TOP
- *JAPAN 1Q GDP SHRINKS ANNUAL 3.7% vs -1.9% expec
- S&P SAYS SEES POSSIBILITY OF DOWNGRADE IF NZ’S EXTERNAL POSITION DOES NOT IMPROVE
- HSBC -The April FOMC minutes reinforced the view presented by Bernanke at his inaugural press briefing three weeks ago, confirming that the Fed remains committed to an accommodative policy stance. Only a few on the FOMC thought that economic conditions might warrant less-accommodative policy this year. There were at least as many other participants who thought an early exit could “unnecessarily damp” the ongoing economic recovery. Although the minutes show careful discussion on strategies for normalizing policy, it was explicitly noted that this did not mean that a move towards normalization would begin soon
- FT- The ECB has criticised proposals for a possible restructuring of Greek sovereign debts, laying bare a behind-the-scenes row between ECB technocrats and EU politicians over Greece’s debt crisis. The ECB officials warned that any move to delay repayments would be a dangerous distraction from Athens’ economic and fiscal reform plans. Berlin is pushing for a legal commitment to be written into the treaty establishing the European stability mechanism – the €500bn permanent rescue fund to be set up in 2013.
- Glencore has priced its multibillion-pound initial public offering at 530p, ending four decades of partnership as the world’s largest commodities trader.
EMEA
- IMF head Dominique Strauss-Kahn has resigned as Managing Director, effective immediately, the IMF says.
- South Africa has led calls for the next head of the IMF to be drawn from outside Europe, breaking a tradition that dates back more than half a century, the Telegraph says
- Finland will demand private investors play a bigger role in future eurozone stabilisation efforts after giving its approval to the E78bn bail-out for Portugal, according to Finnish political leaders, the FT reports.
- FT- The ECB has criticised proposals for a possible restructuring of Greek sovereign debts, laying bare a behind-the-scenes row between ECB technocrats and EU politicians over Greece’s debt crisis. The ECB officials warned that any move to delay repayments would be a dangerous distraction from Athens’ economic and fiscal reform plans. The ECB and some eurozone countries are at odds with Germany’s determination to involve private creditors in any future debt restructuring, for fear of scaring investors. Berlin is pushing for a legal commitment to be written into the treaty establishing the European stability mechanism – the €500bn permanent rescue fund to be set up in 2013.
- European Central Bank President Jean-Claude Trichet called on emerging economic powers with big surpluses to let their currencies gradually appreciate, according to a magazine interview made available on Wednesday.
- The IMF has warned that Greece’s economic recovery programme risks being derailed unless the socialist government accelerates structural reforms. Poul Thomsen, head of an IMF mission assessing the country’s progress, said the country would not emerge from recession next year without “stepped-up reforms”.
- Greek debt talks cast doubt over sovereign CDS In one sense, Greece may be about to get its revenge on the speculators blamed by politicians for exacerbating the country’s debt crisis. If eurozone leaders press ahead with plans to extend Greek bond maturities in a “soft” or voluntary debt restructuring, then traders in credit default swaps could be one of the main casualties the risk of a bond default, are facing a critical moment in their short history.
US
- FT- US Federal Reserve rate-setters held a detailed discussion on how to exit easy monetary policy according to the minutes of their recent meeting. Discussion of exit strategy shows how debate on the FOMC has turned towards tightening of monetary policy rather than further easing. But the FOMC noted the discussion “did not mean that the move toward such normalisation would necessarily begin soon”. Nearly all FOMC members said that the first step towards exit would be stopping the reinvestment of early repayments from the Fed’s portfolio of mortgage-backed securities. A majority of FOMC participants said they would prefer to start sales of MBS after increasing the Fed’s target for short-term interest rates
- US credit-rating agencies would have to disclose details of how they determine credit ratings, ensure quality and consistency of ratings and take steps to prevent conflict of interest, under a crackdown proposed by the SEC the Times reports. The proposals have been drawn up to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act
- WASHINGTON (MNI) – Data released Wednesday by the Investment Company Institute showed long-term municipal bond funds registered their first inflow in 27 weeks. Despite the strong rally since early April in the municipal bond market, long-term municipal bond funds had continued to record outflows over the recent weeks, albeit at a slowing pace. In the week ended May 11, however, they registered a $38 million inflow.
- Corn futures rose the most in six weeks, wheat had the biggest gain in two months, and soybean and rice prices surged as adverse weather from North Dakota to Louisiana to Europe threatened to erode crop production. In the U.S., corn planting was 63 percent complete as of May 15, down from the 75 percent average in the past five years, as soggy fields hindered fieldwork, mostly east of the Mississippi River and in northern states, government data show
UK
- The Nationwide UK consumer confidence index dipped to 43 in April from 45 in March, dropping to a level just four points above February’s all time low of 39
- Glencore has priced its multibillion-pound initial public offering at 530p, ending four decades of partnership as the world’s largest commodities trader submits to greater public scrutiny in return for financial firepower in a consolidating industry.
- UK property group Land Securities signalled its intention to build more prime London offices to exploit the prospect of an “even more acute”-than-expected gap between supply and demand, the Independent reports.
Asia
- *JAPAN 1Q GDP SHRINKS ANNUAL 3.7%
- *JAPAN 1Q NOMINAL GDP SHRINKS 1.3% ON QUARTER
- Toshiro Muto, former BOJ deputy governor, told a seminar in Tokyo that he expects Japan’s economy to hit bottom in Q3 and begin to post growth in Q4. He forecast the economy will contract 0.4% to 0.5% in fiscal 2011 and consumer prices to continue falling until showing a gain in fiscal 2013 from the previous year. Muto is currently chairman of Daiwa Institute of Research.
- PBOC sets the USDCNY central parity rate at 6.5048 today, compared with Cny6.5074 set for the previous trading day.
- SINGAPORE: The Ministry of Trade and Industry raised its GDP growth forecast for 2011 to between 5.0% and 7.0%, from 4.0% to 6.0% previously. MTI says the near-term outlook for the Singapore economy remains positive.
- DJ NZ FIN MIN: INTEREST RATES ARE LIKELY TO STAY LOWER FOR LONGER
- Nrew Zealand has introduced a new four-year Earthquake Kiwi Bond to help with financial costs associated with the earthquake. The bond will pay an interest rate of 4% and will be added to the existing Kiwi Bond program which pays an interest of 3% for two years, and 2.25% of six months.
- AUSTRALIA: Consumer inflationary expectations fell to 3.3% in May from 3.5% in April, marking a gradual drop from a high of 4.6% in January, the latest survey from the Melbourne Institute shows.
LATAM
- Brazil’s economic activity picked up in March from February despite government efforts to cool growth in the face of inflationary pressures. Inflows to Latin America’s biggest economy also surged in early May, bringing the sum for the first 13 days of the month to well over the total for the month of April. Inflows this month to May 13 totaled $8.809 billion, well above the $1.541 billion in April. The central bank also bought $3.058 billion on the spot foreign exchange market over the same time in an effort to contain volatility in the foreign exchange market and build reserves.
- The central bank’s IBC-Br economic activity index <BRIBC=ECI> rose 0.51 percent in March from February, the bank said on Wednesday. The central bank revised the February gain to 0.36 percent from a previously-reported 0.32 percent.
COMING UP TODAY( times GMT/ET)
0830/0430 UK Apr-11 SMMT Car Production
0830/0430 UK Apr-11 Retail Sales
– Norges Bank press conference on Financial Stability report
– Bank of Portugal Annual Report for 2010
– France E7.0-E8.5 bln 2.00% Sep 2013 BTAN New
– France ” 3.00% Oct 2015 OAT Tap
– France ” 3.25% Apr 2016 OAT Tap
– France E1.5-E2.0 bln 0.45% July 2016 BTANi Tap
– France ” 1.30% July 2019 OATi Tap
– France ” 1.85% July 2027 OATei Tap
– Spain E3.0-E4.0 bln 5.50% Apr 2021 Oblig Tap
– Spain ” 4.70% July 2041 Oblig Tap
– UK Stg5.0 bln 2.25% 2014 Gilt Tap
1000/0600 UK May-11 CBI Industrial Trends
1120/0720 UK Bank of England’s Bean speech in Belfast
1230/0830 New York Federal Reserve Bank President William Dudley speech on economic conditions and the outlook at SUNY New Paltz, the first of two days of events throughout the Hudson Valley
1230/0830 US 14-May Jobless Claims
1300/0900 Mexico 1Q-11 GDP
1300/0900 Mexico Mar-11 Global economic activity IGAE
1300/0900 ECB President Jean-Claude Trichet to give address at ECB Colloquium in honour of Gertrude Tumpel- Gugerell entitled “European integration and stability”, in Frankfurt
1300/0900 ECB Executive Board member Gertrude Tumpel-Gugerell closing remarks at ECB Colloquium in her honour, entitled “European integration and stability”
1305/0905 World Bank President Robert Zoellick speech at the Bretton Woods Annual Meeting in Washington
1345/0945 US 15-May Bloomberg Comfort Index
1400/1000 US Apr-11 Existing Home Sales (NAR)
1400/1000 US May-11 Philadelphia Fed Survey
1400/1000 US Apr-11 Leading Indicator
1430/1030 US 13-May EIA Natural Gas Stocks
1435/1035 Bank of Canada Gov. Mark Carney speech to Bretton Woods annual meeting session on navigating global financial risks, in Washington
1545/1145 IMF First Deputy Managing Director John Lipsky replaces Managing Director Dominique Strauss-Kahn delivering speech on “Summoning the Will to Act” at the Bretton Woods Annual Meeting in Washington
1600/1200 New York Federal Reserve Bank President William Dudley remarks to the Orange County Chamber of Commerce in Middletown, New York
1600/1200 European Investment Bank President Philippe Maystadt speech on “Europe, the lost continent?”, in Verviers
1700/1300 US Treasury auctions $11.0 bln in 9y-8m TIP
1705/1305 Treasury Under Secretary for International Affairs Lael Brainard speech on meeting global responsibilites at the Bretton Woods Annual Meeting in Washington
1740/1340 Chicago Federal Reserve Bank President Charles Evans speech to AFP Global Corporate Treasurers Forum in Chicago
2030/1630 US 09-May Money Supply (M2)
2100/1700 IMF First Deputy Managing Director John Lipsky replaces Managing Director Dominique Strauss-Kahn for a speech on global recovery and cooperation to the Peterson Institute in Washington.
HSBC Global Research