Good morning New York,
FT ALPHAVILLE
Treasury yields go up a bit: Treasuries exhibited some relatively sharp moves yesterday, with 10-year yields reaching 2.19 per cent this morning. It was the highest one-day rise in 19 months, and brought it to the highest level since April last year but Kate notes that in the bigger picture it's maybe not quite a dramatic QExit-related panic.
A new collateral estimate with a cautionary note: It's the big collateral paper from the Committee on the Global Financial System. The paper estimates that the additional collateral needed to meet upcoming regulatory demands will be around $4,000bn. It also concludes that the world has recently produced enough such collateral in the form of safe assets, particularly government debt, to meet these demands. Cardiff's post has plenty more.
NEWS
EU to ease hard line on austerity for key countries: "In its annual verdict on national budgets of all 27 EU members France, Spain and the Netherlands will be given a waiver on the annual 3 per cent deficit limit. Brussels will also free Italy from intensive fiscal monitoring despite its new prime minister's decision to reverse a series of tax increases imposed by his predecessor." (Financial Times)
IMF cuts China growth forecast to 7.75%: The International Monetary Fund cut its growth forecast for China this year to 7.75 per cent from 8 per cent, citing a weak world economy and exports, adding to concerns that the world's second-largest economy is losing momentum. The IMF move follows a series of lowered 2013 growth estimates for China by private economists after soft factory output and investment performance data for April and weak factory activity in May. (Financial Times)
OECD cuts eurozone growth forecasts: "The OECD has again cut its growth forecasts for the eurozone and called on the European Central Bank to consider doing more to boost growth. The organisation said the eurozone will shrink by 0.6% this year, widening the gap between it and faster-growing economies such as the US and Japan. It said the global economy was moving forward "at multiple speeds"... The organisation, which represents 34 advanced economies, forecast average growth across them of 1.2% this year and 2.3% in 2014." (BBC)
Murdoch seeks to persuade Wall St on new News Corp: Rupert Murdoch yesterday pitched the collection of publishing, advertising and Australian television assets he will spin off next month as a "chance to do it all over again", and tried to convince investors there were still opportunities to make money in newspapers, saying he had often proved naysayers wrong over the past six decades. The new News Corp, seen by many analysts as the poor relation when compared with the television and film brands that will be renamed 21st Century Fox, would pursue "relentless" cost-cutting at its newspapers and "aggressive digital expansion", said CEO Robert Thomson. (Financial Times)(Reuters)
Germany's biggest seven banks are still €14bn short of meeting Basel III capital requirements short of the capital needed to meet incoming Basel III banking rules at the end of last year, according to new estimates by German regulator BaFin. The banks, which include Deutsche Bank and Commerzbank, cut their collective capital shortfall from €32bn in the second half of 2012, although none raised equity and BaFin calculates most capital improvements came from spinning off assets and recalculating risk weightings. (Financial Times)
Japan to Korea: do your own easing. "Koichi Hamada, an economic adviser to Japanese Prime Minister Shinzo Abe, told South Korea to adjust its own monetary policies if officials are concerned at the effects of a yen weakened by unprecedented easing." (Bloomberg)
Seven charged over 'cyber criminals' bank: Liberty Reserve, an underground digital currency company, and seven current and former employees have been charged by US authorities with running a $6bn money-laundering business that allegedly became "the bank of choice" for cyber criminals. Five of the seven men, including Liberty Reserve's founder Arthur Budovsky, were arrested over the weekend and charged with conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business and operating an unlicensed money transmitting business. Authorities believe the case is the largest prosecution of international money laundering in history. (Financial Times)
Citi settles $3.5bn mortgage lawsuit: Citigroup has settled a $3.5bn lawsuit with the US housing regulator, breaking with other banks who have held out against a deal in one of the last big post-crisis lawsuits related to mortgage wrongdoing. The Federal Housing Finance Agency sued Citi and 16 of its rivals in 2011, arguing that the banks had mis-sold mortgage-backed securities to Fannie Mae and Freddie Mac, the government-sponsored mortgage companies which were bailed out in 2008. Although they did not specify the size of the settlement, similar cases have settled for cents on each dollar of principal balance outstanding, which amounted to $3.5bn in the case against Citi. (Financial Times)
Bank auditors urged to question assumptions more closely: Accountants provide "insufficient challenge" to key assumptions of banks calculating loan risks, says UK auditing regulator Financial Reporting Council in its annual report today. (Reuters)
Former KPMG partner pleads guilty: "Scott London, a former senior partner with accounting firm KPMG, agreed to plead guilty to securities fraud for his involvement in insider trading, according to an announcement from the U.S. Attorney's Office in Los Angeles." (Reuters)
German jobs revival stalls: "German jobless claims in May rose by 21,000 from April in seasonally adjusted terms. The number of new claims exceeded an expected increase of 3,000." (Wall Street Journal)
Japanese deflation seen to have slowed in April: Japan's core consumer prices, which exclude fresh food but include energy, are forecast to have fallen 0.4% in April from a year earlier, compared to -0.5% in March, according to a Reuters poll. However many economists maintain the two-year time frame for reaching a 2% inflation target is overly ambitious. The surveyed economists also expect 0.6% industrial production growth in April. Both figures are due on Friday. (Reuters)
Markets: US benchmark bonds are offering 2.20 per cent for the first time in more than a year as recent strong data raise hopes that the US economic recovery is gathering pace. Global equities are mainly soft, however, as the rise in Treasury yields signals to some that the days of Federal Reserve largesse – deemed an important support of stock market valuations by many – may soon be coming to an end. The FTSE All-World index is down 0.2 per cent after the Asia-Pacific region excluding Japan fell 0.6 per cent and as the FTSE Eurofirst 300 sees a 1 per cent decline. The dip for Europe is partly the result of Wall Street's S&P 500 finishing Tuesday's session well off its highs and also caused by the sight of US index futures suggesting the New York gauge, which last week hit an intraday record of 1,687, will later ease 10 points to 1,650 writes the FT's Global Markets madame Jamie Chisholm.
