November, 2010
Ireland downgraded by S&P
And this time, we seriously doubt that the National Treasury Management Agency will complain about S&P’s unfair estimates.
Earlier on Tuesday, RTÉ had reported the €85bn size of the facility offered by the EU and IMF to the Irish government,
Further further reading
For the commute home,
- Mutual fund firm Janus Capital is the first publicly traded company to admit receiving a request from the SEC as part of the ongoing insider trading probe.
- SAC Capital,
The (mostly) unrevealing FOMC minutes
The FOMC minutes contained little that was new or shocking, mostly confirming what was already known.
The committee reduced its forecasts for growth and inflation in the next three years, and increased its forecast for unemployment.
FOMC minutes
The FOMC has released the minutes of its meeting from November 2-3, including revisions to the committee’s forecasts for growth, unemployment, and inflation in the next three years.
We’ll have analysis later,
Convergence at the FOMC
Just a bit of idle musing ahead of today’s release of the latest FOMC minutes. If we had to summarise the recent evolution of thinking on the FOMC, we would note three trends:
1) Qualified support for the latest round of QE2 even from some FOMC members who are skeptical that monetary policy can further boost the economy at this point.
The Iberian connection(s)
Notes from the search for exposure to Spanish bonds, this.
Timely, as 10-year issues are trading at a record spread (233bps at pixel time) to bunds, according to Bloomberg data.
Here’s an interesting chart from an investor presentation found while we were rooting around on the Spanish Treasury’s website:
A bono-fide attack
There have been some frank denials of possible European contagion effects from the Irish fallout this week.
Among those suggesting as much have been (via Reuters):
RTRS – UNICREDIT CEO RULES OUT CONTAGION EFFECT FROM IRELAND ON ITALY
RTRS – BANK OF SPAIN’S ORDONEX SAYS EXPECTS MARKETS TO EVENTUALLY CALM AFTER IRELAND RESCUE PACKAGE
ECB’S GONZALEZ-PARAMO:
Euro wobble [updated]
Chart via Reuters:
Not our words. See screenshot:
Of course, El-Erian isn’t saying anything the market doesn’t already know. However, he’s had the gumption to say it.
Update: Some good comments from Stephen Gallo of Schneider FX:
Chinese bond gyrations
This is the benchmark Chinese seven-day repo market rate (chart via Reuters):
As can be seen, it’s on the rise again.
As Reuters noted on Tuesday the jump to near 2.2 per cent is, if anything,
Patrick Honohan is an honest guy, redux
Or, honest Irish central bank governor vs. dishonest Irish banks.
Bank of Ireland and Allied Irish Banks shares plummeted on Tuesday:
And we wonder if a speech by Governor Honohan helped cause this.
Markets Live transcript 23 Nov 2010
Markets Live chat transcript for the chat ending at 12:19 on 23 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHand welcome to Markets Live
Spanish contagion heads for the bonds [updated]
Nope. Not good.
Just a day after Ireland’s up-to-€90bn bailout, Spain went to the market to sell €4 to €5bn worth of three- and six-month debt. The results of that auction are out.
From a broker:
Around the eurozone in distorted CDS curves
They’ve gone all weirdly hump-shaped.
The below CDS curve charts are all from Markit, and the black and brown ones are the most recent, and the light grey is from three months ago — except for Greece.
Unpredictable (Korean) geopolitical risk, illustrated
Abrupt fighting over in Korea is not what the market would have wanted right now:
Related link:
North Korea fires on South Korea – live coverage - The Guardian
Further reading
Elsewhere on Tuesday,
- The big — securitisation — fail.
- “Banks have to come over arrogantly and unrepentantly in many ways.”
- On (not) shrinking Wall Street.
- An extremely-organised French bank run.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: How Germany could come to kill the euro
“Tell me how this ends,” was the question posed by General David Petraeus about the Iraq war.
Snap news
Breaking pre-market news on Tuesday,
- Nationwide says provision to remain at current levels until economic recovery begins; reports half year results — statement.
- German regulator says Sky Deutschland’s financial statements in 2007 were flawed — report.
Further further reading
For the commute home,
- FBI raids three hedge funds as part of its insider trading case.
- Irish PM Brian Cowen will seek to dissolve the Dáil and have an election in the New Year after the current budgetary process is complete.
Coming clean about the European bailouts
At first sight, this Credit Suisse chart appears to be comparing apples with oranges, or just pointing out an odd coincidence of numbers (click to enlarge):
(Note that the EFSF couldn’t really spit out the total €440bn if asked despite some suspect advertising — more like €250bn;
Newfound choppiness in CRE
Commercial real estate prices in the US were defined by their choppiness in the first half of the year — but from June to August, those unpredictable monthly swings gave way to a simple downward trend.
Anglo-Irish carry trade ahoy
Presenting a modest proposal of sorts.
It’s been more or less confirmed on Monday that the UK and Sweden will indeed extend bilateral loans to Ireland as part of its international bailout.
But while Sweden’s finance minster has estimated a rate of around 3 per cent for his country’s up to €1.1bn contribution,
A Chinese diesel crunch
If you were wondering why distillate spreads improved over the last month in Europe, apparently there has been a unique demand situation heading over from Asia — prominently China — as well as Latin America.
Irish bailout *fail*
RTRS-IRISH FIVE-YEAR CREDIT DEFAULT SWAPS AT 530 BPS, 25 BPS WIDER ON DAY
And here’s a chart of that CDS movement, via Markit:
PORTUGUESE FIVE-YEAR CREDIT DEFAULT SWAPS AT 460 BPS, 39 BPS WIDER ON DAY – MARKIT
SPANISH FIVE-YEAR CREDIT DEFAULT SWAPS AT 281 BPS,
Spain shakes, rattles and rolls
There’s some contagion control going on in Brussels on Monday following the weekend’s epic Irish bailout.
As Reuters reports:
“There are no analogies to be made. The Irish case is very specific. In the case of Portugal,
That mysterious missing mortgage note
Whoops. Securitisation snafu straight ahead.
The New York Times picked up on small court case — with big implications — over the weekend. According to testimony by a Bank of America executive, and presented as part of a New Jersey bankruptcy judge’s opinion,
When multilateral monetary policy is not an option…
One of the reasons why Beijing has tended to stockpile US Treasuries is connected to the need to absorb surpluses generated via the US trade deficit with China.
China’s dollar peg largely depends on the process.
Markets Live transcript 22 Nov 2010
Markets Live chat transcript for the chat ending at 12:27 on 22 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHMorning Rabble NHI trust you had a good weekend