TOP:
Moody’s Investors Service cut Portugal’s debt rating to junk status yesterday, ratcheting up the pressure on euro zone governments to work out a lasting solution to their financial woes.
The EZ big banks will meet again in Paris on Wednesday in an attempt to end the deadlock with European authorities over the terms of investors participation in the restructuring of Greek sovereign debt.
The ECB will accept Greek government bonds as collateral until all rating agencies view them as having defaulted, citing a senior finance official (FT).
Chinese banks are seen issuing 6.7 trillion yuan ($1.04 trillion) worth of new loans this year, an official paper said on Wednesday, suggesting lending could slow markedly in 2011 as part of Beijing’s drive to tame inflation.
Complaints against China by the U.S., European Union and Mexico were bolstered by a WTO finding that the nation’s limits on raw-materials exports broke global rules and gave domestic companies an edge.
EUROPEAN:
Moody’s downgraded Portugal’s long-term government bond ratings to Ba2 from Baa1 and assigned a negative outlook. Concurrently, Moody’s has also downgraded the government’s short-term debt rating to (P) Not-Prime from (P) Prime-2. Says Portugal may need 2nd round of offl financing.
Greece: €30bn target for private sector participation is “increasingly unrealistic” as banks have sold some of their Greek bond holdings (WSJ).
Europe’s hopes for a significant contribution by private bondholders to a new bailout for Greece are fading, as it becomes clear that banks have already sold off a substantial proportion of their Greek government-bond holdings.
Prime Minister George Papandreou is pressing his ministers to redouble their efforts over the summer so that the bulk of a new raft of austerity measures and reforms can be implemented by September, sources have told Kathimerini, their English language website says.
Greek Finance Minister Evangelos Venizelos is due to meet his German counterpart, Wolfgang Schaeuble, on Wednesday in Berlin,eKathimerini reports.
Ireland may seek an additional 400 million euros ($570 million) in savings from next year’s budget depending on the outlook for economic growth, Finance Minister Michael Noonan said on Tuesday.
The Irish government will seek a renegotiation of the rescue package with the EU and the IMF later this year to allow it make different adjustments in budget 2012, the Irish Times reports.
Ireland must pay an annual fee to the British Treasury if it doesn’t draw down the full amounts allowed under its bailout loans each year, the legal agreement between the two countries reveals.
BoE should keep rates at the record low of 0.5 per cent tomorrow as the struggling economy takes its toll on the high street, according to The Times’ Shadow MPC (7-2).
UK Public sector workers are paid 7.8% more than private sector staff on average.figures.
The number of people renting privately-owned accommodation in England has increased by 55% in the past six years.
The UK Housing minister, Grant Shapps, said mortgage lenders should offer ‘mates mortgages” to allow first-time buyers to club together to buy a home, the Independent says.
US:
The US government is readying its first retreat from the mortgage market, with the size of loans eligible for government backing set to decline in October, the WSJ says.
Obama said the U.S. has “a unique opportunity to do something big to tackle our deficit,” and that he opposes a short-term measure that would raise the country’s debt limit without addressing more basic fixes to the government’s finances.
NY State’s recently approved property tax cap will likely put greater pressure on local finances and ratings, particularly of school districts, Moody’s Investors Service said in a report Tuesday.
ASIA:
China broke international law when it restricted exports of coveted industrial raw materials said the WTO, in a landmark case that may trigger new rows over growing global export curbs.
Chinese banks are seen issuing 6.7 trillion yuan ($1.04 trillion) worth of new loans this year, an official paper said on Wednesday, suggesting lending could slow markedly in 2011 as part of Beijing’s drive to tame inflation.
U.S. regulators will head to Beijing to discuss launching audit inspections while regulators in Canada announced a probe of foreign issuers.
Thailand’s central bank said on Wednesday it expected foreign money to continue to flow into the country in the second half of this year as investors are worried about conditions in the United States and Europe
Activity in India’s services sector rebounded in June from a 20-month low as new orders flowed in with renewed vigour and input costs climbed at a slower pace. The seasonally adjusted HSBC India Services Purchasing Managers Index (PMI), compiled by Markit, rose to 56.1 in June. The index, which is based on a survey of 350 companies, was at 55.0 in May – ET
Japan’s Cabinet Office says it will release the government’s monthly economic report for July on Wednesday, July 13, at a time to be set later.
Europe’s debt crisis and signs of a slowdown in global growth are complicating Malaysia’s decision on interest rates as a pickup in inflation coincides with dimming prospects for export gains.
ELSEWHERE:
Brazil is preparing a range of additional measures to stem the damaging rise of the real as the global currency war shows no signs of ending, according to Guido Mantega, the country’s finance minister.
Colombia sold $2 billion in 10-year U.S. dollar-denominated global bonds on Tuesday at a 4.425 percent yield, the finance ministry said, in the country’s largest ever foreign bond issue.
Following the RBA’s cash rate statement on Tuesday which showed the central bank sees no urgency to hike the cash rate anytime soon with near-term growth forecast downgraded and underlying inflation expected to see gradual
rise.
New Zealand: Government-controlled financial institutions made strong returns in the nine months to March 31 returning 15.7%, largely because of the strong performance of global equity markets, the Treasury said.
Statistics New Zealand has once again delayed the release of the GDP data for the March quarter, rescheduling it to July 14 from July 7, saying “more time is needed to analyse the data.
CORPORATE:
At the year’s half-way point, the average hedge fund was off 2.12 percent, preliminary data from Hedge Fund Research show. By contrast, the Standard & Poor’s 500 gained 6 percent
Temasek Holdings Pte, Singapore’s state-owned investment company, raised HK $ 28.2 billion selling stakes in China Construction Bank Corp and Bank of China Ltd., two of the mainland’s three biggest banks. Temasek sold about HK$18.8 billion of shares in Bank of China and about HK$9.4 billion in an offering of China Construction Bank stock.
A group of Dubai-based developers is suing Standard Chartered for about $10m (6.2m) in relation to money they lost after investing in a fund connected to the “Ponzi” scheme of US fraudster Bernard Madoff, the Telegraph reports.
OVERNIGHT DATA:
UK Jun Permanent Placements 52.2 vs 55.1 in May.
Activity in India’s services sector rebounded in June from a 20-month low as new orders flowed in with renewed vigour and input costs climbed at a slower pace. The seasonally adjusted HSBC India Services Purchasing Managers Index (PMI), compiled by Markit, rose to 56.1 in June. The index,
which is based on a survey of 350 companies, was at 55.0 in May – ET
MARKETS:
STOCKS: Major European bourses are initially seen trading higher Weds. Spreadbetters Cantor Index are calling the FTSE up 5, the DAX up 14 and the CAC up 9. Dow spent the Tuesday session languishing in a narrow range either side of flat and ended the day with a modest loss of just 13 points at 12,570. Nasdaq fared slightly better, added 10 points to close at 2,826.
Japan’s benchmark stock indices are trading modestly higher Weds, with the benchmark Nikkei 225 edging above the 10,000 level. The Nikkei was last 29 points higher at 10001, with the broader-based TOPIX up 1.16 points, or 0.13%, at 866.34. The Hang Seng Index ends the morning session down 0.40% at 22,657.74. The Shanghai Composite Index ends the morning session down 0.79% at 2794.05.
TSYS: Treasuries are trading lower across the board in Asian trade Weds, weighed by light profit-taking after modest overnight gains. However, traders say overall volumes are still muted, with many real money accounts sidelined. The yield on the 2Y was last at 0.44%, the 5Y at 1.70% and the 10Y at 3.14%. The Bond was yielding 4.38%.
Commodities: Crude futures are higher in Asia, extending overnight gains and sitting just shy of the session best levels. The front-month WTI contract was last 55 cents higher at $97.44. The Brent/WTI spread was last trading at $16.40. Gols is currently trading at $1515 with Silver at $35.60.
CALENDAR:
0700/0300 UK Halifax House Price Index
0700/0300 Spain May industrial output
0800/0400 UK Jun SMMT New Car Registrations
0900/0500 EMU 3rd release 1Q GDP
1000/0600 Germany May-11 Manufacturing orders
– Germany E4.0 bln 1.75% June 2013 Schatz Re-opening
– UK stg1.1 bln 1.25% 2027 IL Gilt Tap
1100/0700 US 01-Jul MBA Mortgage Application Index
1130/0730 US Jun-11 Challenger Layoffs
1145/0745 US 02-Jul ICSC-Goldman Store Sales
1230/0830 Canada Jun-11 Building permits
1255/0855 US 02-Jul Redbook Average
1300/0900 Mexico Apr-11 Leading Indicators
1330/0930 Newly-installed IMF Managing Director Christine
Lagarde holds press conference in Washington
1400/1000 Insee, IFO, ISAE 3Q economic outlook
1400/1000 US Jun-11 ISM Non-Mfg Index (NMI)