First Impressions

No First Impressions today unfortunately. Our writers are out and about gathering new information to share. That or they are golfing while the weather is still good…we’ll let you know.

Quote of the Day

“A less-friendly market environment will expose the underlying structure as broken.”

A paper by BlackRock in the story, “BlackRock Urges Overhaul of Corporate Bond Trading”.

Lead Stories

Bank of China to Sell High-Yield Bond Fund in Europe
Juliet Samuel – WSJ
One of China’s state-owned banks has struck a deal with Citigroup C -0.82% to market its first fund to pension and retail investors in Europe.

BlackRock Urges Overhaul of Corporate Bond Trading
Nathaniel Popper – Dealbook – NY Times
The giant asset manager BlackRock is initiating an aggressive call for the overhaul of a bond market that sits at the center of the United States financial industry and many retirement portfolios.

US corporate bond traders go electronic
Tracy Alloway and Michael Mackenzie in New York – Financial Times
The last bastion of wild west trading on Wall Street is coming under increasing scrutiny from regulators and investors. Immortalised 35 years ago in Liar’s Poker – Michael Lewis’s account of his time as a bond salesman in the 1980s – nothing much has changed when it comes to buying and selling debt issued by America’s biggest companies.

Shrinking Bond Desks Taken by Journeymen as Masters Fade
Nabila Ahmed – Bloomberg
It was once the profession that inspired Sherman McCoy in the novel “The Bonfire of the Vanities.” In the 1980s, the excitement in the trading room, with hundreds of people talking on the phone, was palpable, like a sporting event, said Kerry Stein, head of credit trading at Lloyds Securities Inc. Those days are gone.

Tiger’s Robertson Says Bond Bubble to End in ‘Very Bad Way’
Devin Banerjee – Bloomberg
Julian Robertson, the billionaire founder of Tiger Management LLC, said there’s a bubble in bonds that will end “in a very bad way.”

CEE corporate bond issuance: Disintermediation begins to take root
Lucy Fitzgeorge-Parker – Euromoney Magazine
With a seemingly bottomless pool of cheap bank funding readily available, companies in emerging Europe have tended to shun the international bond markets. A recent spurt of debut deals, however, has prompted speculation that the long-awaited shift might finally be under way.

China banks poised to relax mortgage rates, say state media
Gabriel Wildau in Shanghai – Financial Times
China’s biggest banks plan to lower interest rates on home mortgages, state media reported on Tuesday, highlighting Beijing’s concerns about the flagging property market and its impact on the broader economy.

Central Banks

ECB’s Draghi Keeps Door Open to Quantitative Easing
Brian Blackstone and Todd Buell – WSJ
European Central Bank President Mario Draghi signaled Monday that the central bank may beef up the scale of its asset-purchase program if inflation stays too low, opening the door to more stimulus to protect a fragile eurozone economy.

HIGHLIGHTS-Recent remarks by Federal Reserve officials
Kocherlakota warned against raising rates while inflation is running below its 2-percent goal, saying that doing so could undermine the Fed’s credibility and unmoor inflation expectations.
“I think we need to be very cautious and careful about starting to raise rates, because we do want to be sure that inflation is on the path back to 2 percent,” he told the Economic Club of Marquette County in Michigan’s Upper Peninsula. Kocherlakota said he does not expect inflation to reach 2 percent until 2018.

Hong Kong central bank warns of ‘very high’ risks linked to higher rates
Michelle Price – Reuters
Hong Kong’s de facto central bank warned on Tuesday that the city’s lenders might face “very high” risks from rising interest rates, which will threaten to drain liquidity at a time banks have heavy loan commitments.
Arthur Yuen, deputy chief executive of the Hong Kong Monetary Authority (HKMA), told the Hong Kong Institute of Bankers’ annual conference that the U.S. Federal Reserve’s decision to end its asset-purchase programme could create “liquidity risks” for Hong Kong banks.


BlackRock Cautions on Euro QE as Pimco Bets Against Volatility
Eshe Nelson – Bloomberg
Bond investors have been too quick to bet the European Central Bank will buy sovereign debt, BlackRock Inc. (BLK) said today, as Pacific Investment Management Co. looks to profit from the prospects of added stimulus.
While the ECB has set itself “an ambitious target” of increasing its balance sheet by about 1 trillion euros ($1.29 trillion), the low take-up of new cheap loans offered to banks to boost the economy is no guarantee of quantitative easing, said Owen Murfin, a money manager at BlackRock. A second tranche of targeted lending in December is likely to be larger, Murfin told a London press briefing.

China inks renminbi deal with Sri Lanka
Simon Osborne – The Trade
China’s central bank, the People’s Bank of China, has implemented a currency agreement with the Central Bank of Sri Lanka.

Goldman’s European Spot FX Trading Head Said to Leave
Julia Verlaine and Ambereen Choudhury – Bloomberg
Goldman Sachs Group Inc. (GS)’s European head of spot foreign-exchange trading, Mitesh Parikh, is leaving after 12 years to join a hedge-fund firm, according to two people with knowledge of the move.

Indexes & Index Products

Goldman Sachs files for active ETFs, joins Wall Street bank trend
Ashley Lau – Reuters
Goldman Sachs Group Inc has laid the groundwork to launch actively managed exchange-traded funds, becoming the latest Wall Street bank to set its sights on the fast-growing market.

MSCI index says it will favor low-carbon stocks
A prominent equity index firm says it’s going green, joining a growing number of firms trying to help investors profit from environmentally conscious holdings. On Monday, MSCI launched its Global Low Carbon Target Indexes, which complement an existing set of indexes that weigh stocks based on their carbon emissions. The new indices will favor companies that have low carbon exposure and emissions.


Dennis Gartman on gold: ‘A treacherous, boring, nasty trade’
Bruno J. Navarro – CNBC
There’s no reason to own gold in U.S. dollar terms, commodities trader Dennis Gartman said Monday.

Gold crashes and is now tarnished for good
Jeff Reeves – MarketWatch
Gold shined brightly at the beginning of 2014, with bullion prices jumping by about 13% from New Year’s Day until mid-March.
But since spring, and particularly since July, gold prices have been on the decline. Last week, the precious metal settled near lows not seen since Christmas 2013.

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