Good morning New York,
FT ALPHAVILLE
Don't try this at home – central banker edition: Central bankers can do many things but they should never, ever attempt humour. To illustrate the point Neil presents the price action in the Australian dollar on Wednesday and the "gag" that kicked it off.
A Cypriot bond glitch? Cyprus announced the results of its sovereign debt restructuring/ "debt management operation" on some €1bn of domestic-law bonds earlier this week. But, as Joseph notes, that "restructuring" might have some side-effects, including an acceleration on other bonds.
Portuguese turmoil: Well this one snuck up on us a bit... The resignation of Portugal's foreign minister Paulo Portas yesterday has everyone worried, because of his role as leader of the CDS-PP, the junior partner in the governing coalition. If CDS-PP withdrew their support, the government would be left with 108 seats in a 230-seat parliament and uncertain prospects for scraping together a majority. And all this less than two weeks before a troika delegation is due to start their next review of the economy as the lenders consider whether Portugal will get an easing of terms on its 2011 €78bn bailout, and receive the next €2bn installment. Kate's post has more, including the fact that 10yr yields punched through 8 per cent this morning before coming back in a little. The PSI 20, Lisbon's main share price index, fell more than 6.9 per cent, the biggest intraday drop since April 2010. (FT take)
NEWS
Egypt's Morsi defies army: In a rambling speech the president warned of bloodshed if he were removed. "Military sources told Reuters the army had drafted a plan to sideline Mursi and suspend the constitution after a 5 pm (1500 GMT) deadline passes." (Reuters)(Financial Times)
The Fed plans to introduce capital requirements that go beyond Basel III: At a board meeting yesterday in which the central bank agreed to force US banks comply with Basel III rules, it also outlined proposals including forcing the biggest banks to hold a higher leverage ratio, and capital charges targeted at banks most exposed to short-term wholesale funding. Officials have previously mentioned the ideas in speeches but not as firm policy goals. (Financial Times)
Investors pulled a record $9.9bn from Pimco in June: It was the largest outflow in the 26-year history of Pimco's flagship Total Return bond fund. (Financial Times) (NYT Dealbook)
China's services sector PMIs improved slightly in June, with the HSBC/Markit measure rising to 51.3 from 51.2 in May, but new orders sub-index was 50.5, its lowest since November 2008. (Reuters)
Bolivian plane diverted amid Snowden hunt: The Edward Snowden case provided a new burst of intrigue on Tuesday evening when Bolivian officials said an aircraft carrying President Evo Morales had been redirected to Vienna on suspicions that the US fugitive was on board. Bolivia's foreign minister said the plane, en route to La Paz from Moscow, landed in Austria after France and Portugal refused access to their airspace. (Financial Times)
"Moody's has placed the credit ratings of the three biggest US custody banks on review for a downgrade in a move that illustrates the continued pressure of record low interest rates on the businesses of some of the largest financial institutions. Bank of New York Mellon, Northern Trust and State Street would most likely see their ratings trimmed by one notch, Moody's said in a statement on Tuesday." (Financial Times)
Standard & Poor's has downgraded Barclays, Deutsche Bank and Credit Suisse, reflecting its doubts about the future of European investment banking. The rating agency on Tuesday evening simultaneously cut all three banks from A-plus to A, blaming the rising uncertainty around the investment banking model. (Financial Times)
Former FBI head to lead BP compensation probe: Louis Freeh, a former FBI director, was appointed to investigate allegations of misconduct at the office administering compensation claims against BP for the 2010 Deepwater Horizon disaster after complaints from BP, which is paying higher levels of compensation than were expected. (Financial Times)
National Australia Bank filed a $230m arbitration claim against Goldman Sachs: People familiar with the matter said the claim, filed with Finra in December, relates to Hudson 1, a $2bn CDO. A 2011 US Senate report on the causes of the financial crisis said Goldman began pitching Hudson 1 in October 2006 without disclosing in marketing materials that the firm also was betting against it. It would be among the biggest arbitration cases in recent years, according to Securities Arbitration Commentator. (Wall Street Journal)
A US federal judge has approved HSBC's record $1.92bn settlement with federal and state investigators, over charges that it flouted rules on money laundering and transacting with countries under US sanctions. While noting "heavy public criticism" of the settlement, which enabled HSBC to escape criminal prosecution, US District Judge John Gleeson in Brooklyn, New York, called the decision to approve the accord "easy, for it accomplishes a great deal". (Reuters)
China will probably miss its modest 2015 target for shale gas production, energy executives and analysts say. Meeting the target of 6.5bn cubic metres would require a 130-fold increase in 24 months. Complicated geology, lack of technical staff and regulations are thought to be the main barriers. (Financial Times)
Oil companies won a US court case against new SEC rules that would force them to disclose payments to foreign governments. (Financial Times)
"Crude oil advanced, with West Texas Intermediate surpassing $100 a barrel for the first time in nine months, on shrinking U.S. stockpiles and concern that political turmoil in Egypt may disrupt Middle Eastern supply." (Bloomberg)
Markets: Stocks are on the back foot as a weak service sector survey from China added to concerns about the country's economic slowdown, while recently better US data reinforced views that the Federal Reserve may start trimming its massive quantitative easing programme in coming months. Political ructions are adding to the cautious mood. The US dollar is at a one-month high and oil prices have spiked, as traders fret over fresh turmoil in Egypt, while a fracturing Portuguese government revives eurozone debt/austerity fears. Ahead of crucial US jobs data on Friday the FTSE All-World equity index is down 0.8 per cent as the FTSE Eurofirst 300 sheds 1.3 per cent and after the Asia-Pacific region slid 1.2 per cent. US index futures suggest the S&P 500 will lose 10 points to 1,604. Chinese stocks have had another tough day. The Shanghai Composite lost 0.6 per cent and Hong Kong's Hang Seng slipped 2.1 per cent after the mainland's non-manufacturing purchasing manager's index fell to 53.9 in June from 54.3 in May, adding to concerns of waning expansion writes the FT's Global Markets diva Jamie Chisholm.
