- The cost of protecting corporate bonds from default fell to the lowest in seven weeks in Europe on investor speculation governments and central banks will succeed in averting further turmoil in credit markets. “There is a slow realization that credit has priced in Armageddon,” said Jim Reid, head of fundamental credit strategy in London at Deutsche Bank AG, Germany’s largest lender. “I think the landscape has changed after the serious intervention from governments and central banks.” Credit-default swaps on the benchmark Markit iTraxx Europe index of 125 companies with investment-grade ratings tumbled 13.5 basis points to 154, the lowest since Nov. 14, according to JPMorgan Chase & Co. prices at 10:28 a.m. in London. The Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings dropped 52 basis points to a five-week low of 932, JPMorgan prices show. Credit-default swaps on the Markit CDX North America Investment-Grade index of 125 companies in the US and Canada declined 4.5 basis points to 191.5 basis points as of 8:17 am in NY, according to broker Phoenix Partners Group.
- The cost of protecting against a default by the world’s biggest banks dropped to the lowest in two months after government efforts to bolster financial company capital and unlock credit markets.The CDR Counterparty Risk Index, tied to 14 banks including Morgan Stanley, Goldman Sachs and UBS AG, fell to 142.6 basis points today, down from more than 300 basis points on Sept. 17, according to Credit Derivatives Research LLC.
- The recent gains in commodity prices may not be sustainable in the first quarter, Morgan Stanley said.“Much of the movement is short-term technical buying and probably will not sustain throughout Q1,” Morgan Stanley wrote.
- Hedge funds have damaged their ability to attract capital by limiting investor withdrawals, according to Karsten Schroeder, CEO of Amplitude Capital LLP, a London-based hedge fund. Hundreds of hedge funds have established limits on the return of investors’ money.As of October, 18% of hedge fund assets were subject to some sort of restriction on withdrawals, according to Peter Douglas, principal of Singapore-based hedge fund consulting firm GFIA Pte.
- The value of Brazil’s farm exports, which have sustained trade surpluses for a decade, may drop 20% this year as commodity prices fall and global demand wanes, citing a government study.
21st Century Business Herald:
- Guangdong and Jiangsu provinces, China’s two biggest export regions, expect no growth in overseas shipments this year as the global recession cuts demand, citing local officials.Guangdong exporters forecast their orders in 2009 will be 30% lower than last year, citing Zhu Zenan, the deputy head of the province’s foreign trade bureau.
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