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’The decline and inversion of Italian bonds
Breaking on Tuesday morning: Italy pays more to borrow for three years than it does for 10 years…
RTRS-ITALIAN 3.5 BLN EURO NOV 2014 BTP BOND AUCTION GROSS YIELD 7.89 PCT
RTRS-ITALIAN 3.5 BLN EURO
How much is there left to sell?
European sovereign debt, that is.
And the answer is over €500bn, according to Nomura, which has pieced together data from the IMF and national sources to come up with an updated picture of foreign exposure globally to the Eurozone.
Italian bond watch/alert
First the good news.
Italy managed to raise the targeted amount of €10bn at Friday’s short-term debt auction.
Now the bad news:
RTRS-ITALY 6-MTH BOT BILL AUCTION YIELD 6.504, UP FROM 3.535 PCT AT END-OCT.
Package holidays in the era of Expedia
Thinking of booking the next summer holiday with Thomas Cook?
Tuesday’s price action might make you think twice.
And so might the statement which triggered the slide.
Thomas Cook Group plc announces that as a result of deterioration of trading in some areas of the business in the current quarter,
The great de-leveraging
Or as Matt King at Citi put it in his latest presentation, “Payback Time: The Coming Decade of Deleveraging”. In short, we’ve borrowed much too much, and the public sector can’t substantially reduce its debt without a corresponding increase in borrowing in the private sector,
A new shareholder for Nat’s coal curiosity
So, the billionaire Bakrie Brothers have sorted one of their debt issues.
They have struck a deal to sell half of their stake in Nat Rothschild’s cash shell curiosity, Bumi Plc, to an Indonesian businessman.
Goldman’s doom-mongering eye-bleeding slide deck
On Thursday the Wall Street Journal reported on a doom-laden research note by Goldman Sachs strategist Alan Brazil sent on August 16 to hedge fund clients.
Unfortunately it didn’t share the report, but Zero Hedge has acquired a copy and it makes for interesting reading,
Morgan Stanley and that downgrade
Morgan Stanley’s 10-Q statement – that’s a quarterly report for European readers – is getting plenty of attention on Monday.
Or rather, the section on risk factors is getting a lot of attention.
Now,
Keep calm and carry on [updated]
Friday’s newspaper round-up (with a little help from Sky News and now with added Daily Mirror).
And finally the Sun…
Yell goes digital
About 10 years too late, Yell — the heavily indebted directories group — is going digital.
From Thursday’s strategic review announcement:
(Warning contains management speak.)
Following a rigorous six month strategic review,
The great wall of Chinese worry
The big holes in Chinese local government balance sheets are back — and bigger than first thought, according to Moody’s.
As widely reported this morning, the rating agency reviewed the National Audit Office’s report on local government debt and concluded that it underestimates banks’ NPL exposure.
China takes on its massive muni mess with a $463bn bailout
Did you miss this whoppingly-important story out of China?
It seems quite a few people have. Reuters reported on Tuesday that China plans to shift RMB2,000-3,000bn, or $308-463bn, of debt off local governments,
Allied Irish and a collapsing capital hierarchy
And the Allied Irish credit event query is — gone!
The question has been abruptly withdrawn. Looks like that’s going to set the stage for a bondholder case filed against the government order in question here,
Better the quality collateral you know?
Not even an S&P warning over the state of the US debt pile has been enough to take the shine off US Treasuries.
On Monday, 10-year US yields actually ended up falling (after briefly rising) following the credit rating agency’s announcement:
One step from high yield – Portugal
More on Tuesday’s downgrade of Portugal (and, to a lesser extent, Greece) from the excellent Harvinder Sian at RBS.
He reckons S&P are spot on with their decision to cut Portugal to BBB- (with the ratings outlook negative) and says there a real risk of a downgrade to junk.
US deleveraging isn’t just about defaults and charge-offs
So the New York Fed is now blogging, and its first post happens to be about one of our favourite topics, consumer deleveraging.
More specifically, the authors scrutinise the Consumer Credit Panel report in an effort to discern how much of the deleveraging since the crisis is the result of households actually paying down debt rather than defaulting on various types of loans.
Why debt investors are taking leave of their senses
Here’s an interesting view.
Is the search for yield getting in the way of all rational sense in the market?
BNY Mellon’s Simon Derrick, currency strategist, makes the point that investors are somewhat taking leave of their senses when faced with the choice of extra yield versus added risk or crisis exposure.
HMV’s debt disaster [updated]
Hopes are fading for HMV.
The embattled books and DVD retailer has issued another profits warning on Tuesday morning.
Since the publication of the Group’s Interim Management Statement (IMS) on 5 January 2011,
Magnus on a chronic under-reporting of private sector surpluses
UBS senior economic adviser George Magnus addresses the issue of Washington’s budgetary crisis on Monday.
As he points out, to some there is a major fiscal imbalance that has to be addressed, but no crisis — while to others the US is bust and nothing short of an immediate downsizing will neutralise a looming austerity crisis.
A conspicuously absent ECB
What can one read into the fact that the European Central Bank suspended its purchases of (mostly peripheral) eurozone government bonds last week?
Following Monday’s stronger-than-expected eurozone inflation figures,
Eschatology in the market
Who knows: 2011 might just be an all right year for risk assets, especially if there’s a second stimulus goin’ round.
But how about that 2012 thing, eh?
This rang a little odd in an otherwise ‘stay overweight’ equities call from Credit Suisse strategist Andrew Garthwaite and his team:
Taking the corporate hospital pass
Yell has a new chief executive. His name is Michael Pocock and in a previous life he was the boss of Polaroid* which he managed to nurse back to profitability and eventually sell.
Presumably he will
Cash-hoarding corps
You already know that US corporates have been saving their retained earnings as cash this year, while the IG-bond rally has been driven increasingly by companies taking advantage of the debt-equity arb.
Currency wars – ‘The crisis is upon us’
We’ve already commented on the rampant descent of the dollar on Thursday.
But here’s a scarily convincing argument from Marc Ostwald at Monument Securities about what all these QE-related currency war shenanigans could really be indicating.
Moody’s looks to Finland – to explain Ireland, Spain
Want to know the shape of things to come in Ireland? Spain?
Look no further than … Finland.
That particular Nordic nation experienced an almighty financial boom in the 1980s. In 1990 came the the bust — led by a slowdown in the global economy,
ICO, Spain’s public sector risk taker
Via Spanish business daily Expansion, and run through Google Translate, comes this tidbit on Spain’s exploding supranational credit agency the Instituto Credito Oficiale:
The Bank of Spain notes that the “growing lending activities of the Instituto de Credito Oficial (ICO)”