Good morning New York,
FT ALPHAVILLE
The risk of yen reversal: The yen has gained back 2.4 per cent against the US dollar since it threatened but failed to break Y100 ahead of the most recent, and quiet, Bank of Japan meeting — the first since April 4, when QE on steroids was announced. David wonders if a yen correction might be upon us?
Gold as collateral, not a loan: Izzy explains why gold backwardation is a function of negative interest rates in money markets and not an indicator of above normal physical or bullish demand. She also argues that the gold correction was possibly connected to alternative collateralised interest-rate markets suddenly becoming available at more favourable rates.
NEWS
Apple sells the largest corporate-bond deal in history: The a $17bn offering was hungrily gobbled up by investors. Goldman Sachs and Deutsche Bank sold the debt for Apple to investors in all corners of the credit markets, from buyers overseas to municipal-bond investors to portfolio managers who typically prefer ultrasafe government debt. Pension funds, insurance companies and hedge funds also joined in the scramble. (Wall Street Journal)
Osborne warns BoE not to curb growth in pursuing stability: “George Osborne urged the Bank of England not to undermine recovery through an overzealous focus on banking stability, in an attempt to put growth at the heart of the new governor’s mandate. The chancellor told the bank’s Financial Policy Committee to give “due weight to the impact of its actions on the near-term economic recovery” when carrying out its primary job of maintaining financial stability.” (Financial Times)
The Fed is considering a stricter cap on bank leverage, targeting largest lenders. People familiar with the matter say Fed officials have discussed increasing the amount of required equity capital above the 3% of assets level agreed internationally. The move comes amid growing concern that risk-weighting of assets will undermine Basel III goals. (Financial Times)
End of mining boom hits equipment makers: The pullback in mining investment is severely reducing demand for equipment including trucks, shovels and underground machinery, putting pressure on companies such as Caterpillar, Joy Global, Atlas Copco and Sandvik. (Financial Times)
China’s manufacturing growth slows further: China’s official PMI fell to 50.6 in April from 50.9 in March. The slowdown in manufacturing growth appeared to be driven mostly by a slump in new export orders, which fell into contraction territory with a reading of 48.6 in April, compared to 50.9 in March. (Financial Times)
ENRC listing faced 11th-hour hitch: “The controversial London flotation of Eurasian Natural Resources Corporation in 2007 faced an 11th hour hurdle after lawyers and auditors found evidence that financial records at the Kazakhstan-based miner had been falsified or destroyed, according to people familiar with the matter.” (Financial Times)
Markets: Lingering concerns about a struggling global economy were nudging stocks down from cyclical highs and leaving commodities on the back foot. But trading was thin as the May Day holiday closed many financial centres and some investors seemed reluctant to place bold bets ahead of policy decisions from the US Federal Reserve and the European Central Bank. Gold was down $3 to $1,473 an ounce and US 10-year Treasury yields were barely changed at 1.67 per cent. The FTSE All-World equity index was compromised by a slew of constituents not trading, but those that are pushed the barometer down 0.1 per cent. At the start of the week the All-World hit its best level since June 2008.
