TOKYO, April 2 (GNN) - Japan's Nikkei share average rose
on Thursday, rebounding from a three-week low, helped by
short-covering and hopes that the central bank is buying stocks.
The Nikkei benchmark ended 1.5 percent higher to
19,312.79, posting the biggest daily percentage gain since
February 12.
The broader Topix gained 1.7 percent to 1,554.17 and
the JPX-Nikkei Index 400 also added 1.7 percent to
14,126.63.
Central bank data showed that it bought 35.2 billion yen
worth of exchange traded funds (ETF) on Wednesday, when the
market fell to a three-week low.(Reuters)
Showing posts with label Global Markets News. Show all posts
Showing posts with label Global Markets News. Show all posts
Nikkei posts biggest daily gain since mid-Feb on short-covering; BOJ buying helps mood
FOREX -Dollar slips vs yen as Tokyo shares slip; Aussie up on China data
* Dollar slips broadly at start of second quarter
* Yen firmer as weak Tokyo shares weigh on risk sentiment
* Better-than-expected China factory data bolsters Aussie
* ADP jobs report could provide clue to Friday payrolls (Adds comments, updates prices)
By Masayuki Kitano and Lisa Twaronite
SINGAPORE/TOKYO, April 1 (GNN) - The dollar slipped versus the yen at the start of a new quarter on Wednesday, as a soft reading on Japanese business sentiment dented Tokyo shares and helped bolster the safe haven yen.
The Australian dollar gained a lift from a better-than expected reading of Chinese factory activity and that added to the broadly weak tone of the greenback, traders said.
"Dollar/yen has led this move today and I think it's basically trading off the back end of the Nikkei," said Stephen Innes, senior trader for FX broker Oanda in Singapore.
The dollar fell 0.5 percent to 119.56 yen, down from Tuesday's one-week high of 120.37 yen.
Japan's benchmark Nikkei share average was last down about 1 percent, as investors booked profits on the first day of Japanese financial year and after soft reading on the Bank of Japan's tankan business sentiment survey.
Weakness in Japanese equities can dent risk sentiment and lend support to the yen.
"Any sort of negative sign, when the market gets over-extended like it is right now, you're going to see some type of profit-taking or pullback," Innes said, referring to long positions in the U.S. dollar.
The Australian dollar rose 0.4 percent to $0.7636, having clawed up to as high as $0.7664 after China's official Purchasing Managers' Index (PMI) showed that activity in China's factory survey unexpectedly picked up in March.
The Australian dollar is sensitive to Chinese data due to Australia's large trade exposure to China.
The better-than-expected China PMI helped lift the Australian dollar and likely triggered some paring back of bullish bets on the U.S. dollar, said Jesper Bargmann, head of trading for Nordea Bank in Singapore.
"Market will have been a little bit of long of (U.S.) dollars, I assume, so we're just seeing a little squeeze on the back of that number," Bargmann said.
The euro rose 0.5 percent to $1.0789, getting some respite after suffering its worst quarterly performance ever in the first quarter.
The euro slid 11 percent against the dollar in January-March, its biggest quarterly drop since its 1999 launch, due to the the European Central Bank launching its quantitative easing programme, with the U.S. Federal Reserve is expected to start raising interest rates this year.
The euro will probably remain under pressure this quarter, although it is unlikely to fall as fast as it did in the previous three months, said Nordea Bank's Bargmann.
"I think the theme is kind of intact, until we start seeing the first hike out of the U.S. We still have the Greek situation looming, so overall there will still be pressure on the euro," he said.
"Against the dollar we found a very important support level around $1.04/$1.05. I think it will be challenged again and I think we may test around parity," Bargmann added.
The euro has regained some ground in the past couple of weeks after setting a 12-year low of $1.04570 in mid-March.
Later on Wednesday, the ADP National Employment Report will provide a picture of the U.S. private sector employment situation and could offer some clues to Friday's non-farm payroll report. (Reuters)(Editing by Simon Cameron-Moore)
* Yen firmer as weak Tokyo shares weigh on risk sentiment
* Better-than-expected China factory data bolsters Aussie
* ADP jobs report could provide clue to Friday payrolls (Adds comments, updates prices)
By Masayuki Kitano and Lisa Twaronite
SINGAPORE/TOKYO, April 1 (GNN) - The dollar slipped versus the yen at the start of a new quarter on Wednesday, as a soft reading on Japanese business sentiment dented Tokyo shares and helped bolster the safe haven yen.
The Australian dollar gained a lift from a better-than expected reading of Chinese factory activity and that added to the broadly weak tone of the greenback, traders said.
"Dollar/yen has led this move today and I think it's basically trading off the back end of the Nikkei," said Stephen Innes, senior trader for FX broker Oanda in Singapore.
The dollar fell 0.5 percent to 119.56 yen, down from Tuesday's one-week high of 120.37 yen.
Japan's benchmark Nikkei share average was last down about 1 percent, as investors booked profits on the first day of Japanese financial year and after soft reading on the Bank of Japan's tankan business sentiment survey.
Weakness in Japanese equities can dent risk sentiment and lend support to the yen.
"Any sort of negative sign, when the market gets over-extended like it is right now, you're going to see some type of profit-taking or pullback," Innes said, referring to long positions in the U.S. dollar.
The Australian dollar rose 0.4 percent to $0.7636, having clawed up to as high as $0.7664 after China's official Purchasing Managers' Index (PMI) showed that activity in China's factory survey unexpectedly picked up in March.
The Australian dollar is sensitive to Chinese data due to Australia's large trade exposure to China.
The better-than-expected China PMI helped lift the Australian dollar and likely triggered some paring back of bullish bets on the U.S. dollar, said Jesper Bargmann, head of trading for Nordea Bank in Singapore.
"Market will have been a little bit of long of (U.S.) dollars, I assume, so we're just seeing a little squeeze on the back of that number," Bargmann said.
The euro rose 0.5 percent to $1.0789, getting some respite after suffering its worst quarterly performance ever in the first quarter.
The euro slid 11 percent against the dollar in January-March, its biggest quarterly drop since its 1999 launch, due to the the European Central Bank launching its quantitative easing programme, with the U.S. Federal Reserve is expected to start raising interest rates this year.
The euro will probably remain under pressure this quarter, although it is unlikely to fall as fast as it did in the previous three months, said Nordea Bank's Bargmann.
"I think the theme is kind of intact, until we start seeing the first hike out of the U.S. We still have the Greek situation looming, so overall there will still be pressure on the euro," he said.
"Against the dollar we found a very important support level around $1.04/$1.05. I think it will be challenged again and I think we may test around parity," Bargmann added.
The euro has regained some ground in the past couple of weeks after setting a 12-year low of $1.04570 in mid-March.
Later on Wednesday, the ADP National Employment Report will provide a picture of the U.S. private sector employment situation and could offer some clues to Friday's non-farm payroll report. (Reuters)(Editing by Simon Cameron-Moore)
Oil down as Iran races for Tuesday deadline on nuclear deal
The two sides have set Tuesday as an interim deadline for an agreement in the talks at Lausanne, Switzerland.
"We're likely to stay jittery through the day on any headline coming out of Lausanne, and the stronger dollar isn't helping oil either," said analyst Phil Flynn of Price Futures Group in Chicago.
The dollar rose as the euro slumped on worries over whether Greece would secure aid before it runs out of cash in three weeks. A stronger dollar makes commodities denominated in the greenback, such as oil, more costly for holders of other currencies. [USD/]
Benchmark Brent oil was down $1.15, or about 1 percent, at $55.26 a barrel by 11:12 a.m. EDT (1512 GMT). U.S. crude was 93 cents, or nearly 2 percent, lower at $47.94.
Brent and U.S. crude tumbled 5 percent on Friday on worries of an Iran nuclear deal by March 31.
Tehran is keen to recover market share lost under the U.S.-led sanctions that have restricted its crude exports to just 1 million barrels per day from 2.5 million bpd in 2012.
Oil markets are well supplied, with recent figures showing global production outstripping demand by around 1.5 million bpd.
"Regarding Iran, there are two possible outcomes: a framework deal or an extended deadline," Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, told the Reuters Global Oil Forum.
Societe Generale analyst Michael Wittner said if a framework agreement was reached, it was logical to expect "an immediate bearish knee-jerk reaction in the markets, with oil prices quickly losing on the order of $5."
Few investors expect the Organization of the Petroleum Exporting Countries, which pumps about a third of the world's oil, to restrain production to help push up prices, rather than maintain market share.
(Reuters)(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Dale Hudson, Susan Thomas and Lisa Von Ahn)
GLOBAL MARKETS-Dollar sags, bonds boom as Fed takes dovish tack
* Dollar extends fall as market sees slower US rate lift off
* Fed lowers projected outlook for growth, inflation, rates
* Stocks, commodities encouraged by thought of extended stimulus
* Japanese shares buck trend as rising yen prompts profit taking
By Wayne Cole
SYDNEY, March 19 (GNN) - The dollar was giving ground in Asia on Thursday as investors priced in a later start and a slower pace for future U.S rate rises, slashing bond yields globally and firing up stocks.
The formerly friendless euro found itself up at $1.0880 , having jumped 2.8 percent on Wednesday, while oil held gains of 5 percent as the dollar retreat benefited commodities.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.3 percent for its best daily performance in five weeks, while Australia's main index jumped 1.4 percent.
The only laggard was the Nikkei which slipped 1.1 percent in reaction to a rising yen.
Short-term U.S. yields had boasted their biggest drop in six years after the Federal Reserve trimmed forecasts for inflation and growth, and said unemployment could fall further than first thought without risking a spike in inflation.
The median projection for the Fed funds rate at the end of 2015 was cut to 0.625 percent, down half a point from December.
Fed Chair Janet Yellen also sounded uncomfortable with the strength of the dollar, saying it would be a "notable drag" on exports and a downward force on inflation.
"There was nothing in the statement to suggest that the Fed is leaning toward a June hike," said Michelle Girard, chief U.S. economist at RBS.
"Developments leave us feeling more comfortable with our official call for the first rate hike being in September."
The market reaction was immediate and violent. Fed fund futures <0#FF:> surged as investors sharply scaled back expectations for how fast and far rates might rise.
Yields on two-year notes nosedived 11 basis points to 0.56 percent as prices rose, the biggest daily rally since 2009.
The drop in yields pulled the rug out from under the dollar, as investors have been massively long of the currency in the expectation its interest rate advantage could only get wider.
Against a basket of currencies the dollar was down a further 0.3 percent, having shed 1.8 percent on Wednesday.
The Swiss franc, sterling and the Australian dollar all enjoyed similar gains, while the New Zealand dollar got an extra boost from upbeat growth data.
The dollar also skidded to 119.80 yen, having been around 121.00 before the Fed's statement.
Wall Street was encouraged by the prospect that policy would stay super-loose for longer and the Dow ended Wednesday up 1.27 percent. The S&P 500 rose 1.21 percent and the Nasdaq 0.92 percent.
Among commodities, gold rallied to $1,173 an ounce, having climbed from $1.145 on Wednesday.
U.S. crude was off 34 cents at $44.32, but that followed a gain of 3 percent on Wednesday. Brent was 5 cents easier at $55.86 a barrel. (Reuters)(Editing by Eric Meijer)
* Fed lowers projected outlook for growth, inflation, rates
* Stocks, commodities encouraged by thought of extended stimulus
* Japanese shares buck trend as rising yen prompts profit taking
By Wayne Cole
The formerly friendless euro found itself up at $1.0880 , having jumped 2.8 percent on Wednesday, while oil held gains of 5 percent as the dollar retreat benefited commodities.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.3 percent for its best daily performance in five weeks, while Australia's main index jumped 1.4 percent.
The only laggard was the Nikkei which slipped 1.1 percent in reaction to a rising yen.
Short-term U.S. yields had boasted their biggest drop in six years after the Federal Reserve trimmed forecasts for inflation and growth, and said unemployment could fall further than first thought without risking a spike in inflation.
The median projection for the Fed funds rate at the end of 2015 was cut to 0.625 percent, down half a point from December.
Fed Chair Janet Yellen also sounded uncomfortable with the strength of the dollar, saying it would be a "notable drag" on exports and a downward force on inflation.
"There was nothing in the statement to suggest that the Fed is leaning toward a June hike," said Michelle Girard, chief U.S. economist at RBS.
"Developments leave us feeling more comfortable with our official call for the first rate hike being in September."
The market reaction was immediate and violent. Fed fund futures <0#FF:> surged as investors sharply scaled back expectations for how fast and far rates might rise.
Yields on two-year notes nosedived 11 basis points to 0.56 percent as prices rose, the biggest daily rally since 2009.
The drop in yields pulled the rug out from under the dollar, as investors have been massively long of the currency in the expectation its interest rate advantage could only get wider.
Against a basket of currencies the dollar was down a further 0.3 percent, having shed 1.8 percent on Wednesday.
The Swiss franc, sterling and the Australian dollar all enjoyed similar gains, while the New Zealand dollar got an extra boost from upbeat growth data.
The dollar also skidded to 119.80 yen, having been around 121.00 before the Fed's statement.
Wall Street was encouraged by the prospect that policy would stay super-loose for longer and the Dow ended Wednesday up 1.27 percent. The S&P 500 rose 1.21 percent and the Nasdaq 0.92 percent.
Among commodities, gold rallied to $1,173 an ounce, having climbed from $1.145 on Wednesday.
U.S. crude was off 34 cents at $44.32, but that followed a gain of 3 percent on Wednesday. Brent was 5 cents easier at $55.86 a barrel. (Reuters)(Editing by Eric Meijer)
GLOBAL MARKETS-Asia stocks fall as risk aversion prevails, dollar soars
- * MSCI Asia-Pacific index hits 2-month low
- * Markets continue digesting possibility of earlier U.S. rate hike
- * Dollar hits new 12-year high against euro
- * Japan shares buck trend on upbeat data, Nikkei up 0.5 pct
By Shinichi Saoshiro
TOKYO, March 11 (GNN) - Asian stocks fell to a two-month low on Wednesday as nervous markets recoiled on worries about an earlier U.S. interest rate hike, while such a prospect helped send the dollar to a 12-year high against the euro.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 percent after touching its lowest since January. Australian and South Korean shares each lost 0.5 percent and Malaysian and Indonesian stocks also declined.
Riskier assets both in the United States and elsewhere have come under pressure after Friday's robust U.S. employment data increased expectations that the Federal Reserve could raise rates as soon as June -a prospect that appeared relatively more remote a few weeks prior.
The possibility of higher U.S. yields siphoning away funds from riskier assets gave the S&P 500, at a record high two weeks ago, its worst decline in two months overnight and emerging market stocks declined to their lowest since early January.
Mexico's peso weakened to a record low and its Malaysian, South Korean, Brazilian and South African counterparts have also suffered heavy hits.
Renewed concern about Greece's debt talks with euro zone partners and deflationary pressures in China have also weighed on emerging markets in general. China will release industrial output, retail sales and investment data later in the day which are all expected to show slowing growth.
Japan's Nikkei bucked the trend and rose 0.5 percent as better-than-expected machinery orders helped offset Wall Street losses.
But the deepening decline in the yen, usually a positive factor for Japanese stocks as it buoys exporters, had some worrying about other consequences.
"The market started to worry about side effects from a further slide in the yen," said Hiroichi Nishi, general manager at SMBC Nikko Securities in Tokyo, adding that there are also concerns that a stronger dollar hurts U.S. multinational companies' earnings.
"In addition to the ECB's starting its bond buying, Greek concerns are likely to weigh on the euro again this week, when there are several Greek-related events scheduled," said Masafumi Yamamoto, market strategist at Praevidentia Strategy in Tokyo.
Technical talks between finance experts from Athens and its international creditors are due to start later in the day with the aim of unlocking further funding.
The dollar traded at 121.315 yen, pulled down from an eight-year high of 122.04 scaled overnight as the broad slide in equities favoured the safe-haven yen.
The dollar index remained close to its 11-1/2 year peak of 98.808 climbed the previous day.
Hit by the greenback's broad strength, the Australian dollar hovered close to a six-year trough of $0.7603 reached on Tuesday.
U.S. crude oil bounced modestly after falling sharply overnight on the dollar's appreciation, which makes commodities denominated in the greenback costlier for holders of other currencies.
U.S. crude was up 1.3 percent at $48.93 a barrel after falling 3.4 percent the previous day. (Reuters)(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Kim Coghill)
Developers wrestle with making 'killer app' for Apple Watch
While app makers are passionate about developing for the Apple Watch, some are skeptical about the prospects of coming up with a big idea for the little computer on a wrist that hits stores on April 24, said Markiyan Matsekh, product manager at software engineering firm Eleks.
A killer app that grabs consumers' attention will be key to the success of the Apple Watch and could spawn new companies, as the iPhone did. The photo-sharing app Instagram grew into a $1 billion business bought by Facebook Inc, and Snapchat has gone from a mobile messaging app to a company valued at $19 billion.
Apple has blocked some features, such as the gyroscope and accelerometer, on the development kit, and the watch simulator cannot test all functions, developers said. Apple declined to comment on why developers cannot access certain features.
"The limitations are discouraging," said Matsekh, who helped develop a Watch app to control a Tesla Model S without involvement from the electric carmaker.
App designer Mark Rabo believes Apple is spurring creativity though restraint.
The challenge he believes is "not trying to take a phone app and cram it into a Watch."
Apple listed about 40 apps on its website as it unveiled its smartwatch on Monday with "thousands" more in the works, it said.
Watch apps showcased by Apple so far are mostly extensions of services like Uber, American Airlines and Twitter.
"People are playing it pretty safe and right now just extending their application," Ryan Taylor, design director at Normative Design, the software firm hired by Rabo. Once the Watch is released, it will be easier to develop, he said.
Taylor points out that there has been no "killer app" so far on Android smartwatches that have been on the market for two to three years.
What Apple is "trying to do is get people to think of apps differently than an iPhone app. That cultural shift is taking a little bit more time and that's OK," he said. (Reuters)(Reporting by Malathi Nayak; Editing by Lisa Shumaker)
UPDATE 2-Brazil's swelling budget gap compounds dire 2015 for Rousseff
- * Worst fiscal result in more than a decade
- * Overall budget gap doubles to 6.7 percent in 2014
- * Minister says numbers are "honest" (Adds comment by cabinet minister)
By Silvio Cascione and Luciana Otoni
BRASILIA, Jan 30 (AsiaTimes.ga) - Brazil fell far short of its main fiscal target in 2014, underscoring the uphill battle that President Dilma Rousseff faces to shore up public accounts to prevent a credit downgrade as recession risks loom.
Brazil posted a primary budget deficit of 32.536 billion reais ($13.76 billion) for last year, equal to 0.63 percent of gross domestic product, the central bank said on Friday. That was the first annual gap since the current data series started in 2001 and a far cry from the 91.3 billion reais surplus of 2013.
The country's overall budget gap, which takes into account debt servicing costs, doubled in 2014 to 6.7 percent of GDP, one of the highest among major economies according to the International Monetary Fund.
The results, much worse than the already grim estimates of investors and ratings agencies, mean that newly appointed Finance Minister Joaquim Levy will have to slash spending or continue jacking up taxes to meet the government's goal of saving 1.2 percent of GDP in 2015.
Budget constraints are just one headache for Rousseff, who struggled to win re-election in October. State-run oil company Petroleo Brasileiro SA is engulfed in a massive corruption probe, and some of the country's biggest cities risk rationing water.
Brazil needs to run solid budget surpluses to service its sizable debt, on which it pays double-digit interest rates. Gross debt will probably keep rising this year, to 65.2 percent of GDP, according to central bank estimates.
Brazil's currency, the real, dropped nearly 3 percent on Friday, while interest rate futures <0#2DIJ:> spiked.
On condition of anonymity, a cabinet minister acknowledged the figures were "very bad," but said they reflected the true state of Brazil's finances.
The December results are the last under former Finance Minister Guido Mantega and Treasury Secretary Arno Augustin. Both left office at the end of the year after investors accused them of using "creative accounting" to bolster budget results.
"We can have a true start from 2015 onwards," the minister told Reuters. "The plan was that there should be no skeletons in the closet for Levy."
The Rousseff administration originally aimed for a primary surplus equivalent to 1.9 percent of GDP in 2014. It later abandoned that target as tax revenues dwindled and public spending surged ahead of the October election. (GA, Reuters, ATimes)(Additional reporting by Anthony Boadle; Editing by Todd Benson, Chizu Nomiyama and Lisa Von Ahn)
IFR-Big three bond raters still hold sway over mortgage market
NEW YORK, Jan 30 (IFR) - Call it old-school thinking but despite all the regulatory scrutiny and public slamming of the top three global rating agencies for their roles during the last real estate bust, their rating calls on the riskiest tranches of conduit commercial mortgage bond deals are still influential enough to impact pricing outcomes on transactions.
Just last week when two competing deals priced their D classes with a 20bp differential, issuers, investors and analysts said the difference was simply because one had a Triple B minus rating from the one of the main credit rating agencies, while the other did not.
"It's certainly the easiest thing for market players to hang their hat on," one issuer of the two trades said of the pricing disparities. "It shows us the preferences of investors, and we are in this market a lot."
Simply put, the costs of doing business in the primary and repo markets for conduit commercial mortgage bond deals will be higher without a stamp of approval from one of the big three rating agencies - Moody's Investors Service, Standard & Poor's and Fitch Ratings.
The problem has being magnified on the riskiest bonds broadly being offered - namely the D class - where the act of securing an investment grade from the old guard rating agencies has become harder to come by.
When Morgan Stanley and Bank of America sold their US$1bn plus conduit a week ago, called MSBAM 2015-C20, the issuers did so with marks of Triple B minus and Triple B (low) from Morningstar and DBRS at the D class level.
Moody's was also hired to rate the trade, but like most of the deals it rated in recent months, supplied letter grades only on the deal's most bullet-proof Triple A and Aa2 securities.
So when Morgan Stanley's US$50.2m D class priced at swaps plus 380bp, versus S+360bp for a similar US$70.65m bond from Deutsche Bank and Ladder Capital that had a Triple B minus rating from Fitch Ratings, market players reacted by saying that having a top-three firm on a deal still mattered.
That partly stems from decades-old investment criteria that required at least one major rating agency on a deal before certain investors were allowed to buy into a deal.
But because little has changed in the criteria even after the crash, newcomers to the rating agency arena like Kroll Bond Rating Agency or Morningstar are still absent from the ranks of approved firms.
"Documentation and technology tend to move relatively slow on that front," one analyst said.
And in practical terms, that not only means some money managers will be barred from buying Triple B minus paper without the sign off from a major rating agency, but also that fast money accounts looking for leverage in the repo market will often be paying more.
Fast-money accounts are big buyers of Triple B minus paper from the conduits, and are known for levering up bonds on a 5.5% yielding D tranche to reach mid-teen returns.
"I don't know what the delta is (on repo) terms for a Triple B minus with or without Fitch (or) Moody's but I am sure it is something," a portfolio manager said.
Credit Suisse, for one, does not differentiate between ratings from one of the big three or from a DBRS, Kroll Bond Rating Agency or Morningstar, a person familiar with the matter said.
But many of the large US investment banks do, he said, noting that most are known to charge more for deals without Triple B minus marks from Moody's or Fitch.
WILLING AND ABLE
Fitch Ratings has stood alone for months as the only firm of the big three agencies willing, or able, to supply Triple B minus ratings.
Standard & Poor's has been largely out of the picture since the crash, and just this month agreed to a one-year ban from rating any new US conduit deals as part of a settlement with regulators, who claimed the agency misled investors in six post-crash deals.
And while Moody's has picked up the bulk of the slack, until this week, its views on anything just below the Triple A level have been absent on new-issues.
But any lingering doubts of Moody's stance of credit quality deterioration has been cleared up in a searing report issued by the agency on Thursday, which stated that bonds rated Triple B minus by others are more akin to B1, or junk status, by Moody's own metrics. [ID: nL1N0V827K]
"None of us really respect what rating agencies have had to say (since the crash)," a portfolio manager at a large money manager said in an interview following the report's release.
"But this had people paying attention for the first time in years."
He was not the only one keeping a close eye on what this all could mean for investors.
Darrell Wheeler, an analyst at Amherst Pierpont Securities, has been warning about the vulnerability of new-issue Triple B minus paper to downgrades and losses.
"If we go into a near-term recession, there is a real risk of losses at the Triple B minus level, and certainly there is concern from a downgrade perspective," he said in an interview.
But even in a downgrade scenario, Wheeler says there are sharp consequences for holders of Triple B minus paper, as deals that initially printed at S+335bp on average in 2014 will quickly widen to S+550bp.
"That's quite a kick in the pants." (Reporting by Joy Wiltermuth; editing by Shankar Ramakrishnan and Jack Doran)
Just last week when two competing deals priced their D classes with a 20bp differential, issuers, investors and analysts said the difference was simply because one had a Triple B minus rating from the one of the main credit rating agencies, while the other did not.
"It's certainly the easiest thing for market players to hang their hat on," one issuer of the two trades said of the pricing disparities. "It shows us the preferences of investors, and we are in this market a lot."
Simply put, the costs of doing business in the primary and repo markets for conduit commercial mortgage bond deals will be higher without a stamp of approval from one of the big three rating agencies - Moody's Investors Service, Standard & Poor's and Fitch Ratings.
The problem has being magnified on the riskiest bonds broadly being offered - namely the D class - where the act of securing an investment grade from the old guard rating agencies has become harder to come by.
When Morgan Stanley and Bank of America sold their US$1bn plus conduit a week ago, called MSBAM 2015-C20, the issuers did so with marks of Triple B minus and Triple B (low) from Morningstar and DBRS at the D class level.
Moody's was also hired to rate the trade, but like most of the deals it rated in recent months, supplied letter grades only on the deal's most bullet-proof Triple A and Aa2 securities.
So when Morgan Stanley's US$50.2m D class priced at swaps plus 380bp, versus S+360bp for a similar US$70.65m bond from Deutsche Bank and Ladder Capital that had a Triple B minus rating from Fitch Ratings, market players reacted by saying that having a top-three firm on a deal still mattered.
That partly stems from decades-old investment criteria that required at least one major rating agency on a deal before certain investors were allowed to buy into a deal.
But because little has changed in the criteria even after the crash, newcomers to the rating agency arena like Kroll Bond Rating Agency or Morningstar are still absent from the ranks of approved firms.
"Documentation and technology tend to move relatively slow on that front," one analyst said.
And in practical terms, that not only means some money managers will be barred from buying Triple B minus paper without the sign off from a major rating agency, but also that fast money accounts looking for leverage in the repo market will often be paying more.
Fast-money accounts are big buyers of Triple B minus paper from the conduits, and are known for levering up bonds on a 5.5% yielding D tranche to reach mid-teen returns.
"I don't know what the delta is (on repo) terms for a Triple B minus with or without Fitch (or) Moody's but I am sure it is something," a portfolio manager said.
Credit Suisse, for one, does not differentiate between ratings from one of the big three or from a DBRS, Kroll Bond Rating Agency or Morningstar, a person familiar with the matter said.
But many of the large US investment banks do, he said, noting that most are known to charge more for deals without Triple B minus marks from Moody's or Fitch.
WILLING AND ABLE
Fitch Ratings has stood alone for months as the only firm of the big three agencies willing, or able, to supply Triple B minus ratings.
Standard & Poor's has been largely out of the picture since the crash, and just this month agreed to a one-year ban from rating any new US conduit deals as part of a settlement with regulators, who claimed the agency misled investors in six post-crash deals.
And while Moody's has picked up the bulk of the slack, until this week, its views on anything just below the Triple A level have been absent on new-issues.
But any lingering doubts of Moody's stance of credit quality deterioration has been cleared up in a searing report issued by the agency on Thursday, which stated that bonds rated Triple B minus by others are more akin to B1, or junk status, by Moody's own metrics. [ID: nL1N0V827K]
"None of us really respect what rating agencies have had to say (since the crash)," a portfolio manager at a large money manager said in an interview following the report's release.
"But this had people paying attention for the first time in years."
He was not the only one keeping a close eye on what this all could mean for investors.
Darrell Wheeler, an analyst at Amherst Pierpont Securities, has been warning about the vulnerability of new-issue Triple B minus paper to downgrades and losses.
"If we go into a near-term recession, there is a real risk of losses at the Triple B minus level, and certainly there is concern from a downgrade perspective," he said in an interview.
But even in a downgrade scenario, Wheeler says there are sharp consequences for holders of Triple B minus paper, as deals that initially printed at S+335bp on average in 2014 will quickly widen to S+550bp.
"That's quite a kick in the pants." (Reporting by Joy Wiltermuth; editing by Shankar Ramakrishnan and Jack Doran)
IMF sees growth momentum for Canada despite lower oil
Jan 30 (AsiaTimes.ga) - Canada's economy will retain its momentum this year, despite a sharp drop in oil prices, thanks to exports to a recovering United States that will offset declines in domestic consumption and investment, the International Monetary Fund (IMF) said on Friday.
While the make-up of the Canadian economy has not yet shifted to a broad-based recovery, it is expected to become more balanced this year as the housing market cools, the IMF said.
Still, the recent drop in oil prices will be a drag on growth due to weaker energy sector investment, with the economy expected to see 2.3 percent growth this year, slightly lower than 2014's estimated 2.4 percent rate.
"Downside risks to the outlook have risen in light of further oil price declines, adding to the risks of weaker global growth and still-unfolding effects from the unusually large fall in oil prices," the IMF said in its report.
The IMF completed its consultations with Canadian officials on the state of the economy in late January. (GA,Reuters, Atimes) (Reporting by Leah Schnurr; Editing by Chizu Nomiyama)
While the make-up of the Canadian economy has not yet shifted to a broad-based recovery, it is expected to become more balanced this year as the housing market cools, the IMF said.
Still, the recent drop in oil prices will be a drag on growth due to weaker energy sector investment, with the economy expected to see 2.3 percent growth this year, slightly lower than 2014's estimated 2.4 percent rate.
"Downside risks to the outlook have risen in light of further oil price declines, adding to the risks of weaker global growth and still-unfolding effects from the unusually large fall in oil prices," the IMF said in its report.
The IMF completed its consultations with Canadian officials on the state of the economy in late January. (GA,Reuters, Atimes) (Reporting by Leah Schnurr; Editing by Chizu Nomiyama)
China Telecom studying Mexico investment - spokesman
Jan 17 (AsiaTimes.ga) - China's third-largest carrier China Telecom is studying a possible investment in Mexico, a company spokesman said on Saturday, a day after Reuters reported that it is preparing a possible bid for Mexico's new $10 billion mobile broadband network.
The spokesman for subsidiary China Telecom Corporation Ltd. did not comment directly on the Reuters story but said in an emailed statement that China Telecom was doing a preliminary study on an investment opportunity in Mexico.
Reuters, citing sources, reported on Friday that China Telecom is looking for Mexican partners to join it in a consortium for the mobile broadband project, with up to several billion dollars of financing already secured from Chinese state-controlled banks.
The proposed network is part of a wider reform designed to break billionaire Carlos Slim's hold on the Mexican telecoms business and to improve poor broadband penetration levels. (Reporting by Christine Murray in Mexico City and Gerry Shih in Beijing; Editing by Frances Kerry)(GA, Reuters, Asia Times)
The spokesman for subsidiary China Telecom Corporation Ltd. did not comment directly on the Reuters story but said in an emailed statement that China Telecom was doing a preliminary study on an investment opportunity in Mexico.
Reuters, citing sources, reported on Friday that China Telecom is looking for Mexican partners to join it in a consortium for the mobile broadband project, with up to several billion dollars of financing already secured from Chinese state-controlled banks.
The proposed network is part of a wider reform designed to break billionaire Carlos Slim's hold on the Mexican telecoms business and to improve poor broadband penetration levels. (Reporting by Christine Murray in Mexico City and Gerry Shih in Beijing; Editing by Frances Kerry)(GA, Reuters, Asia Times)
Italy's Padoan urges ECB bond buying "without constraints"
Jan 17 (AsiaTimes.ga) - Italian Economy Minister Pier Carlo Padoan has called for the European Central Bank (ECB) to launch its expected bond-buying programme "without constraints", saying he hoped its impact was not watered down and fragmented along national lines.
The ECB is expected next week to announce it will issue newly printed money to buy government bonds and flood cash into the euro zone economy, aiming to ward off deflation in a step known as quantitative easing (QE).
"QE is an essential contribution against deflation, it should absolutely not be diluted," Padoan was quoted saying in business daily Il Sole 24 Ore on Saturday.
"I hope that national fragmentation doesn't exert an influence," he said. "What counts is to turn around expectations and for that, there needs to be a decisive intervention without constraints."
Details of the programme, which ECB President Mario Draghi is widely expected to unveil after a meeting on Jan. 22, are still unclear.
The size of any programme and conditions such as whether risks will be distributed across the whole euro zone, or whether national central banks will buy the bonds of their own country only, have been under discussion since late last year.
The plan has faced stiff resistance from Germany, the bloc's biggest economy, which fears unlimited bond purchases would risk loading too much risk from weaker countries onto the Eurosystem as a whole.
However some analysts say a system under which national central banks buy their own country's debt would risk undermining the basic principle on which the single currency is built.
QE has already been deployed in the United States, Britain and Japan, but would be an unprecedented experiment in a bloc made up of different countries with no common fiscal system.
Bank of Italy Governor Ignazio Visco told a German newspaper last week he favoured a programme under which risks were borne jointly by the euro zone as a whole, in line with other policy measures which the ECB sets for the whole bloc.
Separately Dutch Finance Minister Jeroen Dijsselbloem signalled in a newspaper interview he would not object to the ECB purchasing national bonds of member states.
Policy makers in Italy, which is struggling to emerge from three years of on-off recession, have warned repeatedly that their economy faces a growing risk that chronic low inflation will tip into full deflation. (Reporting by James Mackenzie; Editing by David Holmes)(GA, Reuters, Asia Times)
The ECB is expected next week to announce it will issue newly printed money to buy government bonds and flood cash into the euro zone economy, aiming to ward off deflation in a step known as quantitative easing (QE).
"QE is an essential contribution against deflation, it should absolutely not be diluted," Padoan was quoted saying in business daily Il Sole 24 Ore on Saturday.
"I hope that national fragmentation doesn't exert an influence," he said. "What counts is to turn around expectations and for that, there needs to be a decisive intervention without constraints."
Details of the programme, which ECB President Mario Draghi is widely expected to unveil after a meeting on Jan. 22, are still unclear.
The size of any programme and conditions such as whether risks will be distributed across the whole euro zone, or whether national central banks will buy the bonds of their own country only, have been under discussion since late last year.
The plan has faced stiff resistance from Germany, the bloc's biggest economy, which fears unlimited bond purchases would risk loading too much risk from weaker countries onto the Eurosystem as a whole.
However some analysts say a system under which national central banks buy their own country's debt would risk undermining the basic principle on which the single currency is built.
QE has already been deployed in the United States, Britain and Japan, but would be an unprecedented experiment in a bloc made up of different countries with no common fiscal system.
Bank of Italy Governor Ignazio Visco told a German newspaper last week he favoured a programme under which risks were borne jointly by the euro zone as a whole, in line with other policy measures which the ECB sets for the whole bloc.
Separately Dutch Finance Minister Jeroen Dijsselbloem signalled in a newspaper interview he would not object to the ECB purchasing national bonds of member states.
Policy makers in Italy, which is struggling to emerge from three years of on-off recession, have warned repeatedly that their economy faces a growing risk that chronic low inflation will tip into full deflation. (Reporting by James Mackenzie; Editing by David Holmes)(GA, Reuters, Asia Times)
TREASURIES-U.S. 30-year yield hits record low for second day
Jan 15 (ATimes) - Yields on U.S. 30-year Treasuries bonds struck a record low on Thursday for a second straight session after a surprise interest rate cut by the Swiss National Bank spurred buying of higher-yielding U.S. government debt.
The yield on the longest U.S. government securities touched 2.3940 percent, below the previous record low of 2.3950 percent set on Wednesday, according to Tradeweb and Reuters data.
The 30-year bond yield last traded at 2.398 percent, down 5.5 basis points from late on Wednesday. This brought its decline so far in January to 35 basis points, putting it on track for its steepest monthly decline since May 2012.
(Reporting by Richard Leong; Editing by James Dalgleish)(GA, Reuters, Asia Times)
The yield on the longest U.S. government securities touched 2.3940 percent, below the previous record low of 2.3950 percent set on Wednesday, according to Tradeweb and Reuters data.
The 30-year bond yield last traded at 2.398 percent, down 5.5 basis points from late on Wednesday. This brought its decline so far in January to 35 basis points, putting it on track for its steepest monthly decline since May 2012.
(Reporting by Richard Leong; Editing by James Dalgleish)(GA, Reuters, Asia Times)
PC market steadies in third quarter: survey
The quarterly report by Gartner Inc. said global PC shipments dipped 0.5 percent from a year ago to 79.4 million units in the quarter ended in September.
Gartner said the PC market grew in “mature markets” such as North America and Western Europe, offsetting declines in emerging markets, and suggested the worst may be over for PC makers.
Source: APP, AIP
Goldman to test appetite for new structured product
LONDON, June 23 (IFR) - Goldman Sachs will start marketing a new type of bond transaction this Wednesday that straddles asset categories and features an unusual triple-recourse structure, as it seeks to take advantage of investors' demand for Triple A rated assets.
The so-called Fixed Income Global Structure Collateral Obligation (FIGSCO) issuer is a joint venture between Goldman Sachs and Mitsui Sumitomo Insurance and will provide investors with a triple recourse if things turn sour.
Under the structure, investors will have recourse to the pool of assets backing the trade, as well as having an unsecured claim against Goldman Sachs and Mitsui.
This triple-recourse mechanism makes the transaction akin to a covered bond issue, where investors have a claim against the assets and the issuer and, indeed, covered bond investors will be among the targeted roadshow audience.
The transaction is expected to diversify Goldman's funding sources and the outright pricing level is expected to be competitive with senior funding.
The deal has been structured in response to a lack of supply of Triple A rated assets and net negative covered bond supply. The programme size being set up is 10bn.
Barclays, Credit Agricole-CIB, Natixis, Goldman Sachs and UBS will hold investor meetings running from Wednesday until July 1.
But while the transaction uses some covered bond technology, it does not have all the bells and whistles traditionally attached to the sector.
There is no legal framework; the assets would not be eligible for a cover pool as defined by European regulation; the bonds will unlikely be repo-eligible at the ECB; nor will they likely count for the Liquidity Coverage Ratio. They will probably have a 20% risk-weighting and be treated as Triple A corporate exposure under Solvency 2.
TRIPLE A WITH A SPREAD
The deal could offer buyers a much more attractive spread than a sovereign trade, while filling a supply gap in the covered bond primary market, according to a FIG syndicate banker.
"This is an interesting trade, especially if you look at what's going on in the world," he said. "This will offer value and we expect the big liquidity books to get on board." On the negative side, the deal may require more knowledge than a plain Triple A trade.
"We have been here before: Triple A with a spread," the banker said, "which is why the roadshow will be extremely important and investors will have to do their homework."
Another banker said the complex nature of the trade was a negative. "They clearly want to leverage the success of covered bonds, but the complexity alone is negative."
The S&P Triple A is achieved thanks to a total return swap provided on it by Goldman Sachs Mitsui Marine Derivative Products, or GS MMDP, a joint venture with strong credit ratings. For some, this has echoes of the much maligned CDO market.
Meanwhile, the deal's collateral cashflow is likely to come from a variety of securities from Goldman Sach's long-term funding operations.
There is no disclosure yet, but that could mean the collateral could include bonds, derivatives and loan assets, which sources away from the deal say resembles something between a structured covered bond and a CDO structure.
FIGSCO would be more dynamic than a typical covered bond pool, though, as assets would be marked to bid on a daily basis and topped up to keep overcollateralisation above 5%.
More collateral will be added to the pool if the existing securities decline in value. A reputable international asset monitor will be tasked with assessing the valuation of the pool on a monthly basis.
The items would not be disclosed line by line, but investors would be informed of the type of assets, the country of origin, the proportion of fixed and FRN assets and the level of concentration risk.
(Reporting By Helene Durand, Anna Brunetti, Editing by Philip Wright)
The so-called Fixed Income Global Structure Collateral Obligation (FIGSCO) issuer is a joint venture between Goldman Sachs and Mitsui Sumitomo Insurance and will provide investors with a triple recourse if things turn sour.
Under the structure, investors will have recourse to the pool of assets backing the trade, as well as having an unsecured claim against Goldman Sachs and Mitsui.
This triple-recourse mechanism makes the transaction akin to a covered bond issue, where investors have a claim against the assets and the issuer and, indeed, covered bond investors will be among the targeted roadshow audience.
The transaction is expected to diversify Goldman's funding sources and the outright pricing level is expected to be competitive with senior funding.
The deal has been structured in response to a lack of supply of Triple A rated assets and net negative covered bond supply. The programme size being set up is 10bn.
Barclays, Credit Agricole-CIB, Natixis, Goldman Sachs and UBS will hold investor meetings running from Wednesday until July 1.
But while the transaction uses some covered bond technology, it does not have all the bells and whistles traditionally attached to the sector.
There is no legal framework; the assets would not be eligible for a cover pool as defined by European regulation; the bonds will unlikely be repo-eligible at the ECB; nor will they likely count for the Liquidity Coverage Ratio. They will probably have a 20% risk-weighting and be treated as Triple A corporate exposure under Solvency 2.
TRIPLE A WITH A SPREAD
The deal could offer buyers a much more attractive spread than a sovereign trade, while filling a supply gap in the covered bond primary market, according to a FIG syndicate banker.
"This is an interesting trade, especially if you look at what's going on in the world," he said. "This will offer value and we expect the big liquidity books to get on board." On the negative side, the deal may require more knowledge than a plain Triple A trade.
"We have been here before: Triple A with a spread," the banker said, "which is why the roadshow will be extremely important and investors will have to do their homework."
Another banker said the complex nature of the trade was a negative. "They clearly want to leverage the success of covered bonds, but the complexity alone is negative."
The S&P Triple A is achieved thanks to a total return swap provided on it by Goldman Sachs Mitsui Marine Derivative Products, or GS MMDP, a joint venture with strong credit ratings. For some, this has echoes of the much maligned CDO market.
Meanwhile, the deal's collateral cashflow is likely to come from a variety of securities from Goldman Sach's long-term funding operations.
There is no disclosure yet, but that could mean the collateral could include bonds, derivatives and loan assets, which sources away from the deal say resembles something between a structured covered bond and a CDO structure.
FIGSCO would be more dynamic than a typical covered bond pool, though, as assets would be marked to bid on a daily basis and topped up to keep overcollateralisation above 5%.
More collateral will be added to the pool if the existing securities decline in value. A reputable international asset monitor will be tasked with assessing the valuation of the pool on a monthly basis.
The items would not be disclosed line by line, but investors would be informed of the type of assets, the country of origin, the proportion of fixed and FRN assets and the level of concentration risk.
(Reporting By Helene Durand, Anna Brunetti, Editing by Philip Wright)
Sluggish euro zone business, dovish ECB pushes bond yields lower
* Surveys show private sector expansion slowing unexpectedly
* ECB signals low rates through to end-2016
* Bund yields fall close to 2014 lows (Adds fresh comment, updates prices)
By Marius Zaharia
LONDON, June 23 (GNN) - Euro zone bond yields fell on Monday after business surveys showed a feeble and uneven economic recovery and the European Central Bank signalled interest rates will stay low until at least the end of 2016.
Expansion of the euro zone private sector unexpectedly slowed this month, according to Markit's Composite Purchasing Managers' Index (PMI). German activity kept expanding robustly but failed to meet investor expectations, while activity in France shrank at the fastest rate in four months.
"The French data was weak, and even the German data was slightly underwhelming ... and that is leading us to this rebound," said RBC's head of European rates strategy Peter Schaffrik, adding that the weak data underlines the need for the European Central Bank to maintain its ultra-loose monetary policy stance.
The data overshadowed upbeat Chinese manufacturing figures, which pushed yields higher in early trade, and an unexpectedly strong U.S. expansion which was the fastest in four years.
German 10-year Bund yields, the benchmark for euro zone borrowing costs, fell 3 basis points to 1.32 percent, within reach of 2014 lows of 1.285 percent. All other euro zone sovereign 10-year yields also dipped.
"German Bunds are expensive, but it's not easy to see a jump in yields with no inflation expectations and still depressed growth," ING rate strategist Alessandro Giansanti said.
Short-dated yields across the euro zone dipped after ECB President Mario Draghi told Dutch paper De Telegraaf that prolonging banks' access to unlimited liquidity up to the end of 2016 was a signal on rates.
His Austrian colleague Ewald Nowotny also said rates would only rise when growth picked up at a pace faster than 2 percent, which was unlikely to happen before 2016.
German two-year yields dipped 1 basis point to 0.03 percent in early trading, with other similarly dated yields in the euro zone falling 1-4 bps.
"Clearly Draghi wants to strengthen the forward guidance and he has put more flesh on the bones with those comments," said Jan von Gerich, chief fixed income analyst at Nordea.
CURVE PLAYS
Natixis fixed income strategist Cyril Regnat said the ECB's stance and the poor economic data will force investors to switch into bonds with longer maturities in search for yield, flattening yield curves across Europe and especially in Germany.
"German 10-year Bunds are really expensive, but if we get inflation at 0.2 or 0.3 percent in June or July we can have even lower yields," Regnat said.
Other strategists say the ECB's ultra-easy policy stance will eventually foster growth and recommend investors to position for steeper curves. They say Bund yields might track moves higher in U.S. Treasuries and British gilts, as the Federal Reserve and the Bank of England prepare to change course on policy.
Rabobank rates strategist Lyn Graham-Taylor recommends investors position for a wider yield gap between five- and 10-year Dutch bonds, with the five-year supported by the ECB outlook and the 10-year more sensitive to the Fed outlook.
Traders said a slight weakness in peripheral debt on Monday morning was evidence of some profit-taking on this year's rally before the end of the quarter, although bonds pared their early losses as the day progressed.
This supportive market backdrop should help Italy sell up to 3.5 billion euros of inflation-linked debt and zero-coupon bonds on Wednesday, and medium- and long-term bonds on Friday. (GNN) (Reuters)
(Reporting by Marius Zaharia; Additional reporting by John Geddie; Editing by Catherine Evans)
* ECB signals low rates through to end-2016
* Bund yields fall close to 2014 lows (Adds fresh comment, updates prices)
By Marius Zaharia
LONDON, June 23 (GNN) - Euro zone bond yields fell on Monday after business surveys showed a feeble and uneven economic recovery and the European Central Bank signalled interest rates will stay low until at least the end of 2016.
Expansion of the euro zone private sector unexpectedly slowed this month, according to Markit's Composite Purchasing Managers' Index (PMI). German activity kept expanding robustly but failed to meet investor expectations, while activity in France shrank at the fastest rate in four months.
"The French data was weak, and even the German data was slightly underwhelming ... and that is leading us to this rebound," said RBC's head of European rates strategy Peter Schaffrik, adding that the weak data underlines the need for the European Central Bank to maintain its ultra-loose monetary policy stance.
The data overshadowed upbeat Chinese manufacturing figures, which pushed yields higher in early trade, and an unexpectedly strong U.S. expansion which was the fastest in four years.
German 10-year Bund yields, the benchmark for euro zone borrowing costs, fell 3 basis points to 1.32 percent, within reach of 2014 lows of 1.285 percent. All other euro zone sovereign 10-year yields also dipped.
"German Bunds are expensive, but it's not easy to see a jump in yields with no inflation expectations and still depressed growth," ING rate strategist Alessandro Giansanti said.
Short-dated yields across the euro zone dipped after ECB President Mario Draghi told Dutch paper De Telegraaf that prolonging banks' access to unlimited liquidity up to the end of 2016 was a signal on rates.
His Austrian colleague Ewald Nowotny also said rates would only rise when growth picked up at a pace faster than 2 percent, which was unlikely to happen before 2016.
German two-year yields dipped 1 basis point to 0.03 percent in early trading, with other similarly dated yields in the euro zone falling 1-4 bps.
"Clearly Draghi wants to strengthen the forward guidance and he has put more flesh on the bones with those comments," said Jan von Gerich, chief fixed income analyst at Nordea.
CURVE PLAYS
Natixis fixed income strategist Cyril Regnat said the ECB's stance and the poor economic data will force investors to switch into bonds with longer maturities in search for yield, flattening yield curves across Europe and especially in Germany.
"German 10-year Bunds are really expensive, but if we get inflation at 0.2 or 0.3 percent in June or July we can have even lower yields," Regnat said.
Other strategists say the ECB's ultra-easy policy stance will eventually foster growth and recommend investors to position for steeper curves. They say Bund yields might track moves higher in U.S. Treasuries and British gilts, as the Federal Reserve and the Bank of England prepare to change course on policy.
Rabobank rates strategist Lyn Graham-Taylor recommends investors position for a wider yield gap between five- and 10-year Dutch bonds, with the five-year supported by the ECB outlook and the 10-year more sensitive to the Fed outlook.
Traders said a slight weakness in peripheral debt on Monday morning was evidence of some profit-taking on this year's rally before the end of the quarter, although bonds pared their early losses as the day progressed.
This supportive market backdrop should help Italy sell up to 3.5 billion euros of inflation-linked debt and zero-coupon bonds on Wednesday, and medium- and long-term bonds on Friday. (GNN) (Reuters)
(Reporting by Marius Zaharia; Additional reporting by John Geddie; Editing by Catherine Evans)
WRAPUP 1-U.S. housing regaining footing as supply improves
* Existing home sales rise 4.9 percent in May
* Housing inventory increases 6.0 percent from year ago
* Median home price up 5.1 percent, smallest rise since 2012
WASHINGTON, June 23 (GNN) - U.S. home resales rose more than expected in May and the stock of properties for sale was the highest in more than 1-1/2 years, suggesting that housing was pulling out of a recent slump.
The National Association of Realtors said on Monday existing home sales increased 4.9 percent to an annual rate of 4.89 million units. May's increase was the largest since August 2011.
Economists had forecast sales rising only 2.2 percent to a 4.73 million-unit pace last month.
The housing recovery stalled in the second half of 2013 as interest rates increased and prices surged against the backdrop of a dwindling supply of properties available for sale.
Despite the second consecutive months of gains, sales were down 5.0 percent compared to May last year. They remain down 9 percent from a peak of 5.38 million units hit in July.
Still, the increase in sales will be welcomed by the Federal Reserve, which is closely watching the housing market as it contemplates the future course of monetary policy.
Fed Chair Janet Yellen has warned that a prolonged slump could undermine the economy.
The sturdy housing report added to signs that economic activity has regained momentum after sliding in the first quarter.
A separate report showed manufacturing expanding strongly in June. Financial data firm Markit said its preliminary or "flash" U.S. Manufacturing Purchasing Managers Index rose to 57.5, the highest reading since May 2010, from 56.4 in May.
A reading above 50 signals expansion in economic activity.
While housing is showing tentative signs of recovery, progress will likely be slow.
First-time buyers, a necessary ingredient for a strong housing market, continue to hug the sidelines. Many have also been priced out by stringent lending practices by financial institutions.
Last month, first-time buyers accounted for only 27 percent of the transactions, hovering near their lowest level since the Realtors group started tracking the series.
A market share of 40 percent to 45 percent for first-time buyers is considered by economists and real estate professionals as ideal.
The inventory of unsold homes on the market increased 6.0 percent from a year-ago to 2.28 million in May. That was the highest level since August 2012.
The month's supply of existing homes increased to 5.6 months from 5.7 months in April. Six months' supply is normally considered a healthy balance between supply and demand.
Still, the improving supply is helping to temper price increases. The median home price increased 5.1 percent from a year ago to $213,400. That was the smallest increase since March 2012.(GNN)(Reuters)
(Reporting Lucia Mutikani; Editing by Andrea Ricci)
* Housing inventory increases 6.0 percent from year ago
* Median home price up 5.1 percent, smallest rise since 2012
WASHINGTON, June 23 (GNN) - U.S. home resales rose more than expected in May and the stock of properties for sale was the highest in more than 1-1/2 years, suggesting that housing was pulling out of a recent slump.
The National Association of Realtors said on Monday existing home sales increased 4.9 percent to an annual rate of 4.89 million units. May's increase was the largest since August 2011.
Economists had forecast sales rising only 2.2 percent to a 4.73 million-unit pace last month.
The housing recovery stalled in the second half of 2013 as interest rates increased and prices surged against the backdrop of a dwindling supply of properties available for sale.
Despite the second consecutive months of gains, sales were down 5.0 percent compared to May last year. They remain down 9 percent from a peak of 5.38 million units hit in July.
Still, the increase in sales will be welcomed by the Federal Reserve, which is closely watching the housing market as it contemplates the future course of monetary policy.
Fed Chair Janet Yellen has warned that a prolonged slump could undermine the economy.
The sturdy housing report added to signs that economic activity has regained momentum after sliding in the first quarter.
A separate report showed manufacturing expanding strongly in June. Financial data firm Markit said its preliminary or "flash" U.S. Manufacturing Purchasing Managers Index rose to 57.5, the highest reading since May 2010, from 56.4 in May.
A reading above 50 signals expansion in economic activity.
While housing is showing tentative signs of recovery, progress will likely be slow.
First-time buyers, a necessary ingredient for a strong housing market, continue to hug the sidelines. Many have also been priced out by stringent lending practices by financial institutions.
Last month, first-time buyers accounted for only 27 percent of the transactions, hovering near their lowest level since the Realtors group started tracking the series.
A market share of 40 percent to 45 percent for first-time buyers is considered by economists and real estate professionals as ideal.
The inventory of unsold homes on the market increased 6.0 percent from a year-ago to 2.28 million in May. That was the highest level since August 2012.
The month's supply of existing homes increased to 5.6 months from 5.7 months in April. Six months' supply is normally considered a healthy balance between supply and demand.
Still, the improving supply is helping to temper price increases. The median home price increased 5.1 percent from a year ago to $213,400. That was the smallest increase since March 2012.(GNN)(Reuters)
(Reporting Lucia Mutikani; Editing by Andrea Ricci)
Kerry says called Egypt foreign min over journalists' "chilling" sentence
(GNN) - U.S. Secretary of State John Kerry said that he had phoned Egypt's Foreign Minister Sameh Shukri on Monday to register Washington's "serious displeasure" with the sentencing of three Al Jazeera journalists to seven years in jail.
"Today's conviction is obviously a chilling and draconian sentence," he told reporters in Baghdad.
"When I heard the verdict today I was so concerned about it, frankly, disappointed in it, that I immediately picked up the telephone and talked to the foreign minister of Egypt and registered our serious displeasure at this kind of verdict," he said. (GNN)(Reuters)
(Reporting by Lesley Wroughton; Writing by Oliver Holmes; Editing by Hugh Lawson)
"Today's conviction is obviously a chilling and draconian sentence," he told reporters in Baghdad.
"When I heard the verdict today I was so concerned about it, frankly, disappointed in it, that I immediately picked up the telephone and talked to the foreign minister of Egypt and registered our serious displeasure at this kind of verdict," he said. (GNN)(Reuters)
(Reporting by Lesley Wroughton; Writing by Oliver Holmes; Editing by Hugh Lawson)
Asia spooked by Wall Street loss, dollar dips
(GNN) - Asian shares caught Wall Street's gloom on Wednesday, while the dollar was on track for a sixth losing session against the yen after the Bank of Japan upgraded its view on capital expenditures.
The BOJ held policy steady as expected at the conclusion of a two-day meeting and maintained its overall upbeat economic assessment.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.1 percent, after U.S. stocks fell in a broad selloff. .N
Asian investors also kept a wary eye on the situation in Thailand, where the army declared martial law on Tuesday after months of civil and political unrest.
Japan's Nikkei stock average .N225 skidded 0.6 percent, as investors awaited post-meeting comments by Bank of Japan Governor Haruhiko Kuroda from 3:30 p.m. (2.30 p.m.), after the Tokyo market close.
"The market is already jittery about falling U.S. bond yields leading to a weak dollar-yen. Kuroda's comment dismissing the possibility of further easing again won't do any good to the mood," said Hiromichi Tamura, chief strategist at Nomura Securities.
Japanese trade data for April released shortly before the market opened showed that the country posted a record 22nd month
of trade deficits. While last month's rise in exports beat forecasts, shipments to the key U.S. market slowed.
The dollar lost about 0.1 percent against the yen to 101.24 yen, not far from Monday's low of 101.10 yen, which was its weakest level since early February.
The recent downtrend in U.S. Treasury yields continued to undermine the dollar's appeal.
The yield on benchmark U.S. 10-year notes inched up to 2.51 percent in Asia from its U.S. close of 2.50 percent on Tuesday, but remained close to half-year lows.
Later on Wednesday, the U.S. Federal Reserve will release the minutes of its latest policy meeting, though most market participants did not expect any solid clues to emerge on the timing of a future hike to interest rates.
New York Federal Reserve President William Dudley said at an event on Tuesday that the U.S. central bank will likely be "relatively slow" in hiking interest rates.
The euro was flat on the day at $1.3702, not far from a nadir of $1.3648 touched on Thursday, which was its lowest since late February.
In commodities trading, U.S. crude rose 0.6 percent to $102.90 per barrel, supported by a disruption in Libya's oil output and an unexpected draw in U.S. crude oil inventory according to industry data.
Spot gold was up about 0.1 percent on the day at $1,295.50 an ounce.(GNN) (Reuters)
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Shri Navaratnam & Kim Coghill)
The BOJ held policy steady as expected at the conclusion of a two-day meeting and maintained its overall upbeat economic assessment.
 |
| A man looks at an electronic board displaying Japan's Nikkei average (top C) and various countries' stock indices, as passers-by walk past outside a brokerage in Tokyo April 16, 2014. |
Asian investors also kept a wary eye on the situation in Thailand, where the army declared martial law on Tuesday after months of civil and political unrest.
Japan's Nikkei stock average .N225 skidded 0.6 percent, as investors awaited post-meeting comments by Bank of Japan Governor Haruhiko Kuroda from 3:30 p.m. (2.30 p.m.), after the Tokyo market close.
"The market is already jittery about falling U.S. bond yields leading to a weak dollar-yen. Kuroda's comment dismissing the possibility of further easing again won't do any good to the mood," said Hiromichi Tamura, chief strategist at Nomura Securities.
Japanese trade data for April released shortly before the market opened showed that the country posted a record 22nd month
of trade deficits. While last month's rise in exports beat forecasts, shipments to the key U.S. market slowed.
The dollar lost about 0.1 percent against the yen to 101.24 yen, not far from Monday's low of 101.10 yen, which was its weakest level since early February.
The recent downtrend in U.S. Treasury yields continued to undermine the dollar's appeal.
The yield on benchmark U.S. 10-year notes inched up to 2.51 percent in Asia from its U.S. close of 2.50 percent on Tuesday, but remained close to half-year lows.
Later on Wednesday, the U.S. Federal Reserve will release the minutes of its latest policy meeting, though most market participants did not expect any solid clues to emerge on the timing of a future hike to interest rates.
New York Federal Reserve President William Dudley said at an event on Tuesday that the U.S. central bank will likely be "relatively slow" in hiking interest rates.
The euro was flat on the day at $1.3702, not far from a nadir of $1.3648 touched on Thursday, which was its lowest since late February.
In commodities trading, U.S. crude rose 0.6 percent to $102.90 per barrel, supported by a disruption in Libya's oil output and an unexpected draw in U.S. crude oil inventory according to industry data.
Spot gold was up about 0.1 percent on the day at $1,295.50 an ounce.(GNN) (Reuters)
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Shri Navaratnam & Kim Coghill)
