Asian stocks rose in early trade, but Japanese shares fell as the yen strengthened after Shinzo Abe cemented control of Japan's government in upper house elections yesterday. (Bloomberg)
Today: US existing home sales. McDonalds Q2 earnings.
Sweeping victory for Japan's LDP: The victory, which had been widely predicted, will put the coalition in charge of both houses of parliament for the first time since 2007. (Financial Times)
Deutsche plans to shrink balance sheet by up to a fifth: "Deutsche is expected to tell investors that it aims to achieve a minimum 3 per cent ratio of overall equity to loans by the end of 2015, people briefed on the plans said." Its estimated leverage ratio was 2.1% at the end of Q1, according to Morgan Stanley analysis. The bank has is considering issuing at least €6bn in hybrid equity capital such as convertible bonds, once the regulatory capital status of such instruments is clarified in Germany. (Financial Times)
Jaguar plans move into entry-level luxury vehicles market, competing with BMW, Audi and Mercedes-Benz. New models, which include a compact salon in 2015, a crossover SUV and an estate model, will be based on an all-new platform architecture, the first fully designed by JLR under the ownership of Tata Motors. (Financial Times)
Fed reconsidering banks' physical commodities activities: the Fed is reviewing a 2003 precedent 2003 precedent that let deposit-taking banks trade physical commodities. Sources told the FT the Fed's discussions with bank executives in recent weeks included whether the banks should be barred from owning such assets. Meanwhile a Senate subcommittee will hold a hearing tomorrow to explore whether financial firms such as Goldman Sachs Group and Morgan Stanley should continue to be allowed to store metal, operate mines and ship oil. (Bloomberg)(Financial Times)
BoJ governor says more stimulus is an option; two-year inflation target not rigid: The Japanese central bank is prepared to inject more stimulus if the economy's recovery is threatened, BoJ board member Takehiro Sato said in a speech today, as he pointed to risks such as the slowdown in Chinese growth. He also said the 2% inflation target was a flexible one that does not necessarily have to be achieved rigidly in two years. (Reuters)
Portugal's prime minister ruled out calling a snap general election two years ahead of schedule. "President Aníbal Cavaco Silva said on Sunday night that he had been given "additional guarantees" from the two government parties that they would keep their coalition together to see through the country's €78bn EU bailout programme." (Financial Times)
BP failed in its attempt to freeze compensation payments under the settlement it agreed last year over the 2010 Deepwater Horizon disaster. The cost of the settlement is on course to be more than double the original $7.8bn estimate. (Financial Times)
US vulture funds swoop on Co-op debt: "Aurelius Capital Management and Silver Point Capital are understood to have built the stake in one set of the bank's loans, putting them in a strong position as the lender works to fill a £1.5bn capital hole." (Financial Times)
British fraud investigator held in China: "Peter Humphrey, founder of Hong Kong-based risk advisory company ChinaWhys, was detained earlier this month in Shanghai, according to British officials who said Mr Humphrey is being provided with consular services." The company website said Humphrey had worked with GSK in the past. (Financial Times)
At least six other global pharma companies used the Chinese travel agency implicated in GSK bribery claims. (New York Times) The travel agency's address is "which appears to be almost fully occupied by Third Branch of Shanghai's Finance and Taxation Bureau". (WSJ ChinaRealtime)
Dim Sum market goes cold: There have been no offerings since June 18, according to Dealogic, marking the first four-week period without a single deal since offshore borrowing in renminbi first began in 2010. The June China liquidity problems, Fed policy uncertainty, and dwindling expectations of Rmb strengthening are all thought to be factors. (Financial Times)
FROM FT ALPHAVILLE:
- Does the Fed funds rate even matter?
- Alphachat, robots edition.
- 'Edge': SEC vs Steve Cohen edition.
COMMENT AND CURIOS:
- China's move to liberalise lending rates just reminds everyone that it's deposit rates that matter most. (Bloomberg)
- UK dividend payments reached a record in the June quarter. (Financial Times)
- Arctic shipping is reaching a record this year as ice melts. (Financial Times)
- JGB volatility has fallen in the past month, while other sovereigns saw an increase. (Bloomberg)
- How Goldman (et al)'s aluminium warehousing cost American consumers $5bn in three years. (New York Times)
- The commodities supercycle is still ending. (Wall Street Journal)
- Lucy Kellaway: 'Managers' and 'liking your job' are new; working out of cafes is not. (Financial Times)
- Bill Gross has some thoughts about QExit that he wants you to hear. (Bloomberg)
OVERNIGHT MARKETS: UP
Asian markets
Nikkei 225 down -47.67 (-0.33%) at 14,542
Topix down -2.72 (-0.22%) at 1,209
Hang Seng down -49.21 (-0.23%) at 21,313
US markets
S&P 500 up +2.72 (+0.16%) at 1,692
DJIA down -4.80 (-0.03%) at 15,544
Nasdaq down -23.67 (-0.66%) at 3,588
European markets
Eurofirst 300 down -0.12 (-0.01%) at 1,209
FTSE100 down -3.69 (-0.06%) at 6,631
CAC 40 down -2.47 (-0.06%) at 3,925
Dax down -5.52 (-0.07%) at 8,332
Currencies
€/$ 1.32 (1.31)
$/¥ 99.98 (100.64)
£/$ 1.53 (1.53)
Commodities ($)
Brent Crude (ICE) up +0.13 at 108.20
Light Crude (Nymex) up +0.18 at 108.23
100 Oz Gold (Comex) unchanged 0.00 at 1,293
Copper (Comex) unchanged 0.00 at 3.15
10-year government bond yields (%)
US 2.48%
UK 2.29%
Germany 1.53%
Sources: FT, Bloomberg, Markit
