Submitted by Credit Trader Stocks Up BUT Risk Aversion Up S&P Futures managed to test the Jan 11th highs but risk aversion in credit remains significantly shifted since then which we find intriguing. VIX is slightly higher than at 1/11, 10Y TSY 10bps lower in yield with a notable duration extension into the 5-7Y region of the curve and away from 2Y and 30Y, DXY is up 4.5% but oil is a smidge lower while Gold is -$44. All of these changes as equities reach 2010 highs once again
Here comes the EMF ( Telegraph ) "On the edge" banks facing writedowns after FDIC loan auctions ( Bloomberg ) From Greece back to Dubai - Dubai World to seek loan delay in talks, banker says ( Bloomberg ) Eurozone faces two-class future after Greece ( Reuters ) Finding FINRA's failures ( Barron's ) Why a restructuring of the PIIGS will require a restructuring of Germany ( Brown Brothers ) Brazil raises tariffs on 102 US goods in WTO fight ( Bloomberg ) Sleepless-in-Zurich ABB CEO bunkers cash amid European "angst" ( Bloomberg ) Talking has, for now, done its job as CDS fall to 6 week low on Greece, Dubai ( Bloomberg ) Big bank oversight to stay with the Fed ( FT ) Fleckenstein: Foreign versions of our coming crisis ( MSN ) When interest rates rise, don't be surprised how low markets can go ( Forbes ) The jobs pictures is even worse than it appears ( RCM )
As the Fed is ever-so-gradually shifting toward a tightening posture, many have wondered what will Bernanke's actions mean for the bond curve. With various liquidity facilities set to expire this month, and the recent discount rate hike already having been priced in, there has so far not been a muted response by the bond market, although over the past few days we have seen an odd tendency, albeit minor, for curve tightening
The bond king's trade recommendation: the yield convergence trade between the guarantor nations and the guarantee nations. Additionlly, expect a convergence between government spreads and agency/corporate yields.
Reuters reports that hopes of a Nakheel pay down in whole or in part are getting increasingly illusory.
The deflationist: a profile of Paul Krugman ( New Yorker ) China new village makes Chanos see Dubai times 1,000 ( Bloomberg ) Goldman cranks up p.r. engine to turn sinner into saint ( Post ) Hey recovery.gov, The "stimulus" actually raised unemployment ( IBD ) Another one jumps on the bandwagon - Nathaniel Rotschild calls for ban on sovereign CDS ( Les Echos (in french), via DealBook ) Euro worst to come as Greece hammerlocks ECB on rates ( Bloomberg ) Bernanke can tell congress he stiffed banks ( Bloomberg ) The woman behind Greece's debt deal ( WSJ ) Bailout anger undermines Geithner ( WSJ ) Don't believe the hype - Wall Street cautious despite strong earnings ( Reuters ) More on an order cancellation tax: exchanges now make $500 million a year for just reporting quotes ( Themis Trading ) The Bush syndicate chimes in - Brown Brothers Harriman on China's bond sales ( BBH ) Millions of unemployed face years without jobs ( NYT ) Attachment Size BBH 2.22.pdf 27.86 KB
"Royal Navy warships were on standby on Thursday to protect commercial shipping to the Falkland Islands as Gordon Brown said Britain would take a robust stand against Argentine encroachment on the resource rich South Atlantic territory." One would guess that a war between Britain and Argentina is simply the latest thing that would bring the market to an uncontrolled, frenzied melt up (on give or take 3 shares). And while the US market responds to no external stimuli any more, this latest development reported by Telegraph , will likely not help the Gilt's recent concerns. HMS York, a type 42-destroyer, was on a "tight leash" patrolling the seas around the islands in response to rising tensions over British firms oil explorations activities near the Falklands
The dollar just closed yesterday's gap.
Greece loses EU voting power in blow to sovereignty ( Telegraph ) Goldman Sachs didn't disclose swap, investors "fooled" ( Bloomberg ) BofE rate setters voted 9-0 to halt QE ( Telegraph ) Deja vu: Dubai World said to present restructuring plan in March...
Asian stocks, copper, Aussie Dollar rise as earnings boost confidence in recovery. Australia and China committed to starting negotiations on an “open skies” accord. Bank of Japan may refrain from easing credit even as deflation intensifies.
Thursday, March 11, 2010
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