Japan's five-year bonds declined after a rally in global stocks and a rebound in industrial production reduced investor appetite for debt.
Demand at a two-year note auction fell to the lowest since August 2006 after U.S. Treasuries completed the biggest two-day slide since 2004 and European debt had the steepest decline in three months. The perceived risk of issuers in the Asia-Pacific region defaulting on their debt decreased today on speculation the Federal Reserve will cut interest rates next month.
``JGBs will be sold off,'' said Xinyi Lu, chief strategist at the international treasury division at Mizuho Corporate Bank Ltd. in Tokyo. ``The Fed is going to cut rates, so people became a little bit optimistic about Japan's economy.''
The yield on the 1.1 percent note due September 2012 rose 1.5 basis points to 1.04 percent as of 5:48 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price fell 0.068 yen to 100.274 yen. The yield on the benchmark 10-year bond was unchanged at 1.485 percent.
Ten-year bond futures for December delivery declined 0.14 to 136.96 as of the afternoon close in Tokyo. The Nikkei 225 Stock Average gained 2.4 percent.
earnwithourdirectory.com
четверг, 29 ноября 2007 г.
U.K. Gilts Open Little Changed; Yields Hold Near Two-Week High
U.K. government bonds opened little changed, with yields near the highest in two weeks.
The yield on the 10-year gilt rose 1 basis point to 4.69 percent by 8:14 a.m. in London. The price of the 4 percent bond due September 2016 fell 0.08, or 80 pence per 1,000-pound ($2,071) face amount, to 95.10.
Two-year note yields held at 4.57. Yields move inversely to bond prices.
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The yield on the 10-year gilt rose 1 basis point to 4.69 percent by 8:14 a.m. in London. The price of the 4 percent bond due September 2016 fell 0.08, or 80 pence per 1,000-pound ($2,071) face amount, to 95.10.
Two-year note yields held at 4.57. Yields move inversely to bond prices.
earnwithourdirectory.com
пятница, 23 ноября 2007 г.
French Banks to Develop Fund to Provide Liquidity, FT Says
Five French banks are planning to develop a fund to buy securities backed by assets, the Financial Times reported, citing its French partner newspaper Les Echos.
The goal of the project, organized by BNP Paribas SA, Societe Generale SA, Credit Agricole SA, Natixis SA and HSBC France, is to ensure liquidity for asset-management funds, the FT said.
articles-in-stockmarket.com
The goal of the project, organized by BNP Paribas SA, Societe Generale SA, Credit Agricole SA, Natixis SA and HSBC France, is to ensure liquidity for asset-management funds, the FT said.
articles-in-stockmarket.com
Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show
The risk of European companies defaulting on their debt rose, according to traders of credit- default swaps.
Contracts on the iTraxx Crossover Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 4 basis points to 394 basis points, according to Deutsche Bank AG. The index, a benchmark for the cost of protecting bonds against default, rises when perceptions of credit quality worsen.
The iTraxx Europe index of 125 companies with investment- grade ratings rose 1 basis point to 63 basis points, Deutsche Bank prices show.
A basis point on a credit-default swap contract protecting 10 million euros ($14.8 million) of debt from default for five years is equivalent to 1,000 euros a year.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.
articles-in-stockmarket.com
Contracts on the iTraxx Crossover Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 4 basis points to 394 basis points, according to Deutsche Bank AG. The index, a benchmark for the cost of protecting bonds against default, rises when perceptions of credit quality worsen.
The iTraxx Europe index of 125 companies with investment- grade ratings rose 1 basis point to 63 basis points, Deutsche Bank prices show.
A basis point on a credit-default swap contract protecting 10 million euros ($14.8 million) of debt from default for five years is equivalent to 1,000 euros a year.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.
articles-in-stockmarket.com
среда, 21 ноября 2007 г.
Japan's 10-Year Bonds Gain as Stock Slide Spurs Demand for Debt
Japan's 10-year bonds rose, reversing a decline, on speculation a slide in local stocks increased demand for the relative safety of government debt.
Yields on benchmark 10-year notes fell to a 22-month low as Japanese shares declined after the Federal Reserve revealed it cut its 2008 growth forecast for the U.S., Japan's biggest export market. Bonds also rose after the Ministry of Finance sold 800 billion yen ($7.3 billion) of 20-year debt.
``The market is reacting to Asian equities, which are down relatively sharply,'' said Naomi Hasegawa, a senior bond strategist at Mitsubishi UFJ Securities Co. in Tokyo. ``The market will trade up for the rest of the day.''
The yield on the 1.7 percent bond due September 2017 fell 3.5 basis points to 1.43 percent as of 3:07 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. It was the biggest decrease since Nov. 2. The price gained 0.307 yen to 102.323 yen. The yield was earlier as low as 1.42 percent. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery gained 0.32 to 137.30 on the Tokyo Stock Exchange. The Nikkei 225 Stock Average declined 2.5 percent and the MSCI Asia Pacific Index of regional stocks lost 1.8 percent.
Japan's bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.97 with the Nikkei 225 this month, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.
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Yields on benchmark 10-year notes fell to a 22-month low as Japanese shares declined after the Federal Reserve revealed it cut its 2008 growth forecast for the U.S., Japan's biggest export market. Bonds also rose after the Ministry of Finance sold 800 billion yen ($7.3 billion) of 20-year debt.
``The market is reacting to Asian equities, which are down relatively sharply,'' said Naomi Hasegawa, a senior bond strategist at Mitsubishi UFJ Securities Co. in Tokyo. ``The market will trade up for the rest of the day.''
The yield on the 1.7 percent bond due September 2017 fell 3.5 basis points to 1.43 percent as of 3:07 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. It was the biggest decrease since Nov. 2. The price gained 0.307 yen to 102.323 yen. The yield was earlier as low as 1.42 percent. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery gained 0.32 to 137.30 on the Tokyo Stock Exchange. The Nikkei 225 Stock Average declined 2.5 percent and the MSCI Asia Pacific Index of regional stocks lost 1.8 percent.
Japan's bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.97 with the Nikkei 225 this month, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.
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WTO Nations Seek Trade Pact Amid Slowdown, Nath Says
World Trade Organization members are seeking a successful conclusion of the Doha round of trade talks to counter an economic slowdown sparked by mortgage defaults and rising oil prices, India's Trade Minister Kamal Nath said.
``Everybody is looking for an antidote to the uncertain global economic output,'' Nath, one of the four key partners in international trade talks besides the U.S., Europe and Brazil, said in an interview in Singapore. ``A successful Doha round will perhaps be a good antidote.''
U.S. Trade Representative Susan Schwab said this week a trade pact is possible in the next 14 months after repeated breakdowns in negotiations since 2001. The deal could add $96 billion annually to the global economy, which the International Monetary Fund forecasts may slow next year due to a housing recession in the U.S.
The WTO talks have failed to yield results so far because the U.S. and Europe won't lower farm subsidies fast enough, while developing nations including India, Brazil and South Africa say they would have to cut industrial tariffs more than developed countries.
Schwab, who was in Singapore to meet with trade ministers from the 10-member Association of Southeast Asian Nations, said the world's biggest economy is showing more flexibility in the world trade talks, adding there's ``every reason to expect'' the Doha round can be concluded before President George W. Bush leaves office in January 2009.
U.S. Flexibility
``I think so too because of the flexibility the U.S. proposes to show,'' Nath said. ``Probably the flexibilities which she has in her pocket are the flexibilities which are needed to move forward on this. Certainly the U.S. is the most important player on this and the moment the U.S. shows flexibility the process moves on.''
The IMF last month cut its projection for global growth next year to 4.8 percent from an estimate of 5.2 percent in July and warned that even its new prediction may be too optimistic given threats posed by the sell-off in credit markets.
The U.S. subprime crisis has claimed the jobs of three Wall Street chief executive officers including Citigroup Inc.'s Charles O. Prince III and prompted more than $45 billion in writedowns at the world's biggest banks. The total global loss from the subprime mess may reach $400 billion, Deutsche Bank AG said Nov. 12.
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``Everybody is looking for an antidote to the uncertain global economic output,'' Nath, one of the four key partners in international trade talks besides the U.S., Europe and Brazil, said in an interview in Singapore. ``A successful Doha round will perhaps be a good antidote.''
U.S. Trade Representative Susan Schwab said this week a trade pact is possible in the next 14 months after repeated breakdowns in negotiations since 2001. The deal could add $96 billion annually to the global economy, which the International Monetary Fund forecasts may slow next year due to a housing recession in the U.S.
The WTO talks have failed to yield results so far because the U.S. and Europe won't lower farm subsidies fast enough, while developing nations including India, Brazil and South Africa say they would have to cut industrial tariffs more than developed countries.
Schwab, who was in Singapore to meet with trade ministers from the 10-member Association of Southeast Asian Nations, said the world's biggest economy is showing more flexibility in the world trade talks, adding there's ``every reason to expect'' the Doha round can be concluded before President George W. Bush leaves office in January 2009.
U.S. Flexibility
``I think so too because of the flexibility the U.S. proposes to show,'' Nath said. ``Probably the flexibilities which she has in her pocket are the flexibilities which are needed to move forward on this. Certainly the U.S. is the most important player on this and the moment the U.S. shows flexibility the process moves on.''
The IMF last month cut its projection for global growth next year to 4.8 percent from an estimate of 5.2 percent in July and warned that even its new prediction may be too optimistic given threats posed by the sell-off in credit markets.
The U.S. subprime crisis has claimed the jobs of three Wall Street chief executive officers including Citigroup Inc.'s Charles O. Prince III and prompted more than $45 billion in writedowns at the world's biggest banks. The total global loss from the subprime mess may reach $400 billion, Deutsche Bank AG said Nov. 12.
articles-in-finance.com
понедельник, 19 ноября 2007 г.
ICAP Profit May Rise as Volatile Markets Boost Trading: Outlook
ICAP Plc, the world's largest broker of transactions between banks, may report an increase in first- half profit tomorrow after slumping credit markets drove record trading in currencies, stocks, bonds and their derivatives.
Net income probably rose by about 26 percent to 72.8 million pounds ($149 million) for the half-year to Sept. 30 from a year earlier, according to the average estimate of four analysts surveyed by Bloomberg. London-based ICAP, which acts as a go- between for trades in financial markets, is likely to have increased revenue 13 percent to 615 million pounds.
ICAP's computer-based foreign exchange and bond trading systems, its most profitable businesses, handled more than $1 trillion on six days in the first half. ICAP, which profits when prices fluctuate, may benefit as traders use the firm to bet on or hedge losses linked to record U.S. home foreclosures.
``This summer saw record flows, and given current market conditions and ICAP's positioning, there is some reason to believe that they will continue to perform well,'' said Roger Tejwani, an analyst at Numis Securities Ltd. in London who has a ``buy'' recommendation on the stock.
ICAP has risen 25 percent this year, reaching a record 640 pence on Nov 9. The shares were trading at 598.5 pence at 8:50 a.m. in London today, valuing the company at about 3.86 billion pounds.
The broker may have limited upside as banks and securities firms seek to reduce the fees they pay interdealer brokers because of losses stemming from subprime mortgages, Credit Suisse analyst Rupak Ghose wrote last week. He switched his rating to ``neutral'' from ``outperform.''
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Net income probably rose by about 26 percent to 72.8 million pounds ($149 million) for the half-year to Sept. 30 from a year earlier, according to the average estimate of four analysts surveyed by Bloomberg. London-based ICAP, which acts as a go- between for trades in financial markets, is likely to have increased revenue 13 percent to 615 million pounds.
ICAP's computer-based foreign exchange and bond trading systems, its most profitable businesses, handled more than $1 trillion on six days in the first half. ICAP, which profits when prices fluctuate, may benefit as traders use the firm to bet on or hedge losses linked to record U.S. home foreclosures.
``This summer saw record flows, and given current market conditions and ICAP's positioning, there is some reason to believe that they will continue to perform well,'' said Roger Tejwani, an analyst at Numis Securities Ltd. in London who has a ``buy'' recommendation on the stock.
ICAP has risen 25 percent this year, reaching a record 640 pence on Nov 9. The shares were trading at 598.5 pence at 8:50 a.m. in London today, valuing the company at about 3.86 billion pounds.
The broker may have limited upside as banks and securities firms seek to reduce the fees they pay interdealer brokers because of losses stemming from subprime mortgages, Credit Suisse analyst Rupak Ghose wrote last week. He switched his rating to ``neutral'' from ``outperform.''
book-in-finance.com
European Bond Spread Widens on Speculation ECB to Stay on Hold
The gap in yields between two- and 10-year government bonds widened to the most in six weeks on speculation the European Central Bank won't raise interest rates, even with inflation above target.
Investors have bought shorter-dated notes, betting the crisis in credit markets and the euro's surge to a record against the dollar will make it difficult for ECB policy makers to raise rates this year. Swiss Reinsurance Co. said today it had made a 1.2 billion franc ($1.07 billion) loss related to the collapse of the U.S. subprime mortgage market.
``The ECB is set to remain on the sidelines in the next five to six months, and if anything there's a risk of a cut,'' said Nicholas Stamenkovic, a fixed-income strategist at RIA Capital Markets, in Edinburgh. Economic ``forward-looking indicators are clearly heading down.''
The yield on the two-year note fell 4 basis point to 3.76 percent by 10:35 a.m. in London. The price of the 4 percent note due September 2009 rose 0.07, or 70 euro cents per 1,000-euro ($1,463) face amount, to 100.40.
The difference in yield, or spread, between two- and 10-year bonds is at 32 basis points, the widest since Oct. 5.
U.S. Treasury Secretary Henry Paulson last week said the worst may still be to come in the subprime crisis, while Goldman Sachs Group Inc. estimated the slump in credit markets may reduce bank lending by $2 trillion.
book-in-finance.com
Investors have bought shorter-dated notes, betting the crisis in credit markets and the euro's surge to a record against the dollar will make it difficult for ECB policy makers to raise rates this year. Swiss Reinsurance Co. said today it had made a 1.2 billion franc ($1.07 billion) loss related to the collapse of the U.S. subprime mortgage market.
``The ECB is set to remain on the sidelines in the next five to six months, and if anything there's a risk of a cut,'' said Nicholas Stamenkovic, a fixed-income strategist at RIA Capital Markets, in Edinburgh. Economic ``forward-looking indicators are clearly heading down.''
The yield on the two-year note fell 4 basis point to 3.76 percent by 10:35 a.m. in London. The price of the 4 percent note due September 2009 rose 0.07, or 70 euro cents per 1,000-euro ($1,463) face amount, to 100.40.
The difference in yield, or spread, between two- and 10-year bonds is at 32 basis points, the widest since Oct. 5.
U.S. Treasury Secretary Henry Paulson last week said the worst may still be to come in the subprime crisis, while Goldman Sachs Group Inc. estimated the slump in credit markets may reduce bank lending by $2 trillion.
book-in-finance.com
пятница, 16 ноября 2007 г.
Japanese Bonds Rise as BOJ Says Credit Turmoil May Hurt Growth
Japanese government bonds rose, pushing 10-year yields to the lowest in 21 months, as central bank Deputy Governor Toshiro Muto said global financial market turmoil may hurt the nation's economy.
Benchmark notes were poised for a third weekly gain as Muto, a likely candidate to replace Governor Toshihiko Fukui, said the U.S. housing market slump may make it ``difficult'' to decide when to raise Japanese interest rates. Markets are ``unstable,'' Bank of Japan policy makers said in minutes published today of the Oct. 10-11 meeting.
``People think JGBs are very, very safe'' compared with lower-rated securities like corporate bonds, said Xinyi Lu, chief strategist at the international treasury division at Mizuho Corporate Bank Ltd. in Tokyo. ``Financial institutions have to get a return on their money and need to buy JGBs.''
The yield on the benchmark 10-year note fell as much as 3.5 basis points to 1.46 percent, according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The yield was 1.47 percent as of 3:55 p.m. in Tokyo. The price of the 1.7 percent bond due September 2017 rose 0.218 yen to 101.975 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery gained 0.19 to 137.04 as of the afternoon close on the Tokyo Stock Exchange.
The central bank on Nov. 13 kept its target for the overnight call rate, the main rate at which banks lend to each other, at 0.5 percent, the lowest among major economies.
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Benchmark notes were poised for a third weekly gain as Muto, a likely candidate to replace Governor Toshihiko Fukui, said the U.S. housing market slump may make it ``difficult'' to decide when to raise Japanese interest rates. Markets are ``unstable,'' Bank of Japan policy makers said in minutes published today of the Oct. 10-11 meeting.
``People think JGBs are very, very safe'' compared with lower-rated securities like corporate bonds, said Xinyi Lu, chief strategist at the international treasury division at Mizuho Corporate Bank Ltd. in Tokyo. ``Financial institutions have to get a return on their money and need to buy JGBs.''
The yield on the benchmark 10-year note fell as much as 3.5 basis points to 1.46 percent, according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The yield was 1.47 percent as of 3:55 p.m. in Tokyo. The price of the 1.7 percent bond due September 2017 rose 0.218 yen to 101.975 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery gained 0.19 to 137.04 as of the afternoon close on the Tokyo Stock Exchange.
The central bank on Nov. 13 kept its target for the overnight call rate, the main rate at which banks lend to each other, at 0.5 percent, the lowest among major economies.
training-in-stocktraiding.com
Eurodollar Futures Prices Signal Persistent Credit Concerns
Futures traders are betting the rate banks charge each other for dollar loans in London will rise on concern that subprime mortgage losses and constriction of credit markets will increase.
The price of Eurodollar futures contracts expiring next month on the three-month London interbank offered rate, or Libor, fell yesterday. The difference, or spread, between it and the March 2008 contract was the widest since Sept. 17, the day before the Federal Reserve cut its benchmark lending rate for the first time in four years.
``The Libor issue is heating up again,'' said Michael Marzano, Chicago-based interest-rate futures trader at Prudential Securities Inc. ``The fear is about short-term borrowing through year-end and if there will be more credit issues'' such as ``the recent mortgage-related writedowns.''
The spread between the price of the December 2007 Eurodollar futures contract and the March 2008 contract reached minus 0.64 percentage point yesterday. The difference between the near contract and the so-called first deferred contract peaked this year at 0.8375 percentage point on Sept. 10, the widest since at least February 1998, as far back as Bloomberg compiles data.
The contracts, trading on the Chicago Mercantile Exchange, are quoted in price terms and based on predictions for the three-month dollar Libor rates. A declining price corresponds to a rise in implied yield.
training-in-stocktraiding.com
The price of Eurodollar futures contracts expiring next month on the three-month London interbank offered rate, or Libor, fell yesterday. The difference, or spread, between it and the March 2008 contract was the widest since Sept. 17, the day before the Federal Reserve cut its benchmark lending rate for the first time in four years.
``The Libor issue is heating up again,'' said Michael Marzano, Chicago-based interest-rate futures trader at Prudential Securities Inc. ``The fear is about short-term borrowing through year-end and if there will be more credit issues'' such as ``the recent mortgage-related writedowns.''
The spread between the price of the December 2007 Eurodollar futures contract and the March 2008 contract reached minus 0.64 percentage point yesterday. The difference between the near contract and the so-called first deferred contract peaked this year at 0.8375 percentage point on Sept. 10, the widest since at least February 1998, as far back as Bloomberg compiles data.
The contracts, trading on the Chicago Mercantile Exchange, are quoted in price terms and based on predictions for the three-month dollar Libor rates. A declining price corresponds to a rise in implied yield.
training-in-stocktraiding.com
четверг, 15 ноября 2007 г.
Japan's 10-Year Bonds Gain on Signs Subprime Losses Spreading
Japan's bonds rose on signs losses stemming from U.S. subprime mortgage securities are spreading.
Ten-year yields approached their lowest in 21 months after Mizuho Financial Group Inc. cut its full-year profit forecast because of losses related to investments in U.S. home loans to riskier borrowers. Treasuries gained yesterday as concern about weak investor demand for debt used to fund company buyouts overshadowed a stronger-than-forecast retail sales report.
``The generally bond-positive environment is still intact and all the credit-crunch stories are still there, which is why 10-year yields have declined through 1.5 percent,'' said Naruki Nakamura, who helps manage the equivalent of $3.2 billion of bonds in Tokyo at Fischer Francis Trees & Watts.
The yield on the 1.7 percent bond due September 2017 fell 1.5 basis points to 1.5 percent as of 3:15 p.m. in Tokyo, according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.130 yen to 101.713 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery gained 0.34 to 136.85 as of the afternoon close on the Tokyo Stock Exchange.
Aozora Bank Ltd., the Japanese lender bought and restored to health by U.S. buyout firm Cerberus Partners LP, said yesterday it expects a 23 percent decline in full-year profit after writing down the value of investments related to U.S. home loans. Shinsei Bank Ltd. said Nov. 13 first-half earnings plunged 40 percent as it added to provisions linked to U.S. home loans.
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Ten-year yields approached their lowest in 21 months after Mizuho Financial Group Inc. cut its full-year profit forecast because of losses related to investments in U.S. home loans to riskier borrowers. Treasuries gained yesterday as concern about weak investor demand for debt used to fund company buyouts overshadowed a stronger-than-forecast retail sales report.
``The generally bond-positive environment is still intact and all the credit-crunch stories are still there, which is why 10-year yields have declined through 1.5 percent,'' said Naruki Nakamura, who helps manage the equivalent of $3.2 billion of bonds in Tokyo at Fischer Francis Trees & Watts.
The yield on the 1.7 percent bond due September 2017 fell 1.5 basis points to 1.5 percent as of 3:15 p.m. in Tokyo, according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.130 yen to 101.713 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery gained 0.34 to 136.85 as of the afternoon close on the Tokyo Stock Exchange.
Aozora Bank Ltd., the Japanese lender bought and restored to health by U.S. buyout firm Cerberus Partners LP, said yesterday it expects a 23 percent decline in full-year profit after writing down the value of investments related to U.S. home loans. Shinsei Bank Ltd. said Nov. 13 first-half earnings plunged 40 percent as it added to provisions linked to U.S. home loans.
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SIV Asset Values Drop to 69.7 Percent of Capital, Fitch Says
The net asset value of structured investment vehicles, companies that borrow short term to buy higher yielding securities, has fallen to 69.7 percent as the credit slump erodes their holdings, Fitch Ratings reported.
The amount that would be left after selling SIV assets and repaying debt dropped from 71 percent on Oct. 19 and above 100 percent in July, data compiled by Fitch show.
SIVs have been forced to sell about $75 billion of investments since July after record U.S. home foreclosures caused investors to shun asset-backed debt. Citigroup Inc., the largest manager of SIVs, is working with the U.S. Treasury, Bank of America Corp. and JPMorgan Chase & Co. to create an $80 billion fund to help SIVs avoid dumping their holdings and further roiling credit markets.
Fitch's report is based on the SIVs it rates, including three run by New York-based Citigroup.
The data doesn't include Rhinebridge Plc, the SIV set up by Dusseldorf, Germany-based IKB Deutsche Industriebank AG that was forced to sell assets to repay debt. Fitch, based in New York, said it hasn't received information on Rhinebridge since the SIV was forced to appoint Deloitte & Touche LLP as a receiver on Oct. 23 to protect investors. The SIV had a zero net asset value last month, Fitch said.
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The amount that would be left after selling SIV assets and repaying debt dropped from 71 percent on Oct. 19 and above 100 percent in July, data compiled by Fitch show.
SIVs have been forced to sell about $75 billion of investments since July after record U.S. home foreclosures caused investors to shun asset-backed debt. Citigroup Inc., the largest manager of SIVs, is working with the U.S. Treasury, Bank of America Corp. and JPMorgan Chase & Co. to create an $80 billion fund to help SIVs avoid dumping their holdings and further roiling credit markets.
Fitch's report is based on the SIVs it rates, including three run by New York-based Citigroup.
The data doesn't include Rhinebridge Plc, the SIV set up by Dusseldorf, Germany-based IKB Deutsche Industriebank AG that was forced to sell assets to repay debt. Fitch, based in New York, said it hasn't received information on Rhinebridge since the SIV was forced to appoint Deloitte & Touche LLP as a receiver on Oct. 23 to protect investors. The SIV had a zero net asset value last month, Fitch said.
a-training-in-finance.com
вторник, 13 ноября 2007 г.
BlackRock's Fink Says Subprime Credit Losses to Rise
Laurence Fink, who helped create the market for mortgage-backed securities, said the credit losses that have already cost banks and securities firms $45 billion are about to get worse.
Fink, chief executive officer of New York-based fund manager BlackRock Inc., said today at an investor conference that ``many institutions don't understand what the credit crunch is going to do to earnings and their balance sheet.'' At the same conference, Goldman Sachs Group Inc., CEO Lloyd Blankfein said his firm is continuing to bet that mortgage-backed securities and collateralized debt obligations will fall.
The outlook is another indication that the contagion from losses on mortgages to people with poor credit is continuing to spread. Bank of America Corp. Chief Financial Officer Joe Price said the second-largest U.S. bank may write down $3 billion of subprime-related debt in the fourth quarter.
At the investor conference in New York, sponsored by Merrill Lynch & Co., Blankfein said Goldman, the world's most profitable investment bank, doesn't plan to take any significant writedowns on mortgage-related assets. Goldman shares rose 8.5 percent to $233.04 at 4 p.m. in New York Stock Exchange composite trading, and other financial stocks also climbed.
``We continue to be net short in these markets,'' Blankfein, 53, said in response to a question about the New York-based firm's position.
Financial Shares Rally
Banks and brokerages in the Standard & Poor's 500 Index have rallied 7.6 percent since reaching a two-year low on Nov. 7. Bank of America, based in Charlotte, North Carolina, climbed 5.2 percent today to $46.27. Lehman Brothers Holdings Inc. jumped 9.2 percent to $63.49 after UBS AG analyst Glenn Schorr said the New York-based securities firm's potential CDO losses are ``negligible.''
``I don't know when it's over, but it's not over yet,'' Fink, 55, said. ``The bottom has not been achieved yet.''
The selloff of financial stocks had gained steam after Merrill Lynch announced a record $8.4 billion credit writedown on Oct. 24, which led to the ouster of CEO Stan O'Neal. Deutsche Bank AG yesterday said credit losses may reach $400 billion, while Lehman last week predicted losses would reach $250 billion over the next five years.
At the same time, money managers including Bank of America and Baltimore-based Legg Mason Inc. have collectively set aside almost $500 million to prop up money-market funds that invested in debt issued by structured investment vehicles, known as SIVs.
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Fink, chief executive officer of New York-based fund manager BlackRock Inc., said today at an investor conference that ``many institutions don't understand what the credit crunch is going to do to earnings and their balance sheet.'' At the same conference, Goldman Sachs Group Inc., CEO Lloyd Blankfein said his firm is continuing to bet that mortgage-backed securities and collateralized debt obligations will fall.
The outlook is another indication that the contagion from losses on mortgages to people with poor credit is continuing to spread. Bank of America Corp. Chief Financial Officer Joe Price said the second-largest U.S. bank may write down $3 billion of subprime-related debt in the fourth quarter.
At the investor conference in New York, sponsored by Merrill Lynch & Co., Blankfein said Goldman, the world's most profitable investment bank, doesn't plan to take any significant writedowns on mortgage-related assets. Goldman shares rose 8.5 percent to $233.04 at 4 p.m. in New York Stock Exchange composite trading, and other financial stocks also climbed.
``We continue to be net short in these markets,'' Blankfein, 53, said in response to a question about the New York-based firm's position.
Financial Shares Rally
Banks and brokerages in the Standard & Poor's 500 Index have rallied 7.6 percent since reaching a two-year low on Nov. 7. Bank of America, based in Charlotte, North Carolina, climbed 5.2 percent today to $46.27. Lehman Brothers Holdings Inc. jumped 9.2 percent to $63.49 after UBS AG analyst Glenn Schorr said the New York-based securities firm's potential CDO losses are ``negligible.''
``I don't know when it's over, but it's not over yet,'' Fink, 55, said. ``The bottom has not been achieved yet.''
The selloff of financial stocks had gained steam after Merrill Lynch announced a record $8.4 billion credit writedown on Oct. 24, which led to the ouster of CEO Stan O'Neal. Deutsche Bank AG yesterday said credit losses may reach $400 billion, while Lehman last week predicted losses would reach $250 billion over the next five years.
At the same time, money managers including Bank of America and Baltimore-based Legg Mason Inc. have collectively set aside almost $500 million to prop up money-market funds that invested in debt issued by structured investment vehicles, known as SIVs.
tradingonlineschool.com
Florida Holds $2.2 Billion of Debt Cut to Junk
The Florida agency that manages about $50 billion of short-term investments for the state, school districts and local governments holds $2.2 billion of debt cut to junk status.
The downgrades affect more than 4 percent of what the Florida State Board of Administration has purchased for the funds, according to a report by the agency's director, Coleman Stipanovich, that will be delivered at a Cabinet meeting of Republican Governor Charlie Crist today. Some $3.6 billion, or 7.3 percent, of the securities may be downgraded by credit- rating companies, according to the document, provided to Bloomberg by the state board.
Florida rules require the state's short-term investments to only be top-rated, liquid securities, so taxpayer funds aren't placed at risk. The data from Florida shows how far the effects of the bursting of the housing bubble are being felt as complex investment vehicles once marketed as high-yielding safe havens are now backed by collateral shunned by investors.
``Investment of public money needs to be carefully conducted and thoroughly researched,'' said Harvey Pitt, former chairman of the U.S. Securities and Exchange Commission. ``This is not the place for seat-of-the-pants judgments. It requires a lot more than jumping on the latest investment du jour to improve your results.''
Florida isn't the only government whose short-term investments have been affected by rising mortgage defaults in the U.S. and investors' diminished appetite for the securities tied to them.
King County Woes
Last month, Fitch Ratings said Washington state's King County, which includes the city of Seattle, may have its rating lowered on $1.5 billion of bonds because of its investments in debt being roiled by rising defaults on U.S. home mortgages.
Florida's state funds were affected by bad investments in asset-backed commercial paper, short-term debt sold by financial institutions that is secured by collateral such as mortgage securities and credit-card receivables. As the value of that collateral dropped, investors were unwilling to reinvest their money when the short-term debt matured, creating a liquidity crisis for the financial institutions.
Florida's short-term holdings include $400 million of Axon Financial Funding LLC debt, which was cut to junk status by Standard & Poor's on Nov 9. The others rated below investment grade are $850 million of KKR Atlantic Funding Trust, which was cut to default by Fitch last month; $577 million of KKR Pacific Funding Trust debt, cut by Fitch to default last month; and $319 million of debt issued by Ottimo Funding Ltd., cut to default by S&P on Nov. 9.
tradingonlineschool.com
The downgrades affect more than 4 percent of what the Florida State Board of Administration has purchased for the funds, according to a report by the agency's director, Coleman Stipanovich, that will be delivered at a Cabinet meeting of Republican Governor Charlie Crist today. Some $3.6 billion, or 7.3 percent, of the securities may be downgraded by credit- rating companies, according to the document, provided to Bloomberg by the state board.
Florida rules require the state's short-term investments to only be top-rated, liquid securities, so taxpayer funds aren't placed at risk. The data from Florida shows how far the effects of the bursting of the housing bubble are being felt as complex investment vehicles once marketed as high-yielding safe havens are now backed by collateral shunned by investors.
``Investment of public money needs to be carefully conducted and thoroughly researched,'' said Harvey Pitt, former chairman of the U.S. Securities and Exchange Commission. ``This is not the place for seat-of-the-pants judgments. It requires a lot more than jumping on the latest investment du jour to improve your results.''
Florida isn't the only government whose short-term investments have been affected by rising mortgage defaults in the U.S. and investors' diminished appetite for the securities tied to them.
King County Woes
Last month, Fitch Ratings said Washington state's King County, which includes the city of Seattle, may have its rating lowered on $1.5 billion of bonds because of its investments in debt being roiled by rising defaults on U.S. home mortgages.
Florida's state funds were affected by bad investments in asset-backed commercial paper, short-term debt sold by financial institutions that is secured by collateral such as mortgage securities and credit-card receivables. As the value of that collateral dropped, investors were unwilling to reinvest their money when the short-term debt matured, creating a liquidity crisis for the financial institutions.
Florida's short-term holdings include $400 million of Axon Financial Funding LLC debt, which was cut to junk status by Standard & Poor's on Nov 9. The others rated below investment grade are $850 million of KKR Atlantic Funding Trust, which was cut to default by Fitch last month; $577 million of KKR Pacific Funding Trust debt, cut by Fitch to default last month; and $319 million of debt issued by Ottimo Funding Ltd., cut to default by S&P on Nov. 9.
tradingonlineschool.com
Calpers Beats Pickens as Commodity Indexes Clobber Hedge Funds
T. Boone Pickens, the billionaire oil trader who predicted crude's rise to $100 a barrel, is lagging behind commodity-index investors for the first time since 2003.
Even California Public Employees' Retirement System, the 75-year-old pension fund that ignored commodities until eight months ago, is beating Pickens. Calpers invested in the Standard & Poor's GSCI Index, up 32 percent this year, while Pickens's BP Capital fund rose 22 percent.
From Dwight Anderson's Ospraie Management LLC to Global Advisors LP, commodities hedge funds failed to anticipate the 58 percent advance in oil and 31 percent gain in gold that powered indexes to their highest levels in two decades. While bullish forecasters at Goldman Sachs Group Inc. and Deutsche Bank AG advised clients to double down on commodities in January, they didn't expect this year's returns.
``The commodities game has changed, and funds that have been around for a while were previously trading in markets that were less populated by other players,'' said Aoifinn Devitt, founder of Clontarf Capital, a London-based consulting firm that advises on investing in so-called alternative assets, such as hedge funds. ``Now they have less of an edge.''
The Deutsche Bank Liquid Index, the best-performing commodity index, returned 35 percent through October. Hedge funds globally in that time earned 12.3 percent, according to Chicago-based Hedge Fund Research Inc. The Standard & Poor's 500 Index of stocks appreciated 9.2 percent and U.S. Treasuries 6.6 percent, according to Merrill Lynch & Co. indexes.
a-taxadvise.com
Even California Public Employees' Retirement System, the 75-year-old pension fund that ignored commodities until eight months ago, is beating Pickens. Calpers invested in the Standard & Poor's GSCI Index, up 32 percent this year, while Pickens's BP Capital fund rose 22 percent.
From Dwight Anderson's Ospraie Management LLC to Global Advisors LP, commodities hedge funds failed to anticipate the 58 percent advance in oil and 31 percent gain in gold that powered indexes to their highest levels in two decades. While bullish forecasters at Goldman Sachs Group Inc. and Deutsche Bank AG advised clients to double down on commodities in January, they didn't expect this year's returns.
``The commodities game has changed, and funds that have been around for a while were previously trading in markets that were less populated by other players,'' said Aoifinn Devitt, founder of Clontarf Capital, a London-based consulting firm that advises on investing in so-called alternative assets, such as hedge funds. ``Now they have less of an edge.''
The Deutsche Bank Liquid Index, the best-performing commodity index, returned 35 percent through October. Hedge funds globally in that time earned 12.3 percent, according to Chicago-based Hedge Fund Research Inc. The Standard & Poor's 500 Index of stocks appreciated 9.2 percent and U.S. Treasuries 6.6 percent, according to Merrill Lynch & Co. indexes.
a-taxadvise.com
North Korea, China Will Start $10 Billion Fund, Yonhap Reports
North Korea's Daepung Investment Group will set up a $10 billion fund with China Development Bank to help Chinese firms operating in North Korea, Yonhap News reported, citing the company's vice president.
The fund will be used to help Chinese companies build roads, railways and ports in North Korea, Daepung Vice President Bae Kyeong Hwan was quoted as saying. Bae didn't say how much each country will contribute the fund.
Daepung also plans to set up a bank to attract investment from overseas, the report said.
China is North Korea's biggest trading partner and an important provider of food and fuel. North Korea is isolated from most of the rest of the world and has received virtually no foreign investment.
a-taxadvise.com
The fund will be used to help Chinese companies build roads, railways and ports in North Korea, Daepung Vice President Bae Kyeong Hwan was quoted as saying. Bae didn't say how much each country will contribute the fund.
Daepung also plans to set up a bank to attract investment from overseas, the report said.
China is North Korea's biggest trading partner and an important provider of food and fuel. North Korea is isolated from most of the rest of the world and has received virtually no foreign investment.
a-taxadvise.com
понедельник, 12 ноября 2007 г.
Japan's Lowest-Yielding Bonds Lure JPMorgan, Kokusai
The dollar's decline is so steep that even Japan, the nation with the most debt and the lowest interest rates, is attracting global bond funds.
JPMorgan Asset Management, a unit of the third-largest U.S. bank, and Kokusai Asset Management Co., which runs the second- biggest managed debt fund, boosted holdings of Japan's bonds as the yen rose 12 percent against the U.S. currency since the end of June. MFC Global Investment Management (Japan) Ltd., a unit of Canada's largest insurer, predicts 10-year note yields will fall to the lowest since 2005.
Foreign investors bought more Japanese bonds than ever in the first nine months of 2007, increasing holdings by a net 8.3 trillion yen ($75.2 billion), according to Ministry of Finance data. Purchases doubled from the same period of 2006 and were the most since the ministry started keeping data in 2001.
``Yen appreciation is a very strong reason to buy Japanese government bonds,'' said Takeshi Onogi, who helps manage the equivalent of $5.23 billion in debt at MFC, a unit of Toronto- based Manulife Financial Corp. ``It's probably the best investment opportunity to sell the dollar against the yen.''
The benchmark 10-year bond yield has fallen 47 basis points since reaching this year's high on June 13 to 1.515 percent as of 4:55 p.m. Tokyo.
U.S. investors who bought Japanese government bonds at the start of July earned 13 percent including currency gains, according to indexes compiled by Merrill Lynch & Co. That beat returns on the debt of Germany, the U.K. and Australia, even though their 10-year yields are at least double Japan's.
Stronger Yen
Japanese bonds yield the lowest in the 30 biggest government debt markets, according to data compiled by Bloomberg. The price of the 1.7 percent security due in September 2017 rose 0.087 yen today to 101.583 yen.
Fixed-income securities will beat stocks as economic growth slows in the U.S., Onogi said. He predicts Japan's 10-year yield will fall to 1.4 percent in six months, delivering a local- currency return of 1.6 percent. Japan's currency will strengthen beyond 100 per dollar, a gain of 10 percent from 109.87.
Kokusai's $49.2 billion Global Sovereign Open fund has its biggest bet on Japanese government bonds in four years, said Masataka Horii, one of the three managers in Tokyo. Global Sovereign, second in size to Newport Beach, California-based Pacific Investment Management Co.'s Total Return Fund, holds 11 percent of its investments in yen, up from 9 percent on Aug. 31.
financejobonline.com
JPMorgan Asset Management, a unit of the third-largest U.S. bank, and Kokusai Asset Management Co., which runs the second- biggest managed debt fund, boosted holdings of Japan's bonds as the yen rose 12 percent against the U.S. currency since the end of June. MFC Global Investment Management (Japan) Ltd., a unit of Canada's largest insurer, predicts 10-year note yields will fall to the lowest since 2005.
Foreign investors bought more Japanese bonds than ever in the first nine months of 2007, increasing holdings by a net 8.3 trillion yen ($75.2 billion), according to Ministry of Finance data. Purchases doubled from the same period of 2006 and were the most since the ministry started keeping data in 2001.
``Yen appreciation is a very strong reason to buy Japanese government bonds,'' said Takeshi Onogi, who helps manage the equivalent of $5.23 billion in debt at MFC, a unit of Toronto- based Manulife Financial Corp. ``It's probably the best investment opportunity to sell the dollar against the yen.''
The benchmark 10-year bond yield has fallen 47 basis points since reaching this year's high on June 13 to 1.515 percent as of 4:55 p.m. Tokyo.
U.S. investors who bought Japanese government bonds at the start of July earned 13 percent including currency gains, according to indexes compiled by Merrill Lynch & Co. That beat returns on the debt of Germany, the U.K. and Australia, even though their 10-year yields are at least double Japan's.
Stronger Yen
Japanese bonds yield the lowest in the 30 biggest government debt markets, according to data compiled by Bloomberg. The price of the 1.7 percent security due in September 2017 rose 0.087 yen today to 101.583 yen.
Fixed-income securities will beat stocks as economic growth slows in the U.S., Onogi said. He predicts Japan's 10-year yield will fall to 1.4 percent in six months, delivering a local- currency return of 1.6 percent. Japan's currency will strengthen beyond 100 per dollar, a gain of 10 percent from 109.87.
Kokusai's $49.2 billion Global Sovereign Open fund has its biggest bet on Japanese government bonds in four years, said Masataka Horii, one of the three managers in Tokyo. Global Sovereign, second in size to Newport Beach, California-based Pacific Investment Management Co.'s Total Return Fund, holds 11 percent of its investments in yen, up from 9 percent on Aug. 31.
financejobonline.com
Japan's Bonds Rise as Stock Decline Increases Demand for Debt
Japan's 10-year bonds gained for a fourth day as a slump in local stocks boosted demand for the relative safety of government debt.
The advance in benchmark notes pushed yields to close to the lowest since February 2006 as concern global subprime- mortgage losses will deepen led traders to pare bets the Bank of Japan will raise interest rates this year. The central bank will refrain from increasing borrowing costs at a two-day meeting ending tomorrow, according to all 37 economists surveyed by Bloomberg News.
``The market is driven by the weak equity market and the rally in U.S. bonds,'' said Tatsuo Ichikawa, a fixed-income strategist at ABN Amro Securities Japan Ltd. in Tokyo. ``If we see weak economic indicators, then 10-year yields could be pushed below 1.5 percent.''
The yield on the 1.7 percent bond due September 2017 fell 1 basis point to 1.515 percent, the lowest since Sept. 13, as of 3:45 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.087 yen to 101.583 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery closed little changed at 136.69 on the Tokyo Stock Exchange. The Nikkei 225 Stock Average slid 2.5 percent, a seventh day of losses.
Japanese bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.93 with the Nikkei 225 in the past month, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.
`Huge Resistance'
Benchmark 10-year yields are unlikely to fall further unless there are more signs of an economic slowdown, said John Richards, head of debt markets strategy for the Asia-Pacific region at RBS Securities Japan Ltd. in Tokyo.
``There's a huge resistance here and investors are unwilling to push the yields down below 1.5 percent,'' said Richards, whose company is one of the 26 primary dealers required to bid at Japan's bond auctions. ``I don't think we will break 1.5 percent.''
Gains in bonds were limited on speculation a Cabinet Office report tomorrow will show economic growth rebounded in the third quarter. The economy expanded an annualized 1.8 percent in the three months to Sept. 30 from a 1.2 percent decline the previous period, according to the median estimate of a Bloomberg survey of economists.
``Even if it comes out stronger than expected, I don't think it will change the views of the market that the BOJ will delay'' raising rates, ABN's Ichikawa said.
financejobonline.com
The advance in benchmark notes pushed yields to close to the lowest since February 2006 as concern global subprime- mortgage losses will deepen led traders to pare bets the Bank of Japan will raise interest rates this year. The central bank will refrain from increasing borrowing costs at a two-day meeting ending tomorrow, according to all 37 economists surveyed by Bloomberg News.
``The market is driven by the weak equity market and the rally in U.S. bonds,'' said Tatsuo Ichikawa, a fixed-income strategist at ABN Amro Securities Japan Ltd. in Tokyo. ``If we see weak economic indicators, then 10-year yields could be pushed below 1.5 percent.''
The yield on the 1.7 percent bond due September 2017 fell 1 basis point to 1.515 percent, the lowest since Sept. 13, as of 3:45 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.087 yen to 101.583 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery closed little changed at 136.69 on the Tokyo Stock Exchange. The Nikkei 225 Stock Average slid 2.5 percent, a seventh day of losses.
Japanese bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.93 with the Nikkei 225 in the past month, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.
`Huge Resistance'
Benchmark 10-year yields are unlikely to fall further unless there are more signs of an economic slowdown, said John Richards, head of debt markets strategy for the Asia-Pacific region at RBS Securities Japan Ltd. in Tokyo.
``There's a huge resistance here and investors are unwilling to push the yields down below 1.5 percent,'' said Richards, whose company is one of the 26 primary dealers required to bid at Japan's bond auctions. ``I don't think we will break 1.5 percent.''
Gains in bonds were limited on speculation a Cabinet Office report tomorrow will show economic growth rebounded in the third quarter. The economy expanded an annualized 1.8 percent in the three months to Sept. 30 from a 1.2 percent decline the previous period, according to the median estimate of a Bloomberg survey of economists.
``Even if it comes out stronger than expected, I don't think it will change the views of the market that the BOJ will delay'' raising rates, ABN's Ichikawa said.
financejobonline.com
суббота, 10 ноября 2007 г.
Investors Shred Bernanke's Outlook, Bet on Rate Cut
Federal Reserve Chairman Ben S. Bernanke failed to convince investors that there's no need for further interest-rate cuts soon.
Bernanke told lawmakers in Washington yesterday that officials already expect the economy to ``slow noticeably'' this quarter, and warned of ``upside risks'' to inflation. Futures traders focused on his growth comments, increasing the odds of a quarter-point cut in the benchmark rate on Dec. 11 to about 98 percent today, from 68 percent a week ago.
The speculation may complicate Fed decision making, raising the risk of a sell-off in stocks and bonds should officials keep the main rate at 4.5 percent. Bernanke and his colleagues may try to reinforce their message of a neutral stance on borrowing costs between now and their next meeting, economists said.
``Market participants don't think the Federal Reserve is facing reality,'' said Allen Sinai, president of Decision Economics Inc., a New York forecasting firm. ``We have a consumer that is facing a lot of headwinds. We have a business sector that is showing lower revenues, and we have a banking system that is showing a lot of cracks.''
Bernanke said in his remarks to the Joint Economic Committee of the U.S. Congress that he expects ``more reasonable'' growth by the American spring. He predicted the economy will pick up later in 2008 as the impact of the housing slump wanes.
financeonlinecharts.com
Bernanke told lawmakers in Washington yesterday that officials already expect the economy to ``slow noticeably'' this quarter, and warned of ``upside risks'' to inflation. Futures traders focused on his growth comments, increasing the odds of a quarter-point cut in the benchmark rate on Dec. 11 to about 98 percent today, from 68 percent a week ago.
The speculation may complicate Fed decision making, raising the risk of a sell-off in stocks and bonds should officials keep the main rate at 4.5 percent. Bernanke and his colleagues may try to reinforce their message of a neutral stance on borrowing costs between now and their next meeting, economists said.
``Market participants don't think the Federal Reserve is facing reality,'' said Allen Sinai, president of Decision Economics Inc., a New York forecasting firm. ``We have a consumer that is facing a lot of headwinds. We have a business sector that is showing lower revenues, and we have a banking system that is showing a lot of cracks.''
Bernanke said in his remarks to the Joint Economic Committee of the U.S. Congress that he expects ``more reasonable'' growth by the American spring. He predicted the economy will pick up later in 2008 as the impact of the housing slump wanes.
financeonlinecharts.com
Japanese 10-Year Bonds Post Weekly Advance on Rate Outlook
Japan's 10-year government bonds completed a second weekly gain on speculation deepening credit market losses in the U.S. will deter the Bank of Japan from raising interest rates.
Benchmark 10-year yields fell yesterday to a eight-week low after Treasuries gained when Federal Reserve Chairman Ben S. Bernanke said on Nov. 8 the U.S. economy is likely to ``slow noticeably.'' His comments suggest the Fed will cut rates again this year, further weakening the Bank of Japan's case for raising borrowing costs. Benchmark debt extended gains this week as reports of growing subprime-related losses in the U.S. boosted the allure of fixed-income securities.
``JGBs are likely to be affected by the impact of the U.S. housing slump,'' said Akitsugu Bandou, a senior strategist at Okasan Securities Co. in Tokyo. ``The Bank of Japan's aim to raise rates sooner is fading.''
The yield on the 1.7 percent bond due September 2017 fell 1.5 basis points to 1.525 percent as of 3:35 p.m. in Tokyo yesterday at Japan Bond Trading Co., the nation's largest interdealer debt broker. It earlier fell to 1.52 percent, the lowest since Sept. 13. The price rose 0.13 yen to 101.496 yen.
For the week, the 10-year yield declined 6.5 basis points, or 0.065 percentage point. Ten-year bond futures for December delivery rose 0.09 to 136.68 as of the afternoon close on the Tokyo Stock Exchange yesterday. They gained 0.59 this week.
financeonlinecharts.com
Benchmark 10-year yields fell yesterday to a eight-week low after Treasuries gained when Federal Reserve Chairman Ben S. Bernanke said on Nov. 8 the U.S. economy is likely to ``slow noticeably.'' His comments suggest the Fed will cut rates again this year, further weakening the Bank of Japan's case for raising borrowing costs. Benchmark debt extended gains this week as reports of growing subprime-related losses in the U.S. boosted the allure of fixed-income securities.
``JGBs are likely to be affected by the impact of the U.S. housing slump,'' said Akitsugu Bandou, a senior strategist at Okasan Securities Co. in Tokyo. ``The Bank of Japan's aim to raise rates sooner is fading.''
The yield on the 1.7 percent bond due September 2017 fell 1.5 basis points to 1.525 percent as of 3:35 p.m. in Tokyo yesterday at Japan Bond Trading Co., the nation's largest interdealer debt broker. It earlier fell to 1.52 percent, the lowest since Sept. 13. The price rose 0.13 yen to 101.496 yen.
For the week, the 10-year yield declined 6.5 basis points, or 0.065 percentage point. Ten-year bond futures for December delivery rose 0.09 to 136.68 as of the afternoon close on the Tokyo Stock Exchange yesterday. They gained 0.59 this week.
financeonlinecharts.com
пятница, 9 ноября 2007 г.
Corporate Bond Risk Falls in Europe, Credit-Default Swaps Show
The risk of European companies defaulting on their debt fell from a three month high, according to traders of credit-default swaps.
Contracts on the iTraxx Crossover Series 8 Index of 50 European companies with mostly high-risk, high-yield credit ratings decreased 11 basis points to 365 basis points today, according to Deutsche Bank AG. The index, a benchmark for the cost of protecting bonds against default, declines when perceptions of credit quality improve.
The iTraxx Europe index of 125 companies with investment- grade ratings fell 2 basis points to 49.5 basis points, Deutsche Bank prices show.
The CDX North America Investment-Grade Index Series 9 was little changed at 74.5 basis points at the close of trading in New York yesterday, after earlier rising to as much as 79.25 basis points, according to Deutsche Bank.
A basis point on a credit-default swap contract protecting 10 million euros ($14.5 million) of debt from default for five years is equivalent to 1,000 euros a year.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.
earnwithourdirectory.com
Contracts on the iTraxx Crossover Series 8 Index of 50 European companies with mostly high-risk, high-yield credit ratings decreased 11 basis points to 365 basis points today, according to Deutsche Bank AG. The index, a benchmark for the cost of protecting bonds against default, declines when perceptions of credit quality improve.
The iTraxx Europe index of 125 companies with investment- grade ratings fell 2 basis points to 49.5 basis points, Deutsche Bank prices show.
The CDX North America Investment-Grade Index Series 9 was little changed at 74.5 basis points at the close of trading in New York yesterday, after earlier rising to as much as 79.25 basis points, according to Deutsche Bank.
A basis point on a credit-default swap contract protecting 10 million euros ($14.5 million) of debt from default for five years is equivalent to 1,000 euros a year.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.
earnwithourdirectory.com
Poland Raises 50 Billion Yen Selling 30-Year Bonds
Poland sold 50 billion yen ($443 million) of bonds maturing in 30 years, according to a faxed statement from Daiwa Securities SMBC Co., which handled the sale.
The eastern European nation priced the 2.81 percent bonds to yield 28 basis points more than the yen swap rate, the statement said. A basis point is 0.01 percentage point.
Mitsubishi UFJ Securities Co. also handled the sale.
Poland's fundraising follows Hungary, which last month sold 25 billion yen of samurai debt, or yen-denominated bonds issued in Japan by foreign entities. Hungary and Poland are the only governments that have been selling samurai bonds every year since 2004, Bloomberg data show.
``Poland is selling yen bonds to preserve the diversity of currencies for its funding. It likely is rolling over other yen debt,'' said Kerrin Howard, a London-based Asia market strategist at KBC Financial Products, a brokerage unit of KBC Groep NV.
``Raising funds in yen is absolutely cheap. It is similar to a carry trade; they raise funds in yen and use the money for other areas. Then they hope the yen will weaken as it comes time to repay.''
Poland pays a 4.5 percent coupon on 1.5 billion euros ($2.2 million) of bonds maturing in 2022, according to data compiled by Bloomberg.
Poland sold the yen bonds after the country posted a budget surplus for a third consecutive month in September as the nation's expanding economy and growing demand boosts tax revenue.
``After three quarters of lower than expected expenditures and higher revenue, spending is finally catching up with the initial budget plan,'' said Piotr Radzewicz, chief economist at Kredyt Bank SA, a Polish unit of Brussels-based KBC.
Poland, whose borrowing needs are on rise in the quarter ending December, will secure bulk of financing through the domestic market, he said.
earnwithourdirectory.com
The eastern European nation priced the 2.81 percent bonds to yield 28 basis points more than the yen swap rate, the statement said. A basis point is 0.01 percentage point.
Mitsubishi UFJ Securities Co. also handled the sale.
Poland's fundraising follows Hungary, which last month sold 25 billion yen of samurai debt, or yen-denominated bonds issued in Japan by foreign entities. Hungary and Poland are the only governments that have been selling samurai bonds every year since 2004, Bloomberg data show.
``Poland is selling yen bonds to preserve the diversity of currencies for its funding. It likely is rolling over other yen debt,'' said Kerrin Howard, a London-based Asia market strategist at KBC Financial Products, a brokerage unit of KBC Groep NV.
``Raising funds in yen is absolutely cheap. It is similar to a carry trade; they raise funds in yen and use the money for other areas. Then they hope the yen will weaken as it comes time to repay.''
Poland pays a 4.5 percent coupon on 1.5 billion euros ($2.2 million) of bonds maturing in 2022, according to data compiled by Bloomberg.
Poland sold the yen bonds after the country posted a budget surplus for a third consecutive month in September as the nation's expanding economy and growing demand boosts tax revenue.
``After three quarters of lower than expected expenditures and higher revenue, spending is finally catching up with the initial budget plan,'' said Piotr Radzewicz, chief economist at Kredyt Bank SA, a Polish unit of Brussels-based KBC.
Poland, whose borrowing needs are on rise in the quarter ending December, will secure bulk of financing through the domestic market, he said.
earnwithourdirectory.com
четверг, 8 ноября 2007 г.
Turkish Lira Falls to Two-Week Low Versus Dollar as Stocks Drop
The Turkish lira fell to a two-week low against the dollar as a decline in stocks prompted a sell-off in higher-yielding assets funding by cheap loans from Japan.
The lira was the second-worst performer today of the 11 emerging-market currencies tracked by Bloomberg in Europe, Africa and the Middle East. Turkey's benchmark ISE National 100 stock index slipped by the most in almost three weeks and the NTX Index of shares in central and eastern Europe's 30 largest companies declined to a month-low.
``We continue to see weakness in the lira sweeping through as confidence in global markets continues to erode,'' London- based analysts led by Elisabeth Gruie at BNP Paribas SA wrote in a note to clients.
Against the dollar, the lira weakened to 1.1854 by 12:42 p.m. in Istanbul, from 1.1727 late yesterday.
The lira is a favorite purchase in the so-called carry trade because of Turkey's interest rate of 16.75 percent, the highest in Europe. At 0.5 percent, Japan's in the lowest main lending rate among industrialized countries.
Investors use cheap loans to buy currencies, such as the lira, they can lend out for a higher return. They earn the spread between the borrowing and lending rates, taking the risk currency moves will erase their profit.
Turkish government bonds tumbled by the most in a week today, according to an ABN Amro Holding NV index of yields. The index declined for the sixth day in seven, falling more than 1 percent.
In other trading, the Czech koruna rose to 26.881 per euro, from 26.970 yesterday. It also advanced as much as 0.6 percent to a record against the dollar, and recently traded at 18.334, from 18.425 on Nov. 7. The Prague-based statistics office said consumer prices grew an annual 4 percent in October, the fastest rate since January 2002.
articles-in-stockmarket.com
The lira was the second-worst performer today of the 11 emerging-market currencies tracked by Bloomberg in Europe, Africa and the Middle East. Turkey's benchmark ISE National 100 stock index slipped by the most in almost three weeks and the NTX Index of shares in central and eastern Europe's 30 largest companies declined to a month-low.
``We continue to see weakness in the lira sweeping through as confidence in global markets continues to erode,'' London- based analysts led by Elisabeth Gruie at BNP Paribas SA wrote in a note to clients.
Against the dollar, the lira weakened to 1.1854 by 12:42 p.m. in Istanbul, from 1.1727 late yesterday.
The lira is a favorite purchase in the so-called carry trade because of Turkey's interest rate of 16.75 percent, the highest in Europe. At 0.5 percent, Japan's in the lowest main lending rate among industrialized countries.
Investors use cheap loans to buy currencies, such as the lira, they can lend out for a higher return. They earn the spread between the borrowing and lending rates, taking the risk currency moves will erase their profit.
Turkish government bonds tumbled by the most in a week today, according to an ABN Amro Holding NV index of yields. The index declined for the sixth day in seven, falling more than 1 percent.
In other trading, the Czech koruna rose to 26.881 per euro, from 26.970 yesterday. It also advanced as much as 0.6 percent to a record against the dollar, and recently traded at 18.334, from 18.425 on Nov. 7. The Prague-based statistics office said consumer prices grew an annual 4 percent in October, the fastest rate since January 2002.
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Pound Rises to 26-Year High After Bank of England Holds Rates
The U.K. pound rose to its strongest in 26 years against the dollar after the Bank of England refrained from cutting interest rates.
Britain's currency traded above $2.10 for a second day as the central bank held its main rate at 5.75 percent on concern rising oil and food prices will fan inflation. All but three of 61 economists surveyed by Bloomberg News had forecast no change in borrowing costs.
``Sterling's appreciated in response,'' said Paul Robinson, a currency strategist at Barclays Capital in London and a former Bank of England economist. ``The decision was pretty much as expected, though there was the possibility of a cut.''
The pound gained to $2.1088, the highest since May 8, 1981, and traded at $2.1058 by 2:30 p.m. in London, from $2.1035 yesterday. It was little changed at 69.63 pence per euro.
The U.K. currency has strengthened 7.5 percent against the dollar this year as the Bank of England, led by Governor Mervyn King, raised interest rates three times to a six-year high. The Federal Reserve lowered them twice to 4.5 percent in the same period. Robinson predicted the U.K. central bank will start easing in February 2008.
``Sterling has gained on the back of dollar weakness,'' said Audrey Childe-Freeman, an economist at CIBC World Markets in London. ``We're probably close to the peak already.''
Childe-Freeman raised her year-end forecast for the pound to $2.14, from $2.10.
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Britain's currency traded above $2.10 for a second day as the central bank held its main rate at 5.75 percent on concern rising oil and food prices will fan inflation. All but three of 61 economists surveyed by Bloomberg News had forecast no change in borrowing costs.
``Sterling's appreciated in response,'' said Paul Robinson, a currency strategist at Barclays Capital in London and a former Bank of England economist. ``The decision was pretty much as expected, though there was the possibility of a cut.''
The pound gained to $2.1088, the highest since May 8, 1981, and traded at $2.1058 by 2:30 p.m. in London, from $2.1035 yesterday. It was little changed at 69.63 pence per euro.
The U.K. currency has strengthened 7.5 percent against the dollar this year as the Bank of England, led by Governor Mervyn King, raised interest rates three times to a six-year high. The Federal Reserve lowered them twice to 4.5 percent in the same period. Robinson predicted the U.K. central bank will start easing in February 2008.
``Sterling has gained on the back of dollar weakness,'' said Audrey Childe-Freeman, an economist at CIBC World Markets in London. ``We're probably close to the peak already.''
Childe-Freeman raised her year-end forecast for the pound to $2.14, from $2.10.
articles-in-finance.com
Brazil's Real Rises to Near 7-Year High on Bets of Higher Flows
Brazil's real rose to near a seven- year high on speculation foreign investment flows to local bonds and stocks will rise.
``The strong flows to Brazilian markets act as a shield against bad news abroad,'' said Francisco Carvalho, head of currency trading in Sao Paulo at Liquidez Corretora DVTM, Brazil's second-biggest currency derivatives brokerage.
Brazil's currency rose 0.3 percent to 1.7347 per dollar at 7:43 a.m. New York time. It touched 1.7269 on Nov. 6, the strongest since March 2000.
The real is the second-biggest gainer this year against the U.S. dollar among the 16 most actively traded currencies tracked by Bloomberg News, advancing 23.4 percent. Canada's dollar is up 26 percent.
Losses among financial-services companies in the U.S. weren't affecting Brazil's market, according to Carvalho. Morgan Stanley joined Merrill Lynch & Co. and Citigroup Inc. in writing down losses on subprime mortgage-related assets and said the outlook for credit markets is bleaker than in September.
The second-biggest U.S. securities firm by market value after Goldman Sachs Group Inc. said it lost $3.7 billion in the two months through Oct. 31. Losses related to securities linked to home loans to risky borrowers cut fourth-quarter earnings by $2.5 billion, the New York-based bank said today.
The yield on Brazil's benchmark zero-coupon bonds due in January 2008 fell less than 1 basis point, or 0.01 percentage point, to 11.18 percent, according to Banco UBS Pactual SA.
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``The strong flows to Brazilian markets act as a shield against bad news abroad,'' said Francisco Carvalho, head of currency trading in Sao Paulo at Liquidez Corretora DVTM, Brazil's second-biggest currency derivatives brokerage.
Brazil's currency rose 0.3 percent to 1.7347 per dollar at 7:43 a.m. New York time. It touched 1.7269 on Nov. 6, the strongest since March 2000.
The real is the second-biggest gainer this year against the U.S. dollar among the 16 most actively traded currencies tracked by Bloomberg News, advancing 23.4 percent. Canada's dollar is up 26 percent.
Losses among financial-services companies in the U.S. weren't affecting Brazil's market, according to Carvalho. Morgan Stanley joined Merrill Lynch & Co. and Citigroup Inc. in writing down losses on subprime mortgage-related assets and said the outlook for credit markets is bleaker than in September.
The second-biggest U.S. securities firm by market value after Goldman Sachs Group Inc. said it lost $3.7 billion in the two months through Oct. 31. Losses related to securities linked to home loans to risky borrowers cut fourth-quarter earnings by $2.5 billion, the New York-based bank said today.
The yield on Brazil's benchmark zero-coupon bonds due in January 2008 fell less than 1 basis point, or 0.01 percentage point, to 11.18 percent, according to Banco UBS Pactual SA.
book-in-finance.com
Morgan Stanley's Roach Says Dollar's Status Intact
The dollar will keep its status as the ``world currency'' for 15 to 20 years, said Stephen Roach, chairman of Morgan Stanley Asia Ltd., after Chinese officials signaled plans to diversify from the slumping U.S. currency.
``The yen, the euro, the sterling, the Swiss franc will take on greater roles but these still don't come close to commanding the kind of security that the U.S. dollar does in investors' minds,'' Roach, former global chief economist at Morgan Stanley, the second-biggest U.S. securities firm, said in an interview in Beijing. ``It will take 15 to 20 years'' before its status erodes.
The U.S. dollar has fallen against all 16 of the most- actively traded currencies this year, reaching record lows against the euro and Canadian dollar yesterday as Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, told a conference in Beijing yesterday.
The dollar, trading at $1.4652 per euro at 8:01 a.m. in London, fell as low as $1.4731 yesterday on concern the Federal Reserve will cut interest rates for a third time this year to stop a housing slump from slowing the economy.
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``The yen, the euro, the sterling, the Swiss franc will take on greater roles but these still don't come close to commanding the kind of security that the U.S. dollar does in investors' minds,'' Roach, former global chief economist at Morgan Stanley, the second-biggest U.S. securities firm, said in an interview in Beijing. ``It will take 15 to 20 years'' before its status erodes.
The U.S. dollar has fallen against all 16 of the most- actively traded currencies this year, reaching record lows against the euro and Canadian dollar yesterday as Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, told a conference in Beijing yesterday.
The dollar, trading at $1.4652 per euro at 8:01 a.m. in London, fell as low as $1.4731 yesterday on concern the Federal Reserve will cut interest rates for a third time this year to stop a housing slump from slowing the economy.
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Speculators Increase Dollar-Yen Straddle Purchases, MUFG Says
Speculators and banks bought about 20 percent more than the daily average of dollar-yen options known as straddles to hedge against a fall in the U.S. currency, said Takeharu Miki, at Bank of Tokyo-Mitsubishi UFJ Ltd.
The speculators purchased $700 million of the straddles, a call and put option with the same strike price and duration, as the dollar slid to a an almost three-month low. Calls grant the right to buy, while puts grant the right to sell.
The options traded at an implied volatility of 12.5 percent and expire in one month with a strike price near current levels, Miki, a currency options manager, said. Traders quote implied volatility, a measure of expectations for future currency swings, as part of pricing options.
``The options market was short in dollar puts, and now that the spot market has moved lower market makers are in a panic,'' said Miki of Bank of Tokyo-Mitsubishi UFJ, a unit of Japan's biggest publicly traded lender by assets. ``Implied volatility should be well supported. Customers want to buy yen calls and market makers want to cover their short positions.''
The dollar fell as low as 112.10 yen before trading at 112.75 as of 3:27 p.m. in Tokyo from 112.63 yen yesterday when it slumped 1.8 percent. The U.S. currency has weakened after Chinese officials said they may diversify their $1.43 trillion of foreign exchange reserves out of dollars.
Volatility implied by dollar-yen options expiring in one month with a strike price near current levels rose to 12.55 percent from 11.56 percent yesterday. One-month volatility earlier gained to 12.61 percent, the highest since 12.78 percent on Sept. 12. A short is when a trader sells an option.
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The speculators purchased $700 million of the straddles, a call and put option with the same strike price and duration, as the dollar slid to a an almost three-month low. Calls grant the right to buy, while puts grant the right to sell.
The options traded at an implied volatility of 12.5 percent and expire in one month with a strike price near current levels, Miki, a currency options manager, said. Traders quote implied volatility, a measure of expectations for future currency swings, as part of pricing options.
``The options market was short in dollar puts, and now that the spot market has moved lower market makers are in a panic,'' said Miki of Bank of Tokyo-Mitsubishi UFJ, a unit of Japan's biggest publicly traded lender by assets. ``Implied volatility should be well supported. Customers want to buy yen calls and market makers want to cover their short positions.''
The dollar fell as low as 112.10 yen before trading at 112.75 as of 3:27 p.m. in Tokyo from 112.63 yen yesterday when it slumped 1.8 percent. The U.S. currency has weakened after Chinese officials said they may diversify their $1.43 trillion of foreign exchange reserves out of dollars.
Volatility implied by dollar-yen options expiring in one month with a strike price near current levels rose to 12.55 percent from 11.56 percent yesterday. One-month volatility earlier gained to 12.61 percent, the highest since 12.78 percent on Sept. 12. A short is when a trader sells an option.
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Bank of England Keeps Key Rate Unchanged at 5.75%
The Bank of England kept its benchmark interest rate unchanged at a six-year high, with policy makers resisting calls for a cut on concern that rising oil and food prices will fan inflation.
The nine-member Monetary Policy Committee, led by Governor Mervyn King, left the bank rate at 5.75 percent, as predicted by all except three of the 61 economists surveyed by Bloomberg News. Most expect a reduction in February.
The decision suggests contagion from the U.S. subprime mortgage market slump, which sparked the first run on a U.K. bank in more than a century, has yet to outweigh policy makers' concerns about inflation. The Bank of England's reluctance to follow the Federal Reserve in cutting rates sent the pound to a 26-year high against the dollar today.
``They're in `wait and see' mode,'' said Neil Mackinnon, chief economist at hedge fund ECU Group Plc in London and a former U.K. Treasury official. ``We are in for an economic slowdown that will become more apparent as we go into the early part of next year and that's when they are likely to cut. We may even move towards a recession.''
The U.K.'s benchmark is the highest among the Group of Seven industrialized nations. The Fed has cut its key rate 75 basis points since September, to 4.5 percent. The European Central Bank kept its key rate at 4 percent today, as predicted by all 61 economists surveyed by Bloomberg News.
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The nine-member Monetary Policy Committee, led by Governor Mervyn King, left the bank rate at 5.75 percent, as predicted by all except three of the 61 economists surveyed by Bloomberg News. Most expect a reduction in February.
The decision suggests contagion from the U.S. subprime mortgage market slump, which sparked the first run on a U.K. bank in more than a century, has yet to outweigh policy makers' concerns about inflation. The Bank of England's reluctance to follow the Federal Reserve in cutting rates sent the pound to a 26-year high against the dollar today.
``They're in `wait and see' mode,'' said Neil Mackinnon, chief economist at hedge fund ECU Group Plc in London and a former U.K. Treasury official. ``We are in for an economic slowdown that will become more apparent as we go into the early part of next year and that's when they are likely to cut. We may even move towards a recession.''
The U.K.'s benchmark is the highest among the Group of Seven industrialized nations. The Fed has cut its key rate 75 basis points since September, to 4.5 percent. The European Central Bank kept its key rate at 4 percent today, as predicted by all 61 economists surveyed by Bloomberg News.
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Dollar Falls After Bernanke Signals Downside Risks to Growth
The dollar fell to near a record low against the euro after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is likely to ``slow noticeably,'' raising speculation of a third interest-rate cut this year.
The U.S. currency touched the weakest since 1981 versus the pound and the cheapest since 1995 against the Swiss franc as slowing growth dimmed the allure of U.S. assets. The dollar's decline started after the European Central Bank and the Bank of England kept their borrowing costs unchanged today.
``The dollar will continue to lose its appeal,'' said Robert Fullem, vice president of U.S. corporate currency sales at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``Bernanke's crystal ball is foggy. The growth picture is worrisome and the Fed needs to cut rates further.''
The dollar fell to $1.4691 per euro, from $1.4637 yesterday, at 10:57 a.m. in New York. The dollar touched $1.4731 yesterday, the weakest since the European currency started trading in January 1999. The U.S. currency traded at 112.68 yen from 112.63. The dollar dropped to as low as $2.1117 per pound and 1.1254 Swiss franc. The euro rose 0.4 percent to 165.57 yen.
Brazil's real led the advance among the 16 most-actively traded currencies against the dollar, followed by Norway's krone. Canada's dollar rose 0.5 percent as rising oil and gold prices boost the nation's commodity exports.
The Chinese yuan climbed 0.3 percent to the highest since the central bank ended a decade-long dollar peg in July 2005. Chinese officials yesterday said the country plans to diversify its $1.43 trillion in foreign-exchange reserves, causing a sell- off in the dollar.
The yuan climbed to as high as 7.4211 versus the dollar, from 7.4421 yesterday.
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The U.S. currency touched the weakest since 1981 versus the pound and the cheapest since 1995 against the Swiss franc as slowing growth dimmed the allure of U.S. assets. The dollar's decline started after the European Central Bank and the Bank of England kept their borrowing costs unchanged today.
``The dollar will continue to lose its appeal,'' said Robert Fullem, vice president of U.S. corporate currency sales at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``Bernanke's crystal ball is foggy. The growth picture is worrisome and the Fed needs to cut rates further.''
The dollar fell to $1.4691 per euro, from $1.4637 yesterday, at 10:57 a.m. in New York. The dollar touched $1.4731 yesterday, the weakest since the European currency started trading in January 1999. The U.S. currency traded at 112.68 yen from 112.63. The dollar dropped to as low as $2.1117 per pound and 1.1254 Swiss franc. The euro rose 0.4 percent to 165.57 yen.
Brazil's real led the advance among the 16 most-actively traded currencies against the dollar, followed by Norway's krone. Canada's dollar rose 0.5 percent as rising oil and gold prices boost the nation's commodity exports.
The Chinese yuan climbed 0.3 percent to the highest since the central bank ended a decade-long dollar peg in July 2005. Chinese officials yesterday said the country plans to diversify its $1.43 trillion in foreign-exchange reserves, causing a sell- off in the dollar.
The yuan climbed to as high as 7.4211 versus the dollar, from 7.4421 yesterday.
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Asian Debt, Equities May See More Pressure, S&P Says
Asian companies are more likely to default next year as borrowing costs rise, and the region's stocks may fall because they are too expensive, Standard & Poor's said.
Rising costs and tighter access to funding, especially for companies with risk profiles weakened by acquisitions and expansion, will undermine borrowers, the rating assessor said in a report today.
Risk premiums in Asian bonds haven't increased as much as in the U.S. and Europe since record defaults on U.S. loans to people with poor credit histories brought global credit markets to a standstill in July.
``The balance of our rating outlooks on the corporate sector suggests there may be more rating downgrades than upgrades among Asia-Pacific companies in 2008, in sharp contrast to the general improvement in credit quality this year,'' Melbourne-based Ian Thompson, S&P's chief credit officer for Asia-Pacific, said in the report.
Equity markets in the region, having risen 16 percent this year according to the Morgan Stanley Capital International Asia- Pacific Index, will have less room to keep advancing next year as concerns about inflation and weakening U.S. and European economies intensities, the New York-based rating company said.
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Rising costs and tighter access to funding, especially for companies with risk profiles weakened by acquisitions and expansion, will undermine borrowers, the rating assessor said in a report today.
Risk premiums in Asian bonds haven't increased as much as in the U.S. and Europe since record defaults on U.S. loans to people with poor credit histories brought global credit markets to a standstill in July.
``The balance of our rating outlooks on the corporate sector suggests there may be more rating downgrades than upgrades among Asia-Pacific companies in 2008, in sharp contrast to the general improvement in credit quality this year,'' Melbourne-based Ian Thompson, S&P's chief credit officer for Asia-Pacific, said in the report.
Equity markets in the region, having risen 16 percent this year according to the Morgan Stanley Capital International Asia- Pacific Index, will have less room to keep advancing next year as concerns about inflation and weakening U.S. and European economies intensities, the New York-based rating company said.
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Yuan Rises Most in Two Weeks; Reserve Plan Sparks Dollar Drop
The yuan rose the most in almost two weeks against the dollar after China's plans to diversify its $1.43 trillion in foreign-exchange reserves caused the U.S. currency to extend a global slump.
The Chinese yuan climbed 0.28 percent to the highest since the central bank ended a decade-long peg and started managing the exchange rate against a basket of currencies. While the yuan has gained 5.3 percent against the dollar this year, it dropped 5 percent against the euro and 10 percent versus the Australian dollar, increasing the cost of imports and fueling inflation.
``China needn't do much to mitigate the dollar's slump'' against the yuan, said Li Huiyong, an economist at Shenyin Wanguo Research and Consulting Co. in Shanghai. ``Instead, it should take this opportunity to relax the domestic pressure for inflation.''
The yuan climbed to 7.4207 versus the dollar as of 5:30 p.m. in Shanghai from 7.4421 late yesterday, according to the China Foreign Exchange Trade System. It gained 0.31 percent on Oct. 29. Li said an annual 10 percent gain is acceptable for the economy, and ``no one doubts that the yuan is undervalued.''
Cheng Siwei, vice chairman of the National People's Congress, yesterday said at a Beijing conference that the government should diversify its foreign-exchange reserves by buying stronger currencies. The U.S. currency fell versus the euro and traded at a 26-year low against the British pound.
``Cheng's speech was a trigger for further dollar weakness in the international market, pushing the yuan higher,'' said Karen Shu, a currency trader with Standard Chartered Plc in Shanghai. ``Even if the central bank doesn't want to see a fast appreciation, the yuan has to rise since it is managed against a basket of currencies, most of which rose against the dollar.''
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The Chinese yuan climbed 0.28 percent to the highest since the central bank ended a decade-long peg and started managing the exchange rate against a basket of currencies. While the yuan has gained 5.3 percent against the dollar this year, it dropped 5 percent against the euro and 10 percent versus the Australian dollar, increasing the cost of imports and fueling inflation.
``China needn't do much to mitigate the dollar's slump'' against the yuan, said Li Huiyong, an economist at Shenyin Wanguo Research and Consulting Co. in Shanghai. ``Instead, it should take this opportunity to relax the domestic pressure for inflation.''
The yuan climbed to 7.4207 versus the dollar as of 5:30 p.m. in Shanghai from 7.4421 late yesterday, according to the China Foreign Exchange Trade System. It gained 0.31 percent on Oct. 29. Li said an annual 10 percent gain is acceptable for the economy, and ``no one doubts that the yuan is undervalued.''
Cheng Siwei, vice chairman of the National People's Congress, yesterday said at a Beijing conference that the government should diversify its foreign-exchange reserves by buying stronger currencies. The U.S. currency fell versus the euro and traded at a 26-year low against the British pound.
``Cheng's speech was a trigger for further dollar weakness in the international market, pushing the yuan higher,'' said Karen Shu, a currency trader with Standard Chartered Plc in Shanghai. ``Even if the central bank doesn't want to see a fast appreciation, the yuan has to rise since it is managed against a basket of currencies, most of which rose against the dollar.''
financeonlinecharts.com
Japan's 10-Year Bonds Rise as Stock Slide Spurs Demand for Debt
Japan's 10-year bonds gained for a second day as a slide in global stocks boosted demand for the relative safety of government securities.
Benchmark debt advanced as escalating losses tied to U.S. subprime-mortgage defaults reinforced expectations the Bank of Japan will hold off raising interest rates in the first quarter of 2008. Bonds also rose after a government report showed machinery orders fell more than economists expected.
``We are still at the first stage of seeing the effect of the U.S. subprime crisis, which is positive for the bond market,'' said Jun Fukashiro, a fund manager in Tokyo at Toyota Asset Management Co., which holds the equivalent of about $10.4 billion in assets. The decline in machinery orders is ``another positive factor for the bond market today,'' he said.
The yield on the 1.7 percent bond due September 2017 fell 2 basis points to 1.54 percent as of 5:42 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.173 yen to 101.366 yen.
The yield on the benchmark five-year note fell 1.5 basis points to 1.06 percent. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery rose 0.29 to 136.59 as of the afternoon close on the Tokyo Stock Exchange. The Nikkei 225 Stock Average slid 2 percent to 15,771.57.
Machinery orders declined a seasonally adjusted 7.6 percent to 958.7 billion yen ($8.5 billion) in September from August, the Cabinet Office said in Tokyo. The median estimate of economists surveyed by Bloomberg News was for a 1.5 percent drop.
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Benchmark debt advanced as escalating losses tied to U.S. subprime-mortgage defaults reinforced expectations the Bank of Japan will hold off raising interest rates in the first quarter of 2008. Bonds also rose after a government report showed machinery orders fell more than economists expected.
``We are still at the first stage of seeing the effect of the U.S. subprime crisis, which is positive for the bond market,'' said Jun Fukashiro, a fund manager in Tokyo at Toyota Asset Management Co., which holds the equivalent of about $10.4 billion in assets. The decline in machinery orders is ``another positive factor for the bond market today,'' he said.
The yield on the 1.7 percent bond due September 2017 fell 2 basis points to 1.54 percent as of 5:42 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.173 yen to 101.366 yen.
The yield on the benchmark five-year note fell 1.5 basis points to 1.06 percent. A basis point is 0.01 percentage point.
Ten-year bond futures for December delivery rose 0.29 to 136.59 as of the afternoon close on the Tokyo Stock Exchange. The Nikkei 225 Stock Average slid 2 percent to 15,771.57.
Machinery orders declined a seasonally adjusted 7.6 percent to 958.7 billion yen ($8.5 billion) in September from August, the Cabinet Office said in Tokyo. The median estimate of economists surveyed by Bloomberg News was for a 1.5 percent drop.
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