Monday, June 20, 2016

Today's Headlines

  • In a World of Below-Zero Bond Yields, China Debt Bucks the Trend. As investors drive bond yields across the world to record lows, China is going the other way. The nation’s 10-year government bond yield has risen 13 basis points this year to 2.95 percent, the only increase among similar-maturity sovereign debt in the world’s 15 biggest economies. Chinese bonds have sold off amid concern that rising inflation, stabilizing growth and an overheating property market will halt further monetary easing.
  • Yuan Outpaced by Euro, Pound Sees China’s Currency at 2014 Low. The yuan declined to the lowest level since October 2014 against a basket of currencies as easing concern over a U.K. exit from the European Union propelled gains in the euro and the British pound. A Bloomberg replica of the CFETS RMB Index dropped 0.3 percent against a trade-weighted basket, the biggest decline in two weeks. The People’s Bank of China set the reference rate 0.1 percent stronger, compared with a 0.9 percent, two-day decline in the Bloomberg Dollar Spot Index. 
  • Apple’s(AAPL) Loss in Chinese Patent Fight Seen Emboldening Rivals. (video)
  • Brexit or Remain, Sakakibara Sees Yen Rise to 100 as Inevitable. (video) The yen will strengthen past 100 per dollar this year, whichever way the U.K. votes in Thursday’s referendum, according to Eisuke Sakakibara. The only difference is how fast it gets there. After predicting the currency’s relentless march beyond 115, 110 and 105, the man known as Mr. Yen says a victory by those campaigning for Britain to remain in the European Union is already largely priced in by investors, limiting its potential to weaken Japan’s currency. However, a vote for so-called Brexit would be a “disaster,” and could see the yen spike above 100 as investors scurry for the safest assets, said Sakakibara, who won his nickname by influencing the yen’s value as a Ministry of Finance official in the 1990s.
  • India’s Currency Tumbles After Rajan Decision to Leave: Chart.
  • Why Wall Street's Worried About the End of Rajan's Reign. (video) Will the reformer's work go unfinished?
  • Europe Shares Jump as Poll Shows U.K. Support Swings to ‘Remain’. (video) Bulls rushed back into the market after three weeks of heavy selling, sending European stocks to their biggest gains since August as polls showed more Britons back staying in the European Union. The Stoxx Europe 600 Index jumped 3.7 percent to 337.67 at the close of trading, rallying more in one day than it has in any full week since February and building on Friday’s 1.4 percent advance. All major western-European markets climbed, with the U.K.’s benchmark FTSE 100 Index adding 3 percent, while sterling surged. The volume of Stoxx 600 shares changing hands was 22 percent higher than the 30-day average and a measure of euro-area equity volatility slid 10 percent, the most since March.
  • U.S. Oil Rig Increase Shows Producers Are Drilling Again: Chart.
  • Model Shows Top U.S. Banks May Come Up $376 Billion Short: Chart.
  • El-Erian Says ‘Slave-to-the-Market’ View Dents Fed’s Credibility. The Federal Reserve has become too dependent on short-term economic indicators and risks confusing financial markets with its shifting views, said Mohamed El-Erian, the chief economic adviser of Allianz SE. “I have sympathy for the Fed,” El-Erian said Monday in a Bloomberg Television interview. “The Fed is trying to be as honest and as transparent as possible. And because of that, it is being accused of being not just inconsistent, but a slave to the market.” El-Erian said Fed Chair Janet Yellen will face tough questions from Congress during her semiannual report on monetary policy this week after signaling June 15 that some of the forces holding down interest rates may be long lasting. 
  • Negative Rates Are the Tools of Our Elderly Oppressors . A "pattern of intergenerational conflict" sparked by ultra-low returns, according to Citigroup.
  • Pimco Says ‘Storm Is Brewing’ in U.S. Commercial Real Estate. U.S. commercial real estate prices may fall as much as 5 percent in the next 12 months amid tightened regulations, a wall of debt maturities and property sales by publicly traded landlords, Pacific Investment Management Co. said in a report Monday. A global surge in demand for U.S. property investments that pushed real estate values to records may wane as slowing growth in China, lower oil prices and dislocated debt markets threaten to halt six years of price growth, Pimco portfolio managers John Murray and Anthony Clarke said in their report, titled “U.S. Real Estate: A Storm Is Brewing.” “Storms form when moisture, unstable air and updrafts interact,” they said. A similar confluence of factors “is creating a blast of volatility for U.S. commercial real estate.” 
Wall Street Journal:
Fox News: 
  • FBI releases Orlando killer's chilling 911 calls — scrubbed clean of Islam. (video) Republicans blasted Monday's release of a redacted, partial transcript of the Orlando terrorist's phone calls on the night of the massacre, calling the edits "preposterous." In the transcripts, Omar Mateen claimed responsibility for his assault and identified himself as an Islamic soldier -- but all other references to ISIS or Islamic State leader Abu Bakr al-Baghdadi were scrubbed by the Department of Justice.
Zero Hedge:
Business Insider:
Financial Times:
  • Hedge funds seek long term money for distressed debt wagers. Hedge funds anticipating a rising tide of credit and real estate distress in the coming years are asking investors to climb aboard and lock up their money for an extended period. Investors are increasingly willing to commit money for five years or more as they eye the end of the credit cycle, when strategies touted by distressed hedge funds flourish as opportunities arise to purchase securities at depressed prices.

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