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’US MMFs versus the Eurozone, Part 2
In the first installment of US money market funds versus the eurozone, the funds were seen fleeing the continent as quickly as possible, leaving all sorts of funding chaos in their wake.
In part two,
Flight of the kangaroo
Back in December, we wrote about an interesting little ripple effect in the Australian bond market from the fragility of AAA ratings in the eurozone. Top-quality euro ‘supranationals’ such as the European Investment Bank or France’s CADES — the biggest foreign issuers of Australian dollar kangaroo bonds – might fall out of the market.
The great Australian bond run
We noted a while back that Australia was facing a serious problem in its bond markets. In short, the country seems to be running out of public government debt.
There isn’t anywhere near enough to satisfy demand.
Australian banks’ll be right, mate
There was a bit of a furore in Australia this month when the big banks looked like — shock, horror — they would not immediately pass on an official interest rate cut in full to their mortgage clients.
Endangered supranational kangaroos
Here’s an interesting ripple effect to consider… downgrades of AAA-rated European supranational debt, hitting the Australian bond market.
As Nomura rates analyst Martin Whetton wrote in a Friday note — there aren’t that many Australian government bonds.
Manufacturing quality collateral
Regulators are demanding that banks set aside larger amounts of high-quality liquid assets to help them withstand periods of market stress.
The securities generally deemed acceptable are AAA-government bonds.
Citi’s high carbs diet
It seems like more or less anything can be deemed an asset class these days.
Here’s the latest one from Citigroup analysts: ‘Carbs’. No that’s not McDonalds and Coca Cola, but Canada, Australia,
Asian PMIs go ‘uh-oh’
There’s something for everyone in the Chinese PMIs for October:
BEIJING, Nov. 1 (Xinhua) — China’s Purchasing Managers’ Index (PMI) dropped to 50.4 percent in October after rising for two consecutive months,
Qantas flies the unfriendly skies
The dramatic decision by Qantas to ground its fleet on Saturday has ended well, so far — for passengers, at least.
The national workplace relations tribunal, Fair Work Australia, convened over the weekend and in the early hours of Monday morning gave Qantas what it was seeking:
Steeling for more commodities volatility
Remember when Vale and BHP, two of the world’s biggest iron ore miners, changed their pricing contract methods with China and Japan?
The move from annual to quarterly contracts came amid resurging Chinese demand for iron ore,
Creative ways to avoid exposure to LNG cost blowouts
Despite the prospects of entering a golden age for natural gas, investors are looking decidedly less excited about LNG.
Australia is set to take over Qatar as the biggest exporter of LNG within the next decade or so.
Risk-weighting down under
There might be some wiggling about liquidity but the worldwide work of getting banks ready for Basel III goes on. Though there’s been an interesting development in Australia recently.
Australian banks
[Competition] An Australian CPI basket
There’s a lot of talk about the “two-speed economy” in Australia these days, and occasionally one even hears “Dutch disease” mentioned.
Retailers are suffering. Those mining salaries might be impressive,
Australian RMBS grabs Moody’s attention
Moody’s is taking another look at the way it rates Australian Residential Mortgage-Backed Securities.
We anticipate increases to Moody’s Aaa mortgage default probability and house price stress rate assumptions.
Crunching the carbon price for Aussie miners
After much wailing and gnashing of teeth name-calling and politicking Australia’s minority government on Sunday announced details of its carbon pricing scheme.
Planned for a mid-2012 start, the scheme would initially price CO2 emissions at $23 per tonne,
When cigarette makers go green
Who would have guessed. The colour smokers find most repulsive is olive green.
Well, that’s the finding of researchers working for the Australian government which on Wednesday launched a bill aimed at banning any form of branding on cigarette packs.
ABS, CDS and various other acronyms in Australia
Your daily dose of financial innovation, right here.
Flexi ABS Trust 2011-1 may be a structured finance deal you’ve never heard of, but it’s making waves amongst securitisation types in Australia. Put simply it’s the first ever Australian deal to bundle interest-free payment plans for retail goods like jewellery,
Australia, flowing sideways
Notice anything in the below chart, of five-year CDS for Spain, Japan and Australia?
European shocks have managed to feed through into normally-quiet (CDS) markets like Japan’s (though of course,
‘Is it dangerous to borrow dollars?’
Or, remembering the crisis dollar swap lines, and noting a funding currency elephant in the room for Australian and Swedish banks.
Moody’s downgrade of four Australian banks on Wednesday was serendipitous in a way.
Live and lend loose, or, mortgages down under
A data point for the Australian housing bubble debate.
Bank of America Merrill Lynch analysts have a great report questioning how Australian banks calculate mortgage approvals. It’s been picked up by Macro Business,
Why no Canadian, Australian housing busts?
Here’s a chart to ponder from the peer review of residential mortgage practices, just published by the internationally-coordinated Financial Stability Board:
Set aside Switzerland and the Netherlands.
Carry trade as canary in the coalmine
BNY Mellon’s Simon Derrick briefly mentioned the carry trade last week.
This Thursday, the currency strategist is back with more detail
Think of the trade (where investors buy low-yielding currencies to fund purchases of higher-yielding currencies/assets) as a canary in the (crisis) coalmine,
Death bonds’ unique risks
Victoria’s the Age newspaper on Wednesday published an interesting investigation into a bad life settlements investment by the Australian state’s quasi-SWF.
It alleges that it uncovered:
details of a new $500 million loss that was only entered in the corporation’s accounts at the end of last year and the mistakes that led to that loss – the lack of due diligence,
Lehman in SCDO trial down under
Bloomberg reports Wednesday on the first day of an Australian trial involving a long-running dispute with potentially interesting consequences for notions of fiduciary duty:
Wingecarribee Shire Council,
NAB gets Axa-ed, and AMP-ed, Down Under
At long last. The interminable — and fiendishly complicated — saga of the battle for Axa Asia Pacific Holdings (Axa APH) is approaching a finale. Or so it seems.
As Reuters reports on Monday:
Australian wealth manager AMP and French insurer AXA SA launched a new $13.1bn-plus bid for AXA Asia Pacific,
Xstrata’s iron-ore ambitions
A little bit of takeover tussle Down Under highlights the long-held ambitions of Anglo-Swiss miner Xstrata to add iron ore to its coal and metals-focused businesses.
Not only that, Xstrata’s hot pursuit
Rates on the rise in Asia
It’s central bank action month, or at least, central bankers are grabbing the limelight – even as government leaders and policy makers from around the world prepare to discuss ‘currency wars’ and other issues at the G20 and Apec gatherings later this month.
Mining taxes, yen rates — or, when politics matter
The uglier – and in some cases, the more ridiculous – a country’s politics become, the more serious become some of the issues.
At least, that would seem to be the lessons from Australia and also Japan,