TOP
- EZ FinMins said for the first time that they would consider asking Greece’s private creditors to extend the maturities on their bonds to buy Athens more time to pay down its huge debt. At a meeting in Brussels the ministers also approved a bailout for Portugal and backed Italian Mario Draghi to become the next president of the ECB.
- Spain’s regional and local administrations have “hidden” debt, not included in the official accounts, amounting to about 26.4 billion euros ($37 billion), according to research by Freemarket Corporate Intelligence, a consulting firm, the FT reported.
- Australia will likely need higher interest rates at some point to keep a lid on price pressures, especially as global inflation risks have moved to the upside, but the current mildly restrictive policy stance is appropriate, the central bank said. In minutes of its May policy meeting released on Tuesday, the RBA painted an upbeat outlook for both the local and global economies even as it kept rates at 4.75 percent for a sixth month.
US
- Republican top budget writer Paul Ryan pushes spending cuts as U.S. hits debt limit. Democrats launch new attacks on Republican health plans.
- IMF chief Dominique Strauss-Kahn was denied bail and sent to New York’s notorious Rikers Island jail on Monday, a crushing blow as he fights charges that he assaulted and tried to rape a hotel maid.
- NY Attorney General Eric Schneiderman has opened an investigation into the packaging of mortgage loans into securities, in the latest sign of increased scrutiny of the mortgage industry, the WSJ reports.
- The White House is threatening to hold up final passage of three coveted free trade agreements (with South Korea, Panama and Columbia) unless lawmakers agree to expand retraining assistance for American workers who lose their jobs because of foreign competition, the Washington Post reports.
- A WSJ survey of economists finds that US CPI inflation is expected to ease to 3% during this year and then stay below 2.5% through 2012. The economists on balance expect GDP to grow at an annualised rate of 3.2% this quarter and then to accelerate to 3.4% by Q4. The unemployment rate is seen falling to 8.4% by end-year.
- Canadian inflation will stay above the central bank’s target range in the second quarter, BoC hief Mark Carney said on Monday, while appearing to be in no rush to raise interest rates to keep prices in check. Carney said inflation would remain above 3 percent But he suggested that price pressures were temporary, the result of gasoline-price increases and provincial tax hikes, and that food inflation had seeped into the country sooner than expected.
EUROPE
- EZ FinMins said for the first time on Monday that they would consider asking Greece’s private creditors to extend the maturities on their bonds to buy Athens more time to pay down its huge debt. At a meeting in Brussels the ministers also approved a bailout for Portugal and backed Italian Mario Draghi to become the next president of the ECB.
- EU officials back Portugal bailout plan. The amount of the loan was 78 billion euros for 3 years. At the request of Finland, Portugal have have to undergo a privatization program as well as encouraging private investors not to sell Portuguese exposure.
- The euro exchange rate should not move in the wrong direction and the wrong direction is upwards, Jean-Claude Juncker, the head of the Eurogroup of Eurozone finance ministers, told Market News International.
- Spain’s regional and local administrations have “hidden” debt, not included in the official accounts, amounting to about 26.4 billion euros ($37 billion), according to research by Freemarket Corporate Intelligence, a consulting firm, the FT reported.
- A “re-profiling” of Greece’s huge debt load is possible, but not before the government in Athens implements new measures to meet its deficit targets and reform the nation’s economy, Eurogroup Chairman Jean-Claude Juncker said. Speaking at a late night press conference following the monthly meeting of Eurozone finance ministers, Juncker ruled out any kind of “large debt restructuring” by Greece.
- It makes sense for Europe to keep the top job at the lMF for now given its role in tackling the euro zone crisis, though the post may go to the developing world in the future, Germany’s leader said. Merkel continued to back Italain Central Banker Draghi for the next ECB head.
- FT- Campaigning for Portugal’s June 5 general election has exposed sharp differences between the two main political parties over how the next government should implement the country’s €78bn bail-out deal. Both parties have signed up to a package due to be approved today by the EU and the IMF. But divergences over how to achieve the targets set out in the three-year programme of tough austerity measures.
- Italian PM Silvio Berlusconi looked set to suffer a big defeat on Monday as early results from local polls raised the prospect of his centre right losing a string of key cities, including the financial capital Milan. Berlusconi had campaigned frenetically for an outright win in his home town and power base, which the centre right has easily held for nearly 20 years. Aides described him as “surprised and saddened” by the early results.
- The restructuring of the debt of any euro zone country before 2013 would be “incredibly” damaging to the credibility of the euro zone, German Chancellor Angela Merkel said. Speaking to students in Berlin, Merkel defended in strong terms the principle that Greece or other countries should not undergo a debt restructuring before mid-2013 when Europe’s permanent bailout fund is in place.
- Gordon Brown believes he still has a chance of winning the top job at the International Monetary Fund, telling friends he has global backing that could trump the opposition of David Cameron, his successor in Downing Street, the FT reports.
ASIA
- Many countries celebrating the birth of Buddha today: India, Indonesia, Malaysia, Singapore, Thailand.
- JAPAN DATA: The Cabinet Office says it will release the government’s monthly economic report for May on Tuesday, May 24. The government revised down its overall economic assessment in April, for the first time since October 2010, saying, “Although the economy was picking up, it shows weakness recently, due to impact of the Great East Japan Earthquake.”
- Japan’s Trade Minister Banri Kaieda said he thinks financial institutions will cooperate with Tokyo Electric Power Co.’s restructuring plans to compensate victims of the Fukushima Dai-Ichi nuclear plant disaster.
- The People’s Bank of China sets the dollar-yuan central parity rate at Cny6.5108 today, compared with Cny6.5089 set for the previous trading day.
- Sales of private residential homes in Singapore shot up by 29% to 1,788 units in April, Channel NewsAsia reports, citing data from the Urban Redevelopment Authority (URA). That was the highest number since November last year.
- Australia will likely need higher interest rates at some point to keep a lid on price pressures, especially as global inflation risks have moved to the upside, but the current mildly restrictive policy stance is appropriate, the central bank said. In minutes of its May policy meeting released on Tuesday, the RBA painted an upbeat outlook for both the local and global economies even as it kept rates at 4.75 percent for a sixth month.
RBA SAW A$’S RISE INFLUENCED BY FOREIGN CENTRAL BANKS BUYING
- The Australian economy is facing sustained strength in the local currency, not a short-term spike, the head of Australia’s Treasury department, Martin Parkinson, said on Tuesday, in his first major speech since taking on the key economic job.
LATAM & MENA
- Peru’s breakneck economic growth cooled slightly in March, expanding at its slowest rate in 13 months as a presidential election approached and the central bank raised interest rates, official data showed on Monday. The economy grew 7.87 percent in March from the same month a year ago and expanded 0.56 percent from February, which had fewer working days. March growth was in line with the expectations of economists surveyed by Reuters.
- Brazil 2011 inflation seen 6.31 pct vs 6.33 pct before – Weekly survey
- Chinese companies are in talks to invest about $1 billion in new projects in Brazil, Reuters reported, citing Commerce Minister Chen Deming. Sany Heavy Equipment International Holdings Co. plans to make a $200 million investment in production facilities, Chen said. Brazilian exports to China may rise about 20 percent this year, the report said, according to Brazilian Development Minister Fernando Pimentel.
- Campaigning began on Monday in a key Mexican state election that could significantly affect the hopes of the front runner for 2012’s presidential poll, Enrique Pena Nieto.
- In a further step to clean up its financial sector following a real estate crash, the Dubai government has taken over Dubai Bank, an Islamic bank majority- owned by the emirate’s ruler. The government will inject cash into the troubled bank, taking over complete ownership, while assessing whether it should carry on as a standalone entity or whether it should merge with another institution, a statement said.
OTHER MARKETS
- NIKKEI 9588 (+0.3%), HANGSENG 22935 (-0.1%), S&P/ASX 4683 (+0.7%), SHANGHAI SE COMPOSITE 2861 (+0.4%), KOPSI 2106 (+0.1%) – As of 07.00 GMT
- TSYS: The yield on the 2Y was last at 0.52%, with the 5Y at 1.80%, the 10Y at 3.15% and the Bond at 4.27%.
- OIL: Brent Crude trades at 110.61 (-0.2%). WTI at 97.1 (-0.2%)
- Gold last trades at 1494 (+0.3%) , silver trades at 33.83 (+0.7%)
- Billionaire financier George Soros, who called gold “the ultimate bubble,” dumped almost his entire $800 million stake in bullion in the first quarter, well before a commodities slump blamed partly on reports he was liquidating his holdings. Famed gold bull John Paulson held his ground, but Soros was joined in the retreat by several other big names, including Eric Mindich and Paul Touradji, according to 13-F filings with the U.S. Securities and Exchange Commission that provide the best insight into where hedge funds are placing their bets.
HSBC Global Research