Dual-track Libor replacement lined up: “The scandal-plagued Libor benchmark is likely to be replaced by a dual-track system with survey-based lending rates running alongside transaction-linked indices as soon as next year. Martin Wheatley, the UK regulator leading efforts to reform the London Interbank Offered Rate, told the Financial Times that a parallel system would provide continuity for holders of $350tn in existing contracts that reference Libor while also paving the way for a new benchmark tied more closely to objective data.” (Financial Times)
Top hedge funds bet on Greek banks: “Some of the world’s leading hedge funds are pouring money into the Greek banking sector in expectation of huge potential returns, even as the country struggles to right its economy in the face of deep government spending cuts.” (Financial Times)
Schäuble warns EU bank rescue agency needs treaty changes: “Germany’s finance minister has warned that a single EU bailout agency and rescue fund for ailing banks is legally untenable until the bloc’s treaties have been overhauled. In today’s Financial Times, Wolfgang Schäuble calls for a “two-step approach” that would leave bank rescues in the hands of “a network of” national authorities until treaty changes can take place.” (Financial Times)
G7 reaffirms commitment on currency depreciation: “The world’s leading finance ministers gave their tacit approval to the soaring US dollar and plunging Japanese yen at the weekend, but international divisions over economic strategy and European banking union remained unresolved. After an informal gathering of the Group of Seven rich economies outside London, participants reaffirmed their commitment not to use economic policy to seek weaker currencies and did not conclude Japan was breaking that pact yet.” (Financial Times)
Bloomberg alerted to access issue in 2011: “Bloomberg knew in 2011 about the privacy issue that has concerned powerful clients including Goldman Sachs, JPMorgan Chase and the Federal Reserve, but failed to close the loophole until Goldman’s recent complaint that reporters had kept track on its partners using private terminal data. Executives at the financial data company, whose terminals sit in trading floors, hedge fund offices, law firms and central banks around the world, were alerted to reporters’ ability to see when clients log on to their terminals and which functions they use when a reporter mentioned the practice on Bloomberg TV, people familiar with the situation said.” (Financial Times)
Mittal urges EU to protect itself against China imports: “Lakshmi Mittal has urged Europe to erect trade barriers to protect its manufacturers as the Indian steel tycoon attacked policy makers for stifling demand through tough austerity measures. The owner of the world’s biggest steelmaker by sales said the future of EU manufacturing depended on politicians in Brussels helping industry face what he said was unfair competition from China.” (Financial Times)
Bischoff to take his leave from Lloyds: “Sir Win Bischoff, who has overseen a radical restructuring and return to profitability at Lloyds Banking Group, is stepping down as chairman of the part-nationalised bank this year. Sir Win, who took up the role in September 2009, will announce his decision ahead of Thursday’s annual shareholder meeting, said people familiar with the plan. He is said to feel he has accomplished the task of stabilising Lloyds, having brought in a strong executive team.” (Financial Times)
Esure hit by fallout over ex-HBOS director: “Esure has been accused of downplaying in the run up to its recent London stock market launch the role that one of its directors played at HBOS before the lender collapsed. The insurance group has been criticised for failing to point out in the prospectus for its flotation that Tony Hobson, who oversees Esure’s investment strategy, chaired HBOS’s audit committee between 2001 and 2008.” (Financial Times)
COMMENT AND CURIOS:
- The Fed dials the wrong unemployment number. (Gavyn Davies)
- There is zero correlation between the Fed printing and the money supply. (Mark Dow)
- Bernanke haters at the Sohn Conference. (Brad DeLong)
- Why they hate. (Joe Weisenthal)
- How Ben Bernanke saved Europe’s banks. (The Globalist)
OVERNIGHT MARKETS:
Asian markets
Nikkei 225 up +225.76 (+1.55%) at 14,833
Topix up +24.12 (+1.99%) at 1,235
Hang Seng down -215.03 (-0.92%) at 23,106
US markets
S&P 500 up +7.03 (+0.43%) at 1,634
DJIA up +35.87 (+0.24%) at 15,118
Nasdaq up +27.41 (+0.80%) at 3,437
European markets
Eurofirst 300 up +4.34 (+0.35%) at 1,233
FTSE100 up +32.24 (+0.49%) at 6,625
CAC 40 up +25.25 (+0.64%) at 3,954
Dax up +16.04 (+0.19%) at 8,279
Currencies
€/$ 1.30 (1.30)
$/¥ 101.83 (101.80)
£/$ 1.54 (1.54)
Commodities ($)
Brent Crude (ICE) down -0.82 at 103.09
Light Crude (Nymex) down -0.74 at 95.30
100 Oz Gold (Comex) down -7.10 at 1,430
Copper (Comex) down -0.60 at 335.00
10-year government bond yields (%)
US 1.93%
UK 1.88%
Germany 1.38%
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.13bps at 89.89bp
Markit iTraxx Xover +3.61bps at 382.7bp
Markit CDX IG +1.07bps at 72.02bp
Sources: FT, Bloomberg, Markit