Tuesday, December 27, 2011

Today's Headlines

  • German Government Notes Climb, Italian Benchmark Bonds Fall Before Auction. German notes rose, pushing the rate on two-year notes to less than 0.2 percent for the first time, as investors sought the safest assets before Italy auctions as much as 20 billion euros ($26.2 billion) of debt. Italian benchmark debt held three days of declines. German bonds snapped a two-day drop after International Monetary Fund Managing Director Christine Lagarde said the world economy is in danger because of Europe’s financial woes. Dutch and Finnish note yields also fell. Italy plans to sell 9 billion euros of 179-day bills and as much as 2.5 billion euros of zero-coupon notes due in 2013 tomorrow. It will offer bonds due between 2014 and 2022 on Dec. 29. “The auction will be quite a big event,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam. “It will continue to drive Italian yields higher and will have an effect on bunds with a flight to quality.” The yield on two-year German notes dropped six basis points to 0.17 percent at 4:50 p.m. London time, after reaching 0.158 percent, the least since Bloomberg began collecting the data in 1990. The 0.25 percent security due December 2013 rose 0.115, or 1.15 euros per 1,000-euro face amount, to 100.16. Italian 10-year note yields were two basis points higher at 7 percent. The additional yield investors demand to hold the benchmark securities instead of German bunds widened to as much as 520 basis points, or 5.2 percentage points, the most since Nov. 17.
  • Italy Retailers in Worst Christmas in 10 Years. Italian retailers had the worst Christmas in 10 years, consumer group Codacons said, as austerity measures to combat the sovereign debt crisis prompted households to cut spending. Italians spent 48 euros ($62.75) less per person this holiday season than the average of the past five years, Rome- based Codacons said in a statement on its website. The shoe and clothing sector was hit the most, with sales dropping 30 percent from previous years, it said, adding retailers won’t recover the decline during seasonal promotions that start in January. The discount period “will be a flop,” with sales declining as much as 40 percent compared with 2010, Carlo Rienzi, the head of Codacons, said in the statement.
  • Will the Euro Survive in 2012? (video)
  • Consumer Confidence Rose More Than Forecast. The Conference Board’s index increased to 64.5, exceeding all estimates in a Bloomberg News survey and the highest since April, from a revised 55.2 reading in November, figures from the New York-based private research group showed today. Another report showed home prices fell more than projected in October.
  • Oil Extends Longest Rally Since 2010. Crude advanced as much as 1.9 percent after Iran’s official Islamic Republic News Agency cited Vice President Mohammad Reza Rahimi as saying the country would bar shipments through the strait if sanctions are imposed on its oil exports. “The Iranian threats are getting increasingly bold,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. Crude oil for February delivery rose $1.78, or 1.8 percent, to $101.46 a barrel at 2:01 p.m. on the New York Mercantile Exchange. The contract reached $101.53, the highest level since Dec. 8. Futures have climbed 11 percent this year after increasing 15 percent in 2010. Brent oil for February settlement gained $1.45, or 1.3 percent, to $109.41 a barrel on the London-based ICE Futures Europe exchange.
  • Sears(SHLD) Plunges on Plans to Close Stores. Sears Holdings Corp. tumbled the most in 8 1/2 years after saying it will close as many as 120 stores, with a deeper-than-expected sales decline casting doubt on Chairman Edward Lampert’sefforts to turn around the chain.
  • S&P Index in 2011 Moves Least Since 1970. Stock swings that reached twice the five-decade average left the Standard & Poor’s 500 Index (SPX) with the smallest price change in 41 years and utilities, soapmakers and health-care providers at the highest valuations since 2008. The S&P 500 rose 3.7 percent last week, sending the measure to a gain of 0.6 percent for the year. The last time it moved less on an annual basis was in 1970, when it fell 0.1 percent.

Wall Street Journal:

  • Obama to Nominate Powell, Stein as Fed Governors. U.S. President Barack Obama will nominate Harvard economist Jeremy Stein and Jerome Powell, an investment banker and former Treasury official, to the two empty seats on the Federal Reserve's policy-setting board of governors.
  • Recession? Not If You Are a Member of Congress. When Representative Ed Pastor was first elected to Congress two decades ago, he was comfortably ensconced in the middle class. Mr. Pastor, a Democrat from Arizona, held $100,000 or so in savings accounts in the mid-1990s and had a retirement pension, but like many Americans, he also owed the banks nearly as much in loans. Today, Mr. Pastor, a miner’s son and a former high school teacher, is a member of a not-so-exclusive club: Capitol Hill millionaires.
  • White House to Raise Borrowing Limit by $1.2 Trillion. The Obama administration will ask Congress to raise the nation's borrowing limit by $1.2 trillion this week, marking the third and final increase from a deal negotiated over summer. Treasury officials said Tuesday that the increase is necessary because the government will be within $100 billion of its current limit by Friday. The debt limit is the amount the government can borrow to finance its operations. The latest increase will boost that limit to $16.4 trillion. Officials say that should be enough to allow the government to keep borrowing until the end of 2012 — just after the presidential election.
Business Insider:
Zero Hedge:
  • Ben Nelson Retiring From Senate. Democratic Sen. Ben Nelson of Nebraska will announce today that he is retiring after two terms, a serious blow to Democratic efforts to hold on to their majority in the chamber next November.


  • Wolfgang Bosbach, a German politician from Chancellor Angela Merkel's Christian Democratic Union, said continued aid payments to Greece depend on the country's meeting its commitments, citing an interview. "As long as it's entirely unclear where Greece is going politically, the country can't expect that further billion-euro aid is paid all the time," citing Bosbach.
Diario Economico:
  • Retail sales in December through Christmas, in Portugal, dropped about 15% from a year earlier, citing Joao Vieira Lopes, the chairman of the country's Commerce and Services Confederation.

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