The Day Today

The (Taper?) Day Today 18 Sept 2013

5 years after Lehman collapsed and the most important central bank in the world is about to signal that easy money really is over. Whether the so-called taper is $5bn, $10bn, $20bn, however its split between Tsys and MBS, this marks a significant turning point for the global economy. It’s time for the world to realise that rates are going up, and more importantly, that’s NOT A BAD THING. If you want to worry, then worry about how the new Fed chair (whoever (s)he is) takes back massive monetary accommodation further down the track – and how mortgages will cope with higher long-term rates. But for now, rejoice that the world is on the mend – and we’re just taking the patient out for a nice stroll rather than pushing them straight back up Everest.

* NZ Deputy PM Bill English trying to temper ccy gains: “would prefer NZD a bit lower”, “concerned about property prices”, “expects NZD decline as Fed removes stimulus”, “much of anticipated RBNZ rate rise now priced into NZD” {NSN MTATFX6K50Y9 <go>}

* Riksbank minutes flag macroprudential measures once again for any signs of higher credit growth  {NSN MTB9566JIJUU <go>}

* England House Prices At Record High – wealthy outsiders piling into LDN mkt, up 10% in a year  {NSN MTA1K83HBS3K <go>}

* Spread of corporate debt to govt continues to shrink [bubble building?]: Next Plans First Bond Sale in Two Years as Yield Premiums Drop  {NSN MTB8PW6K50XV <go>}

The Day Today 17 Sept

FED * WSJ:  Yellen “emerged as the front runner”.. “The process for selecting a nominee isn’t starting over…no new candidates have been added to the mix.. An announcement won’t happen this week” * RTRS concurs about no further additions to list * NYT also calling for Yellen * Hilsenrath: Fed Faces Tough Sell on Low-Rate Strategy. ‘Their challenge: How to justify the low interest-rate plan when their own estimates suggest an economy regaining its health”

UK * Govt makes ~£60mio in profit on first sale of Lloyds stake, with shares priced 75p, above the 73.6p originally paid on the £20bn bailout in 2008 {NSN MT9DIO6JIJV6 <go>} * Lloyds sale expected to go to US investors – who are making a bet on UK recovery

JAPAN * Aso: Want to Formulate Extra Budget Without Issuing Bonds {FIFW  NSN MT908D6K50YO<GO>} * Japan Warned U.S. of Blackouts in Appeal for LNG Supply  {NSN MT94PI6TTDS5 <go>}

* RBA Minutes: Rate cuts still possible, though no moves imminent.  Welcomed a lower AUD: “a further fall in the local dollar would be helpful in cushioning the economy as mining investment is likely to fall sharply over the next few years”.

The (Lehman RIP) Day Today 16 Sept

* Summers withdraws from the race to be Fed chairman after key Democrat senators, emboldened by Syria deference to Congress, warn he won’t pass muster {NSN MT7B286JIJUZ <go>} * WSJ: Other candidates aside from Yellen are Kohn, Ferguson, Geithner (who says he doesn’t want it {NSN MT797C0YHQ0X <go>}) or even ex-Bank of Israel Stanley Fischer

* Syria’s Govt hails Russian-brokered deal as ‘victory’

* The man who warned of the credit crunch, BIS former chief econ Bill White, says “this looks to me like 2007 all over again, but even worse” {NSN MT65KE3HBS3K <go>} * BIS also says bank lending to emerging mkts surged to record levels in Q1

EUROPE * Merkel boosted by CSU Bavaria win {NSN MT6KEW07SXKX <go>} * ECB’s Praet says ECB has room for maneouvre – could reduce the “corridor” {NSN MT7BIW6JIJUS <go>} * Germany working on plan for banking union without treaty change

5 Years to the day since Lehman went under

* NYT: Why Lehman wasn’t rescued * 25 scariest moments of the crisis * What are Lehman top brass doing now? * Time: Wall Street won and it could all happen again

The Day Today (Friday edition) 13 Sept

* Nikkei: Obama To Name Summers As Next Fed Chief: Sources -> This story a rehash of what is already known, but mkt excitement hinges on Nikkei using the phrase “set to name” Summers -> Yellen’s chances could be scuppered by appointment of Lael Brainard as Vice-Chair (guarding Obama from accusations of being anti-women)

* 66% of economists expect taper next wk, but 40% don’t think mkts have fully priced in a move

* BoE must limit house price booms to 5% per year says RICS

* ECB’s Bini-Smaghi’s new book claims Italy floated plans to leave Euro in 2011, and Merkel thought Greece could leave safely at late as autumn 2012 * Spiegel: Bailout No 5? Euro Zone Eyes Slovenia’s Troubled Banks

* Chemical weapons must have been fired from govt lines, says the Times about UN report due Monday

* As today is Friday 13th, the Mayor of London has announced that all bus routes with the number 13 will be free to ride. Boris Johnson, has ‘declared war on triskaidekaphobia’, and if successful the scheme will rolled out nationwide

The Day Today 12 Sept

* RBNZ become first G10 central bank to signal rate hikes: “OCR increases will likely be required next year…We expect to keep the OCR unchanged in 2013” * But Governor Wheeler tries to talk down the ccy: “Overvalued NZD is a problem…would like to see a weaker NZD”  {NSN MSZQ0R6K50YQ <go>}

* Putin writes in NYT urging caution over Syria: ‘Recent events…have prompted me to speak directly to the American people and their political leaders…we were allies once, and defeated the Nazis together. The universal international organization — the United Nations — was then established to prevent such devastation from ever happening again.’

* AUD employment data disappoints: -10k vs +10k exp and -10k prior, unemployment rate edges up to 5.8% from 5.7%

ECB * Asmussen Says OMT May Help States Back to Bond Markets  {NSN MSYZLH6TTDT5 <go>} * Knot says OMT needed until debt moves under 60% threshold, and ‘that may take a decade’  {NSN MSZA316TTDSF <go>}

* FT: Sterling’s jump fuels doubts over Mark Carney’s rates guidance * BOE Miles: UK recovery is ‘only just starting’ and higher mkt rates are ‘reflection of good economic news’ {NSN MSYYST6JTSE8 <go>} * Some believe EUR/GBP hedges could be unwound if Vodafone/Kabel Deutschland deal falls through. Times: Vodafone burns midnight oil with deal in balance

* MNI’s Steve Beckner: No Sign From Fed Start of Taper Should Be Delayed