Posts belonging to Category bonds



US Debt

Americans’ debt level notches a new record high

Americans’ debt level notched another record high in the second quarter, after having earlier in the year surpassed its pre-crisis peak, on the back of modest rises in mortgage, auto and credit card debt, where delinquencies jumped. Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday.

The proportion of overall debt that was delinquent, at 4.8 percent, was on par with the previous quarter. However a red flag was raised over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.” Loosening lending standards have allowed borrowers with lower credit scores to access credit cards, Andrew Haughwout, an in-house economist, said in the report.

http://www.reuters.com…   Wed.,  16  August 2017

Tensions with North Korea worry markets

Wall Street swings lower after Trump warns North Korea

U.S. stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after U.S. President Donald Trump vowed to respond aggressively to any threats from North Korea. After scaling back from record highs earlier in the session, Wall Street’s three major indexes dipped after Trump said North Korea “will be met with fire and fury” like the world has never seen if it threatens the United States. “Trump’s response was aggressive and that’s why the market turned lower,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities.

Japan said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programs as Pyongyang’s continues missile and nuclear tests in defiance of U.N. sanctions. Investors, who took the North Korea report from Japan in their stride earlier in the day, lost their appetite for risk after Trump’s comments to reporters during his vacation at his golf club in New Jersey.

http://www.reuters.com…   Wed.,  09  August 2017

Tesla needs funding to boost Model 3 production

Tesla seeks $1.5 billion junk bond issue

Tesla Inc (TSLA.O) said on Monday it would raise about $1.5 billion through its first-ever offering of junk bonds as the U.S. luxury electric car maker seeks fresh sources of cash to ramp up production of its new Model 3 sedan.

The move to issue junk bonds – lower-quality investments that offer higher yields – represents a bet by Tesla Chief Executive Elon Musk that bond investors will be as hungry as stock investors to back the company on expectations that its Model 3 will be a hit.

Tesla shares are up 67 percent this year, pushing the company’s market value to about $60 billion, above that of top U.S. automakers General Motors Co (GM.N) and Ford Motor Co (F.N), even though Tesla has yet to make an annual profit.

http://www.reuters.com…   Tue.,  08  August 2017

Stock Market: indicators warnings

Next break in the Stock Market

Alarms are going off even with the stock market at an all-time high. The obvious ones include a degree of complacency illustrated through low volatility and the overall valuation of the stock market.

But there are more reasons to be concerned below the surface. Brad Lamensdorf, the portfolio manager of the short-only Ranger Equity Bear ETF, laid out some of the more hidden warning signs that may be worth looking into.

http://www.businessinsider.com…   Mon.,  07  August 2017

Sub-zero rates

IMF says negative interest rates are an efficient tool to boost inflation

Negative interest rates imposed by central banks have generally worked as a tool to boost inflation, pulling down yields and sometimes weakening currencies, International Monetary Fund research has concluded.

It also found that commercial banks for the most part have maintained their profits under such policy, cushioning margins with such tactics as not passing on all of a policy rate cut to customers.

The findings come in a report by IMF economists Giovanni Dell’Ariccia, Vikram Haksar and Tommaso Mancini-Griffoli who studied the impact of sub-zero interest rate policy in the euro zone, Denmark, Japan, Sweden and Switzerland.

Cutting rates below zero has been a factor in some central banks’ struggle to help their economies recover from the financial crisis and its accompanying trend towards deflation.

http://www.reuters.com…   Fri.,  04  August 2017

Brexit exodus for Investment banking jobs

70,000 roles may be relocated from the City of London post-Brexit

A banking exodus from London will be costly. International lenders may need to shift as many as 40,000 investment banking jobs to the European Union to maintain activities on the continent after Brexit, according to financial consultants Oliver Wyman.

Banks may also have to pump as much as $50 billion in extra capital into EU subsidiaries “to support new European entities,” analysts at Oliver Wyman said in a report published on Tuesday.

Oliver Wyman is not alone in predicting a banking exodus. The Centre for London estimated last month that as many as 70,000 roles may be relocated from the City of London post-Brexit, while EY last year predicted 83,000 financial services jobs could be lost. Brussels think tank Bruegel made a more conservative forecast of 30,000 jobs lost.

http://www.oliverwyman.com…   Tue.,  01  August 2017

Brexit: Japan’s biggest bank moves investment operations to Amsterdam

Hundreds of MUFG staff could be leaving the UK

Japan’s biggest bank is reportedly set to move its European investment operations from London to Amsterdam because of the uncertainty posed by Brexit. MUFG could move hundreds of its 2,100 London employees to the Dutch capital, sources told the Financial Times.

Other banks are also looking to set up new offices in various European cities because of Brexit. The UK’s withdrawal from the EU is likely to have a significant effect on the financial services industry in the UK – along with numerous other areas – as companies in Britain will no longer be able to operate within the EU framework.

This could potentially block access to clients and significantly interfere with business. Amsterdam is already home to MUFG’s retail and corporate banking operations.

http://www.independent.co.uk…   Mon.,  31  July 2017

Exit from BREXIT?

Voters must be allowed another referendum  at the end of the two year Article 50 process

Sir Vince Cable has offered voters the possibility of an “exit from Brexit” after being confirmed as the new leader of the Liberal Democrats. The former business secretary, 74, succeeds Tim Farron, who stood down in the wake of the General Election because of questions around his faith. The June election saw the Lib Dems increase their tally of MPs by from eight to 12, a modest revival after being almost wiped out in 2015.

Sir Vince, who is the party’s oldest ever leader, said the Government’s handling of Brexit was taking the UK towards the “disastrous outcome” of crashing out of the EU. Negotiations were being conducted by a “dysfunctional, disorganised, disunited” Government, whose strategy was devised before the full complexity of Brexit became apparent, he said, and during a time when Theresa May had “serious political authority”, something she has now lost.

http://news.sky.com…   Fri.,  21  July 2017

Morgan Stanley beat Wall Street’s profit expectations

More trading revenue than the rival Goldman Sachs

Morgan Stanley beat Wall Street’s profit expectations on Wednesday, reporting gains across most of its businesses and producing more trading revenue than rival Goldman Sachs Group Inc, a rare feat. The sixth-largest U.S. bank by assets reported an 11 percent rise in second-quarter profit, generating more revenue from giving corporations advice, underwriting securities, trading equities and managing customers’ money.

The one dark spot, bond trading, fell 4 percent, much less than at Wall Street rivals that reported earnings in recent days. The $1.3 billion in revenue from that business topped Chief Executive Officer James Gorman’s $1 billion quarterly target and beat Goldman’s $1.2 billion.

Morgan Stanley shares jumped 3.9 percent to $46.95 in morning trading.

http://www.reuters.com…   Thu.,  20  July 2017

Are markets increasingly overbought ?

Bank Of America Sets A Date For The Market’s “Great Fall”

With the US stock market likely to continue its levitation today, it means that by close of trading, the S&P500 will be above 2,400, the same as Goldman’s year end price target, and 100 points away from Bank of America’s “euphoric blow off top” destination, which is also known as Michael Hartnett’s Icarus Trade. In a note released overnight, Hartnett confirms that he is “sticking with our “Icarus Trade” targets: SPX 2500, GT30 3.5%, DXY 110, oil $70/b”, even as he admits that the euphoria level in stocks is unprecedented:

  • Yes, markets are increasingly overbought (it’s now 96 trading days since SPX fell >1% in one session).
  • Yes, sentiment is increasingly bullish (our Bull & Bear Indicator is 7.0, close to the 8.0 sell-signal).
  • Yes, the easy money has been made. But we believe a March Fed rate hike at a time of booming macro data will cause the bears to fully capitulate into risk assets, causing the melt-up toward our targets in Q2.

He also notes that the renewed jump in bond yields is coinciding with renewed outperformance by small cap & banks, and by high yield bonds vs. investment grade bonds, “thus we are willing to remain long risk assets for a little longer.”

http://www.zerohedge.com…   Tue.,  11  July 2017