ROUND-UP
FT markets round-up: “The euro fell sharply and European government bond prices rose as market participants digested the implications of the European Central Bank’s latest policy decision and subsequent comments by president Mario Draghi. The euro fell more than a cent against the dollar, taking it back below $1.31. The possibility of further ECB rate cuts pushed the yield on the German 10-year government bond to within a whisker of last July’s record low and drove the country’s two-year yield into negative territory. The Bund yield settled 5bp lower at 1.16 per cent and that on the Schatz fell the same amount to minus 0.03 per cent. Ten-year French and Belgian yields touched record lows. The 10-year US Treasury yield, meanwhile, was flat at 1.63 per cent as the market focused on Friday’s non-farm payrolls report.” (Financial Times)
ECB ‘ready’ for more action after rate cut: “The European Central Bank cut its main interest rate on Thursday, but opposition from a German official in the bank’s inner sanctum highlighted the constraints to further action. Facing diminished prospects for an economic recovery in the recession-bound bloc, the ECB cut its main refinancing rate by a quarter percentage point to 0.50 per cent and Mario Draghi, ECB president, said the bank remained “ready to act if needed”.” (Financial Times)
Private equity companies struggle to raise capital: “The 50 largest private equity groups raised less capital over the past five years as the industry struggled to attract and retain investors, according to a study of the 300 biggest companies. The top 50 managers raised $586bn in the five-year period starting 2008, according to the study by Private Equity International, a fall of 17 per cent compared with the five years starting 2007.” (Financial Times)
China guides renminbi to fresh high against the US dollar: “The Chinese renminbi marched to a record high against the US dollar on Thursday, adding to a recent burst of appreciation and spurring talk that Beijing is poised to soon let the currency trade more freely. Over the past three weeks the renminbi has gained 0.6 per cent against the dollar, an unusually fast rise for the tightly controlled Chinese currency and one that has come even as the dollar has been relatively strong.” (Financial Times)
GM stems losses in a worsening Europe: “General Motors, the biggest US carmaker by revenues, hailed its “progress” in Europe after it reduced first-quarter losses there, but said the region’s troubled car market had not yet hit bottom. Adjusted first-quarter losses before interest and tax in Europe (excluding special and one-off items) narrowed from $300m in the first quarter of 2012 to $200m, on revenue down 9.4 per cent to $4.8bn.” (Financial Times)
FURTHER FURTHER READING
- Enjoy the US shrinking trade gap. It won’t last.
- The case for megabanks fails.
- Mark Thoma once found an error in an influential Bernanke & Blinder paper; the error remains.
- Monetary policy vs financial stability is a false trade-off.
- The folly of solutionism.
- Does the Internet strengthen the institution of marriage?