The Euro Is Suddenly Diving After Mario Draghi Discusses Possibility Of Negative Rates
And there goes the euro.
After spiking earlier on the rate cut, the euro is diving.
FinViz
Euro tanks as*DRAGHI SAYS ECB HAS OPEN MIND ON NEGATIVE DEPOSIT RATE
— Sara Eisen (@saraeisenFX) May 2, 2013
Read more: http://www.businessinsider.com/the-euro-is-suddenly-diving-after-mario-draghi-discusses-possibility-of-negative-rates-2013-5#ixzz2S8rvVuFa
9:00 AM: There was a very strong, prevailing consensus toward an interest rate cut, and within that, there was a prevailing consensus of a 25 basis-point cut.
9:02 AM: The [...]
From Bloomberg:
Investor Jim Rogers joined Bill Gross, who runs the world’s biggest bond fund, in warning that a rout that sent Treasurys to their biggest loss last month in almost a year probably isn’t over.
The list of bond bears is growing after Goldman Sachs Group Inc. and Wells Capital Management Inc. also voiced concern. While unemployment rose in January, Labor Department revisions showed job gains at the end of last [...]
From Bloomberg:
Spain’s economy contracted for a fifth quarter, undermining efforts to plug the budget deficit that’s pushing the nation closer to a bailout, while austerity measures kept inflation at a 17-month high.
Gross domestic product declined 0.3 percent in the three months through September, compared with 0.4 percent the prior quarter, the National Statistics Institute said today. That compared with the Bank of Spain’s estimate on Oct. 23 of a 0.4 [...]
SAN FRANCISCO (MarketWatch) — Treasury prices turned up late Monday, pushing yields down slightly, as companies took advantage of the calm to line up once again to sell debt. The week’s major events don’t begin until Wednesday, leaving open a good window for companies to take advantage of still relatively low borrowing costs.
Yields on 10-year notes (US:10_YEAR) turned down 2 basis points to 1.66%, after increasing to 1.69% earlier.
Thirty-year bond yields (US:30_YEAR) fell 1 [...]
Many are hailing the ECB’s yet-to-be-announced bond-buying plan – expected to be detailed to the public September 6 – as a game-changer for the euro crisis.
The ECB has been unwilling to restart bond purchases of peripheral euro nations even as markets have spiraled out of control this summer, saying they violate the central bank’s governing treaties in that they amount to de facto financing of sovereign states.
Recently, however, the story has changed. The [...]
If the Barclays e-mails are any indication, the right submission could at least earn an employee a cup of coffee from grateful traders.
“If it’s not too late, low 1m and 3m would be nice,” a Barclays trader wrote to a Libor submitter in an April 7, 2006, e-mail released by the FSA. “Coffees will be coming your way either way, just to say thank you for your help in the [...]
Despite economic miss after miss, the momentum players in the market continue unfazed, dodectupling down on Bernanke Put Double Zero, pushing stocks to new highs simply on continued hopes that something in Europe may have changed with Merkel’s so-called defeat last week, even as Merkel’s key CSU coalition partners voiced an open threat earlier today to no longer support Eurozone aid if there is no conditionality – supposedly Mario Monti’s biggest victory (ignoring [...]
Wonder how deep the rabbit hole goes? It goes very, very, very deep.
From the FSA’ breakdown of Barclays traders caught in the act of manipulation:
On Friday, 10 March 2006, two US dollar Derivatives Traders made email requests for a low three month US dollar LIBOR submission for the coming Monday:
i. Trader C stated “We have an unbelievably large set on Monday (the IMM). We need a really low 3m fix, [...]
The number of Americans filing new claims for unemployment benefits was little changed last week, according to government data on Thursday that suggested the labor market was struggling to regain momentum.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week’s figure was revised up to 389,000 from the previously reported 386,000.
Economists polled by Reuters had forecast claims falling to 380,000 [...]
Thursday is jobs day in the U.S. But a key report from the Philadelphia Fed, as well as preliminary June PMI readings and existing home sales, will also move shares.
Here’s what you need to know.
New Zealand starts things off at 6:45 p.m. on Wednesday evening with a reading of first quarter GDP. Economists forecast the economy expanded by 0.4 percent during the period.
Announcements go quiet until 2:00 a.m. on Thursday morning, [...]
The Reserve Bank of India kept its policy repo rate at 8 percent and the cash reserve ratio at 4.75 percent at its latest policy meeting.
This comes after the central bank’s 50 basis point cut at its April meeting, and despite hopes of another rate cut against a backdrop of slowing domestic growth.
Fitch cut the nation’s credit ratings, and S&P warned that India could be reduced to junk status citing concerns about the country’s [...]
UPDATE:
Growth in the manufacturing industry in the region surrounding Chicago increased at a more tepid rate than recently recorded, new data out of the Institute for Supply Management shows.
Click here for updates >
The headline index declined to 52.7 from 56.2 a month earlier. Economists polled by Bloomberg had expected another month of increasing growth, forecasting a 60 basis point jump. A reading above 50 indicates expansion.
All seven sub-indexes declined in May, with new orders and production [...]
UPDATE:
Growth in the manufacturing industry in the region surrounding Chicago increased at a more tepid rate than recently recorded, new data out of the Institute for Supply Management shows.
Click here for updates >
The headline index declined to 52.7 from 56.2 a month earlier. Economists polled by Bloomberg had expected another month of increasing growth, forecasting a 60 basis point jump.
Below, full output from the report:
ISM-Chicago
Read more: http://www.businessinsider.com/chicago-pmi-2012-5#ixzz1wSHJ2QBd
From Bloomberg:
Nassim Taleb, author of “The Black Swan,” said he favors investing in Europe over the U.S. even with the possible breakup of the single European currency in part because of the euro area’s superior deficit situation.
Europe’s lack of a centralized government is another reason it’s preferable to invest in the region, said Taleb, a professor of risk engineering at New York University whose 2007 best- selling book argued that [...]
It’s official now, the Chinese economy did not bottom out in the first quarter, and the latest data confirms just how badly the economy is doing (or just how too optimistic the market has been).
While I am bearish on China and did not think the worst was over for the Chinese economy, I did think that the slowdown has stabilised a bit in the late first quarter, and will probably have another [...]
A series of 25 basis point increases in the Fed rate would help to create downward pressure on overly valued commodities shares and may actually end up boosting employment.
The notion that higher interest rates will reduce new investment is bogus. We live in a demand based economy and the only way to spur consumer demand is to force down commodities valuations so consumers have money to spend on something besides [...]
WSJ
One business story these days is how companies are crashing the debt markets to raise money at today’s bargain rates. The same goes for the world’s biggest borrower, Uncle Sam, which is also quietly benefitting from historically low interest rates that cannot last. The latter deserves more attention because the next President and Congress are likely to be stuck paying the bill when rates inevitably rise.
***
First, a couple facts: the [...]
Facebook Inc. (FB) the operator of the world’s most popular social-networking website, got $8 billion in financing.
The loans consist of a $5 billion five-year revolving line of credit and a $3 billion 364-day bridge loan, the Menlo Park, California-based company said today in a regulatory filing.
JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp. and Barclays Plc arranged both facilities.
Borrowings under the revolver will pay [...]
(Reuters) – China’s central bank said on Saturday it would cut the reserve requirement ratio (RRR) for banks by 50 basis points, effective from February 24.
The first RRR cut in 2012 came more than two months after the last 50-basis-point cut announced on November 30, 2011.
The People’s Bank of China made the announcement on its website (www.pbc.gov.cn).
It would cut the RRR for the biggest banks to 20.5 percent from 21 percent, freeing [...]
While sounding just a tad preachy in his February newsletter, Bill Gross’ latest summary piece on the economy, on the Fed’s forray into infinite ZIRP, into maturity transformation, and the lack thereof, on the Fed’s massive blunder in treating the liquidity trap, but most importantly on what the transition from a levering to delevering global economy means, is a must read. First: on the fatal flaw in the Fed’s plan: “when [...]
From Bloomberg:
France was stripped of its top credit rating by Standard & Poor’s and banks suspended talks with Greece over debt restructuring, the first blows this year to efforts aimed at stemming Europe’s fiscal turmoil.
France’s AAA rating will fall by one level at S&P, Finance Minister Francois Baroin told France 2 television today. Slovakia, Italy, and Austria are among other countries to be downgraded, European officials said. Germany will keep [...]
* Three-month euro Libor/OIS spread close to 3-yr highs
* Only crisis resolution to restore normal lending
* Excess liquidity makes gauging rate bets hard
By Ana Nicolaci da Costa
LONDON, Jan 5 (Reuters) – A key measure of interbank financial stress hovered near a three-year high on Thursday, with worries over euro zone debt keeping banks reluctant to lend to each other even after the ECB’s liquidity injection in December.
The European Central Bank [...]
From Reuters:
The euro zone banking system starts the new year awash with record levels of liquidity but few signs that institutions are prepared to lend to each other, leaving money markets frozen.
Most of the near half trillion euros of three-year funds borrowed from the European Central Bank in the last week of 2011 have made their way back to the ECB’s overnight deposit account.
Use of the facility was close to 450 billion [...]
When on Friday we penned “And This Is Where The LTRO Money Went” we said that the final nail in the “Carry Trade” theory was that instead of using the LTRO “Bazooka” cash to collect meaningless pennies in front of a steamroller, Europe’s banks turned around and deposited it right back with the ECB after the bank’s deposit facility soared to a 2011 record €347 billion, €82 billion more than [...]
by ZH
It appears that China has already forgotten its close encounter with inflation as recent as a few months ago leading to assorted riots, and is instead far more concerned with the collapsing housing market. As a result it just announced a 50 bps reserve ratio cut, well in advance of when most commentators thought it would happen, on what is now the start of a monetary policy loosening cycle. The [...]
For Russian Prime Minister Vladimir Putin, the U.S. is a “parasite” because its rising debt weighs on the global economy. For his government, the same debt is the safest possible investment.
Russia, the world’s largest energy producer, has boosted its holdings of U.S. debt by more than 1,600 percent since September 2006, according to U.S. Treasury Department data. Russia used surging commodity prices to build the world’s third- largest reserves pile, [...]
U.S. stocks climbed, erasing earlier losses and preventing the longest Dow Jones Industrial Average slump since 1978, as investors speculated the Federal Reserve will start another stimulus program. Treasuries 10-year notes erased gains and the dollar slid.
The Dow halted an eight-day drop, gaining 29.82 points to 11,896.44 at 4 p.m. in New York. The S&P 500 rose 0.5 percent after yesterday’s 2.6 percent plunge erased the gauge’s 2011 advance and [...]
U.S. banks searching for hints of credit-market distress ahead of next week’s deadline to raise the U.S. debt ceiling are finding few signs of panic so far.
Commercial banks and securities firms are tracking how money-market funds adjust holdings and whether participants in repo markets, where financial firms obtain short-term financing, change terms for collateral including Treasuries, according to executives in charge of finance operations at five of the largest U.S. [...]
by Tony Palotta of MacroStory
How A Credit Market Prices In Economic Recession
In a prior post I compared the 2007 SPX topping pattern to the current May 2011 high. The assumption being the US economy is on the verge of an economic recession now as it was in December 07 when the recession officially began. The similarities were unquestionable (chart below). The unknown is are [...]
by JR
Jim Grant is talking his book and when he says what’s not to like, I’ll tell him what’s not to like: destruction of the economy is not to like. Bernanke is heading into inflation at 10% with unemployment and housing and construction busts, and the Grants of this world think politicians are going to be fine with that? They’re not. Grant is off the reservation.
Michael [...]
Since the triple dip in housing was recently circumvented courtesy of QE2, and was “transitory” in theory today’s subpar housing starts and permits data is the beginning of the quadruple dip. And subpar it was: starts came at 523K on expectations of 569K, down from revised 585K previously. Permits were also ugly, missing expectations by a comparable account, printing at 551K, with consensus of 590K(and [...]
by Michael Pollaro
Our monthly Monetary Watch, an Austrian take on where we are on the monetary inflation front examining the money creation activities of the Federal Reserve and private banks…
True “Austrian” Money Supply TMS
The U.S. money supply aggregates based on the Austrian definition of the money supply, what Austrians call the True Money Supply or TMS, saw robust growth in April, with narrow TMS1 posting an annualized rate [...]
I showed in the first End of QE2 paper that there will be a 5% GDP shortfall in demand for Treasuries when the Fed stops its quantitative easing policy. According to many long term models, a 1% increase in the US budget deficit leads to a 15/20 basis point hike in UST 10-year yields. The table below suggests this, and recaps the main drivers and their influence [...]
by Russ Winter, SA
Below is the long term chart of the eurodollar (ED) yield, showing the effects of a decade of money printing and bubble blowing. In the last two years this has created what I have called the central bank or Wizard of Oz bubble. This bubble and all its correlated bubbles were caused by the willingness of central bankers to purchase, [...]
by ZH
Until now, in our Non Farm Payroll growth forecasts, Zero Hedge had been using 90,000 as the number of monthly jobs the US should be creating each month just to keep up with population growth. However, per the CBO budget released in January, it may be time to revise this estimate. As the chart below shows, according to the traditionally optimistic Congressional Budget Office, [...]
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