FURTHER FURTHER READING
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Which part of future Fed tightening “is now completely up in the air”?
The answer (according to Societe Generale) is in the useful table below… click to enlarge: Read more
Greg Fuzesi is quietly fuming. We get a post-holiday presser from Mario Draghi on Thursday and the JP Morgan economist really would like the ECB chief to use the opportunity to expand upon the word “extended” when offering interest rate guidance. Read more
BNP Paribas has an interesting note out on the increased use of FX swaps by central banks.
If you’re a central bank in emerging markets, struggling to keep your economy stimulated/protected from hot money flows, using swaps or FX sales is a tempting and viable alternative to interest rate hikes, they note.
And generally speaking, the BNP EM strategists argue, swaps provide for a richer toolset for most central banks. Read more
In particular, the recapitalisation plan is subject to finalisation and its implementation is subject to a number of inherent risks. Risks include a failure by bondholders to participate in the Exchange Offer, a legal challenge by affected Bank bondholders to the Exchange Offer and a failure by, or inability of, The Co-operative Group to make its proposed contribution…
Failure to implement the recapitalisation plan may result in regulatory intervention that could reduce or eliminate the value of the equity and modify, reduce or eliminate debt payment obligations.
— ‘Cautionary Statements’, The Co-operative Bank plc Interim financial report 2013
That’s the official version of the Co-op Bank warning to subordinated bondholders to swallow conversion of their debt into equity, in order to ensure its £1.5bn capital rescue. The unofficial version, from the mutual whose model was once lauded by politicians? “There is no plan B”.
Well, the bondholders are starting to think of Plan C. Read more
Live markets commentary from FT.com
More signs of eurozone recovery / SFO prosecutes Olympus / Ryanair profit warning / Shell Centre redevelopment in doubt / On FT Alphaville: how big a problem are Chinese imbalances? Read more
By Yukon Huang
That China’s growth is unbalanced is a fact. Consumption as a share of GDP has declined steadily over the past decade to 35 percent — the lowest of any major economy — while its investment share rose to above 45 percent, correspondingly the highest (Figure 1). But are these imbalances a vulnerability — as most observers believe — or a consequence of China’s economic rise and therefore not inherently problematic? Read more
First up, consider this comic flow chart from the FCA. Click to enlarge.
Yes, of the 30,169 cases of potential mis-selling of interest rates hedges to gullible British businesses, a sum total of 10 cases have so far been settled. The bill to date is £500,000, but there’ll be a few zeros added to that figure before we’re through. Read more
Resurgent nervousness about looming military action in Syria and a lack of strong economic or corporate data pushed Asian equities into the red. Japan’s Nikkei 225 was down 0.7 per cent, with the Topix down 0.4 per cent. In greater China, Hong Kong’s Hang Seng lost 0.5 per cent while Taipei’s Taiex was down 0.2 per cent. South Korea’s Kospi Composite was off 0.2 per cent and in Indonesia the Jakarta Composite was down 0.9 per cent. (Financial Times)
Today: UK and Eurozone Markit services PMI; EU GDP; US Trade balance, Beige book and vehicle sales. Read more