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Central banks act as EU sets 10-day euro crisis deadline
November 30, 2011-- The world's top central banks sprang into action Wednesday to help cash-strapped banks, while the EU acknowledged it has 10 days in which to fix a crisis threatening a global financial meltdown.
The central banks of the eurozone, the United States, Japan, Switzerland, Canada and Britain collectively announced a giant shot in the arm with "liquidity support to the global financial system."
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Source: EUbusiness
Rome Pays High Price at Bond Sale .
November 30, 2011--Italy's latest bond auction on Tuesday drew more buyers than analysts anticipated, but it didn't enable the debt-laden country to avoid paying euro-era record-high yields to get the deal done.
The auction of €7.5 billion ($10 billion) in bonds over a range of maturities saw Italy paying yields of 7.89% on three-year bonds and 7.56% on 10-year paper. Despite the record yields, the auction attracted enough demand—driven mainly by domestic buyers, analysts said—to cover the amount on offer.
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Source: Wall Street Journal
UAE downplays eurozone impact, keeps dollar peg
November 29, 2011--The United Arab Emirates on Tuesday played down the impact of the eurozone debt crisis on its economy and reiterated a pledge to maintain its currency peg to the US dollar.
"Banking and business relations with the eurozone are limited, as 20 percent of our trade is with the eurozone," the governor of the UAE central bank, Sultan Nasser al-Suwaidi, told reporters.
However, the top banker of the oil-rich Gulf state argued that the euro, whose zone faces the risk of collapse because of a snowballing debt crisis, is "a great currency."
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Source: EUbusiness
ETF securities lending comes under scrutiny for collateral risk
November 29, 2011--Wealth managers using exchange traded funds (ETFs) should be aware of securities lending and the level of counterparty risk involved, with some funds lending out as much as 90% of their securities while holding Italian and Japanese equities as collateral.
According to iShares, its FTSE 250 ETF has lent out 92% of its securities, on average, over the last year. This average figure is very close to the maximum it has had out on loan, at 95%.
Returns from this practice, which went back into the fund amounted to a net figure of 14.7 basis points.
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Source: Citywire.uk
European Commission-Economic Sentiment resumes decline
November 29, 2011--In November, the Economic Sentiment Indicator (ESI) declined by 1.0 point in the EU and by 1.1 points in the euro area, dipping to 92.8 and 93.7, respectively. The decline resulted from a broad-based deterioration in sentiment across the sectors. Confidence remained broadly unchanged only in the construction sector.
Among the largest Member States, France (-3.7) reported the biggest decrease in sentiment, followed by the Netherlands
(-1.8) and - to a lesser extent - the UK (-0.6). Sentiment was broadly unchanged in Germany (-0.1) and Spain (+0.2), while it improved in Italy (+0.8) and Poland (+0.9). The ESI remains above its long-term average only in Germany.
Confidence in industry weakened by 1.0 point in the EU and by 0.8 points in the euro area, moving below its long-term average in both regions. The deterioration was broad-based: managers were more pessimistic about their companies' past production and their export order books. They also expressed growing concerns about production expectations, particularly in the euro area where an increasing number of managers also assessed their stocks as being too large.
Employment expectations deteriorated in industry in both the EU and the euro area, while managers' selling price expectations increased in both regions.
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Source: Europa
Embattled Europe hit by credit rating warning
November 29, 2011--- Moody's warned Monday that every member of the European Union could have its credit rating downgraded without firm action to stem the eurozone crisis as the IMF denied it was in talks to bail out Italy.
Ahead of a new OECD growth forecast likely to deepen the gloom within the eurozone, Moody's said there was a real danger of "multiple defaults" by debt-ridden countries and raised the spectre of the single currency's break-up.
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Source: EUbusiness
Embattled Europe hit by credit rating warning
November 29, 2011--Moody's warned Monday that every member of the European Union could have its credit rating downgraded without firm action to stem the eurozone crisis as the IMF denied it was in talks to bail out Italy.
Ahead of a new OECD growth forecast likely to deepen the gloom within the eurozone, Moody's said there was a real danger of "multiple defaults" by debt-ridden countries and raised the spectre of the single currency's break-up.
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Source: EUbusiness
Euro Zone Leaders Weigh New Budget Rules
November 27, 2011--Euro zone leaders are discussing a deal among themselves to institute strict new budget rules for their countries, rather than go through the long, complicated process of amending European Union treaties. By acting more quickly, they hope to reassure skeptical financial markets and encourage the European Central Bank to do more to fight the deepening sovereign debt crisis on the Continent.
Investors clearly are not persuaded by the intermittent efforts that Europe has made to protect major countries like Italy and Spain from the crisis, which started in smaller, more fragile economies like those of Greece and Ireland. The leaders of Germany, the mainstay of the euro zone, want a new treaty that would stop euro nations from posing a threat by running large deficits or amassing crushing debts, but France, the zone’s second-largest economy, believes that amending treaties would take too long to help now.
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Source: New York Times
ECB Monetary developments in the euro area-October 2011
November 27, 2011--The annual growth rate of the broad monetary aggregate M3 decreased to 2.6% in October 2011, from
3.0% in September 2011.1
The three-month average of the annual growth rates of M3 in the period from
August 2011 to October 2011 increased to 2.8%, from 2.6% in the period from July 2011 to September
2011.
M3 components
Regarding the main components of M3, the annual growth rate of M1 decreased to 1.7% in October 2011,
from 2.0% in September. The annual growth rate of short-term deposits other than overnight deposits
(M2-M1) decreased to 2.2% in October, from 3.1% in the previous month.
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Source: ECB
Bunds get caught in stampede for the exit
November 25, 2011--The dominance of an overarching ‘risk trade’ has been perhaps the most prominent feature of capital markets ever since the debt crisis moved from being a banking problem to one of sovereign debt.
On one side there are things like equity and the euro. They’re highly correlated and charge higher on the increasingly rare days when investors have some hope for the future. German government bonds have been part of a select group of assets on the other side of the trade: in demand when investors want low-risk parking slots for their money.
The group includes U.S. Treasurys, U.K. gilts, the yen, Swiss franc and gold. Risk aversion took both yen and franc to such heights that their central banks are busily attempting to keep financial refugees away with the threat of vast selling. Now Wednesday’s shocking bund auction has raised the odd doubt about German debt’s membership of the club.
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Source: Wall Street Journal
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