Asian stocks fell and WTI crude oil rallied above $100for the first time in nine months on political turmoil in Egypt and shrinking US stockpiles. The Nikkei was 0.1% lower after rallying earlier in the day and the Hang Seng fell 1.9%. The yen, South Korea's won and Australia's dollar all fell and the US dollar strengthened against major currencies. (Bloomberg)(Reuters)
TODAY: US ADP private employment figures; US initial jobless claims; European services PMIs.
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)
Portuguese PM pledges to stay on amid threat of election: Pedro Passos Coelho says he will seek to establish a stable government despite the resignation of two key ministers and the threatened break-up of his ruling coalition. However, opposition parties called for an early general election, saying there was no possible solution for the governing coalition. (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)
"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)
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)
COMMENT AND CURIOS:
- Martin Wolf: Could China hit its stall speed? (Financial Times)
- China's plans for financial reforms could lead to yet more instability. (Reuters)
- What Ian Hannam is doing next. (Financial Times)
- Some CFTC officials still fighting the agency's own new rules for trading abroad. (NYT Dealbook)
- John Kay: Evolution, adaptation and economics. (Financial Times)
- Is it the end of competitive politics in Japan? (Financial Times)
- Why Brent is so high despite commodities fall. (Financial Times)
- What will be the legacy of long-serving PBoC chairman Zhou? (Bloomberg)
- Deutsche Borse plans to trade cloud computing capacity. (Financial Times)
OVERNIGHT MARKETS: DOWN
Asian markets
Nikkei 225 down -15.27 (-0.11%) at 14,083
Topix up +1.24 (+0.11%) at 1,173
Hang Seng down -388.98 (-1.88%) at 20,270
US markets
S&P 500 down -0.88 (-0.05%) at 1,614
DJIA down -42.55 (-0.28%) at 14,932
Nasdaq down -1.09 (-0.03%) at 3,433
European markets
Eurofirst 300 down -4.81 (-0.41%) at 1,159
FTSE100 down -3.84 (-0.06%) at 6,304
CAC 40 down -24.91 (-0.66%) at 3,743
Dax down -73.15 (-0.92%) at 7,911
Currencies
€/$ 1.30 (1.30)
$/¥ 100.69 (100.62)
£/$ 1.51 (1.52)
Commodities ($)
Brent Crude (ICE) up +0.80 at 104.80
Light Crude (Nymex) up +2.01 at 101.61
100 Oz Gold (Comex) up +3.70 at 1,247
Copper (Comex) unchanged 0.00 at 3.14
10-year government bond yields (%)
US 2.47%
UK 2.40%
Germany 1.71%
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.43bps at 94.67bp
Markit iTraxx Europe -0.95bps at 113.87bp
Markit iTraxx Xover -5.28bps at 454.7bp
Markit CDX IG +1.46bps at 85.95bp
Sources: FT, Bloomberg, Markit
