Bank Avoids Market

Morning Briefing: Portugal closer to EU bailout; PM resigns News: Forex: Euro slips as Portuguese austerity measures are rejected Global Markets: Asian markets fall over radiation concern; oil eased on Portugal debt worries Portugal: Prime Minister resigns after parliament rejected austerity plan New Zealand: Avoids recession, GDP Q/Q at 0.2 percent Japan: More nations curb imports from Japan Euro zone: EU set to push decision on bailout fund to June United Kingdom: MPC voted 6-3 to keep policy on hold Rates in Asia and Indices: EUR/USD: 1.4114 - 1.4054 USD/CHF: 0.9124 – 0.9075 GBP/USD: 1.6267 - 1.6200 EUR/JPY: 114.22 – 113.55 USD/JPY: 81.05 – 80.76 DowJones: 12'086.02 +0.56% NASDAQ: 2'698.30 +0.54% S & P 500: 1'297.54 +0.29 Nikkei: 9’435.01 -0.15% Shanghai: 2’946.71 -0.06% Gold: $ 1' ...

The Week Ahead Highlights * EU competitiveness pact may disappoint * Fallout from Japanese earthquake * Spain gets a wakeup call * Central banks expected to maintain policy rates * A mixed picture in China, but further tightening is still needed * Key data and events to watch next week EU competitiveness pact may disappoint Without the final details in hand as of late Friday afternoon, we can't be sure of the ultimate reaction, but price moves ahead of the release of the EU pact suggest markets are going to be underwhelmed. The draft of the pact suggested that no concrete rules will be established and that individual governments will operate on a 'best efforts' basis to rein in debts and deficits and stimulate growth. The only enforcement mechanism will be ...

(Reuters) - Stick to banks, Meredith, and leave the municipal bond market to the experts. That is what Alexandra Lebenthal thinks. Lebenthal, whose family name has been synonymous with munis since the 1970s, has had enough of banking analyst Meredith Whitney's predictions of a wave of defaults by states, cities and other public-sector borrowers. Whitney, among the few analysts who predicted that the housing crisis would hobble undercapitalized banks, has in recent weeks taken to the airwaves to warn viewers of impending defaults in the $3 trillion municipal bond market. In interviews on business news channel CNBC and a widely watched story called "The Day of Reckoning" on the CBS News TV program, Whitney predicted 50 to 100 municipal issuers representing "hundreds of billions" of ...

Forex Trading was peaceful during the Asian session as no new information came in after the early morning. Regional indexes pushed marginally higher into the green. With today’s lack of new data, traders seem to be patiently waiting for a event laden European and US sessions. The peculiarly optimism that fiscal stimulus delivered in the form of the tax cut extensions and payroll tax cuts (in the US) would create meaningfully growth rather than an temporary patch wore off quickly yesterday and the USD came under significant selling pressure. US yields further took a break as well. EURUSD rallied to 1.3450, the Cable hit a December high at 1.5900 and the USDJPY dropped back above its daily cloud. For the record, we had expected a rally near the end of the year rally in risk-correlated ...

The Week Ahead Highlights * Is the USD back on the outs? * In a QE2 world... Is bad data now bad for the buck? * ECB avoids the knight in shining armor role * Interest rate decisions likely to be non-decisions * Key data and events to watch next week Is the USD back on the outs? The US Nov. employment report is widely described as disappointing, but we need to keep it in context. No one should have been expecting a sudden surge of job creation given still elevated jobless claims data, so why should we be so severely disappointed that the number came in about -100K below expectations? After all, the margin of error on NFP reports is easily +/- 100K and that leaves the Nov. number roughly within the range of expected outcomes. The jump in the unemployment rate is a ...

“That the economists…can explain neither prices nor the rate of interest nor even agree what money is reminds us that we are dealing with belief not science.” – James Buchan, Frozen Desire (1997) The Federal Reserve is in disarray. Unsure of whether its QE2 strategy (quantitative easing – second round) should be tabled (see speeches of Thomas Hoenig, president of the Kansas City Federal Reserve Bank) or if it should pump $10 trillion into the economy (the unsolicited advice from economic columnist Paul Krugman), the New York Federal Reserve Bank has now asked bond dealers what it should decide at its upcoming November 3 meeting. Since it is the belief in the integrity and competence of the Fed that backs the dollar, asking Wall Street what it wants is another reason to sell dollars. Two ...

Will QE Become QE2? Signs of a weakening in the UK economy are becoming more widespread. Since GDP growth of 1.2% in Q2, UK purchasing managers' indices have turned lower, volume retail sales has shown the first fall in four months and business and consumer confidence is turning down. With interest rates pretty much as low as they can go at 0.5%, the only real monetary option left is quantitative easing - directly injecting liquidity into the economy via the central bank buying securities from the financial markets. Our own Business Barometer - a better lead indicator of economic activity in the next three months than the PMI survey - is suggesting that economic growth could be flat by the end of the year. In this weekly, we look at the prospects for a resumption of QE - or QE2. Normally, ...

Plenty of important macro data from the U.S. was published yesterday. Investors were disappointed by the figures and responded mainly by moving away from riskier assets. At first U.S. Durable Goods came negative at -1%, at 12:30GMT later at 18:00GMT Beige book revealed a gloomy outlook for U.S. economy. Although company earnings are still high, yesterday fears about recovery came back to dominate the markets. Economic News USD - Traders Shift from EU Debts Concern to U.S. Economic Outlook U.S. macro data came far less than expected. Investors responded by moving away from riskier assets back to buying the Yen and U.S. Dollar. The EUR/USD was slightly down after U.S Durable Goods was published, The USD/JPY traded lower, currently trading at $87.22 as investors feel safer holding the ...