Italian settlement fail penalty, bond sell-off — causation or correlation?
November 3, 2011 by Laura Reveley · Leave a Comment
This is the performance in 10-year Italian bonds this year :
What’s intriguing, of course, is how the bond yields spiked so suddenly in early July. Almost out of the blue.
It even baffled analysts, who struggled to explain it at the time.
And just as quickly as it spiked, it settled back by early August ….only to resurface equally dramatically by September 1.
Causation or correlation, we do not know, but the July date does intrigue us — it was the very same month Italian market regulators decided to bring efficiency to the Italian repo market, which prior to that had been experiencing an unacceptable rate of settlement failure, by amending the settlement procedure.
Since the authorities were convinced that high fail rates were the result of operational glitches — people not picking up phones, or overlooking faxes — rather than any sinister settlement-avoidance strategies, they moved to give market participants more time to settle trades. A total of
U.S. Consumer Sentiment Shows Unexpected Improvement In October
October 27, 2011 by Laura Reveley · Leave a Comment
– Consumer sentiment in the U.S. unexpectedly improved in the month of October, according to a report released by Reuters and the University of Michigan on Friday.
The report showed that the consumer sentiment index for October was upwardly revised to 60.9 from the preliminary reading of 57.5. With the upward revision, the index is above the September reading of 59.4.
Economists had been expecting the index to be upwardly revised, although the consensus estimate called for a more modest upward revision to 58.0.
Peter Boockvar, equity strategist at Miller Tabak, said, “While confidence ticked higher to 60.9, it still compares unfavorably with the 10 month average ytd of 67.5.”
“That said, as we head into the holiday season, impulse purchases and gift buying runs on its own emotion separate from overall consumer confidence,” he added.
The stronger than expected upward revision to the headline index was partly due to a notable upward revision to the index of consumer expectations, which was revised up 51.8 from 47.0. The expectations index came in at 49.4 in September.
Banks must take bigger cuts: eurozone
October 18, 2011 by Laura Reveley · Leave a Comment
The report from Greece’s international debt inspectors, which was discussed at the finance ministers’ meeting Friday, says in order to keep a second international bailout of Greece to the 109-billion-euro level tentatively agreed upon in July, Greece’s debt would have to be cut 60 percent.
Even that would leave the country’s debts at 110 percent of economic output in 2020.
“Yesterday we agreed that we need a substantial increase in the contribution from the banks,” Jean-Claude Juncker, Luxembourg’s prime minister who also chairs the meetings of eurozone finance ministers, said Saturday.
That means the July deal, under which banks would have taken write-downs on their Greek bondholdings of about 21 percent, is definitively off the table.
Austrian Finance Minister Maria Fekter told journalists that the eurozone’s chief negotiator Vittorio Grilli had been asked to restart negotiations with banks.
The report did not make policy recommendations, and the European Central Bank opposes cutting Greece’s debts further. But
Coal shortage threatens already ailing Indian economy
October 16, 2011 by Laura Reveley · Leave a Comment
NEW DELHI (Commodity Online): Coal has never been in the news as it is now for multiple factors. First it was workers strike, then the commodity itself went into shortage and because of this power generation has become very difficult for power companies. Now add heavy rains in coal producing areas and disruption of coal supplies due to continuing blockade in Telangana region, the circle is complete. To top it all, the Indian government cleared the draft Mining Bill, where companies would have to share 26 per cent profits with locals.
All these have affected both coal mining companies as well as power companies. Coal India Limited, one of the largest companies listed in the Indian stock exchange took the first hit.
Stock price of coal India suffered 3-4% in last two days and according to Maulik Patel, Research Analyst with www.makemystocks.com, it was double whammy impact on stock price. Coal India suffered not only production loss on account of employee strike but on the other hand Coal Ministry decided to sell 10% of its stock through e-auction.
“I believe that auction price of coal will be discount to the market price. T
U.S. Consumer Confidence Ticks Higher In September But Remains Fragile
September 26, 2011 by Laura Reveley · Leave a Comment
– After reporting a sharp drop in consumer confidence in the month of August, the Conference Board released a report on Tuesday showing a modest increase by its consumer confidence index in September, although the index increased by less than expected.
The Conference Board said its consumer confidence index edged up to 45.4 in September from a revised 45.2 in August. Economists had been expecting the index to climb to 46.5 from the 44.5 originally reported for the previous month.
With the modest increase, the consumer confidence index regained some ground after dropping to its lowest level in over two years in August.
“Consumer confidence remains very fragile as the economy remains on stall speed and recession probabilities rise,” said Jennifer Lee, senior economist at BMO Capital Markets.