What you don’t hear very often (and we are as guilty of this as anyone) is that the Fed data of “corporate securities held by primary dealers” is tainted with some assets that don’t look very much like corporate bonds. Those would be private-label residential mortgage-backed securities (RMBS), commercial MBS (CMBS) and commercial paper (CP).
The Fed, perhaps in an effort to better examine the inventory issue, began breaking out the data by security type in the spring of this year. Read more
Germany’s technically uncovered 10-year bund auction has stirred much debate.
To us, the mystery is the inconsistency. How do you reconcile low auction demand, with supposedly high demand for haven assets like bunds and the low or “special” repo rates in the German bond collateral market. Read more
Many might not be aware, but the Fed introduced a quarterly survey “on changes in credit terms and conditions for securities financing and over-the-counter derivatives transactions” over a year ago.
The point was to shed light on the mysterious practices of the shadow banking sector and in particular the daily goings on in the repo finanicng markets. Read more
The art market is riding high, thanks to a surge of new collectors across Europe and Asia who feel confident about the value of everything from Ming vases to Mark Rothko paintings, the WSJ reports. Christie’s International, the auctioneers, said it sold $3.2bn worth of fine and decorative art in the first half of the year, up by a quarter from a year earlier. The total included $2.7m in auction sales and $467.3m in privately brokered art sales, says the paper. Private art sales were up 70.5 per cent compared to the first half of 2010. Rival Sotheby’s, meanwhile, said it auctioned off $2.9bn worth of art during the same period, up a third from a year ago. It will release its consolidated sale totals in August.
The Wall Street Journal reports that two months after the March 11 earthquake rocked Japan, the ripple effects are starting to hit US car dealers like AutoNation. Dealers had begun the year expecting a surge in auto sales. But due to the quake’s effect on Japanese auto makers, many dealers are now in bind: They’re running short of Japanese-brand cars as demand is rising. “We are in a completely different environment than at the beginning of the year, and we have to pivot on a dime,” AutoNation Chief Executive Michael J. Jackson said at a meeting last week according to the Journal. Other auto dealers are also coming to grips with the same reality. Houston-based Group 1 Automotive Inc. is getting less than half the Toyota and Honda vehicles it wanted for May, Chief Executive Earl Hesterberg said in an interview. Models from Toyota, Honda and Nissan Motor Co. make up about 60 per cent of Group 1′s new-vehicle sales.