuffed pleas to inject more cash in to the financial system on Thursday, according to the FT.

We have the 7-day repo rate jumping 270 basis points to 10.8 per cent, nearly triple where it stood just two weeks ago and overnight money markets hitting silly levels:

 Read more

Markets Live: Thursday, 20th June, 2013

Live markets commentary from FT.com 

The (early) Lunch Wrap

Bernanke sees 2014 end for QE3 || Chinese manufacturing activity slumped further in June || Chinese interbank rates spiked again, to their highest level since 2006 || Eurozone PMI improvemet || Rupee hits all-time low after Bernanke comments || UK bank capital hole || The UK government will launch an “urgent investigation” into creating a bad bank from RBS’s toxic assets || The Treasury is also “actively considering options” for how to begin selling its Lloyds shares || Sony will study Third Point’s proposal || Microsoft recently came close to buying Nokia’s handset business || The UK’s Financial Conduct Authority has begun to vet senior appointments to hedge funds || Markets wrap || FTAV’s latest Read more

Japan’s open goal

Whatever the final results of Abenomics, at least it has refocussed attention on a longstanding problem in Japan: the tremendous difference in labour force participation between men and women.

It’s an especially significant problem for Japan because of the country’s ongoing population decline. Read more

Further reading

Elsewhere on Thursday,

- China’s liquidity squeeze creates enormous global risks.

- Why India trails China.

- A governor looks back — and forward. Read more

Some UK bank shortfalls

Click to enlarge for the Prudential Regulation Authority’s table on UK bank capital shortfalls…

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The London 6am Cut

Ben Bernanke said that QE could end completely by mid-2014, and that it would be “appropriate to moderate the monthly pace of purchases later this year” on current economic trends. Ten-year Treasury yields hit their highest level since March 2012 after the Fed chairman’s press conference on Wednesday, rising to 2.36 per cent (Wall Street Journal, Reuters).

Bernanke: “when asset purchases ultimately come to an end, the unemployment rate would likely be in the vicinity of 7 per cent, with solid economic growth supporting further job gains” (Financial Times). Read more