Converging Prices Long

Investors known for snapping up distressed debt on the cheap have identified Portugal as their next target but some of these so-called "vultures" say they will wait until a Greek bond swap deal is completed before striking. Many traditional bond investors, such as funds that follow ratings benchmarks, were forced to sell Portuguese debt after it was downgraded to "junk" by Standard & Poor's last month. Others, including some banks, simply fled the volatile market fearing a debt restructuring or under pressure from their shareholders to cut losses on their Portuguese debt holdings, sending the country's bond yields to euro-era highs. That left the door open to a specialized type of investors, often called "vultures" or "vampires," who look to buy bonds when prices hit bottom, hoping to ...

Reaching the Summit, Facing the Cliff Edge Rebound in risk sentiment underpinned by hopes for the coming week's EU summit. EU leaders's appear to be converging and entrenched positions softening, but risks are high. Modest 0.25% ECB rate cut expected, Bank of England to hold off more QE until January. Risk sentiment improved sharply this week with Euro area stock markets posting gains of 10%+. The turnaround in sentiment appears to have been motivated by hopes of a resolution to the Euro area crisis. But the liquidity support operation announced by the major central banks clearly helped, as did the easing in monetary policy in China and Brazil. Against this background, hopes are riding high that the coming week's key EU Summit will deliver a lasting solution to the Euro ...

The Week Ahead Highlights Fresh signs of global slowing keep risk down All eyes on Greece, again IEA emergency reserve release - Transitory or permanent influence on crude oil prices? UK data releases evidence a stagnant economic recovery Important technical levels to watch in the week ahead Key data and events to watch next week Fresh signs of global slowing keep risk down Markets received fresh signals this past week that global growth is moderating further, suggesting potential for further declines in risk assets (stocks and commodities) in the weeks ahead. Stocks in the US did not lose much ground, but attempts to rebound were rejected, highlighting our view that sellers remain dominant. Commodities, using the CRB index as the proxy, posted much sharper ...

The Week Ahead Highlights * Stay focused on the big picture * Concerted intervention in JPY is for real * Germany throws a spanner in Europe's works * Key Technical Levels to Watch in the Week Ahead * Key data and events to watch next week Stay focused on the big picture The past few weeks have seen events unfold at a furious pace, making it sometimes difficult to keep up with developments, which is exacerbated by heightened market volatility. During such times, it's important to stay focused on the big picture which we currently see as an on-going global recovery, which is generally positive for risk assets such as stocks and commodities. In precious metals and oil, we prefer to be buyers on dips. In particular, we would note impending UN-sanctioned military action ...

US Economic Indicators Preview (Week of 15 to 21 November 2010) * Retail sales (Oct): auto sales spur growth in sales * First regional manufacturing surveys (Nov): converging at moderate expansion levels * Industrial production (Oct): cancelling out the September decrease * Housing starts (Oct): downward correction * Consumer prices (Oct): core rate remaining very low Retail sales could have risen sharply by 1.1% mom in October due to a surge in domestic vehicle sales, which, according to industry reports, could have gone up by more than 6% mom in adjusted terms. Higher gasoline prices will probably have had a positive impact on nominal sales too. However, sales ex autos and gasoline are likely to have grown at a more moderate pace: as the graph shows, consumer ...

The euro and high-yielding currencies held firm on Friday after an improvement in U.S. housing and jobless claims data bolstered investor appetite for risk ahead of key U.S. jobs data today at 12:30 GMT. Economic News USD - Dollar Slips against the Euro and the Yen The U.S currency was on the defensive Thursday, retaining most of the losses sustained the previous day when upbeat data helped lure investors away from safe-haven currencies and assets. Figures released yesterday showed U.S. pending home sales rose unexpectedly in July and new claims for unemployment insurance fell for a second straight week, which, together with upbeat manufacturing data on Wednesday, eased the gloom over the U.S economy. That lifted stocks, commodities and higher-yielding currencies. However, investors ...