First Impressions

Now Batting For Number 17…
Jon Matte
Our intrepid Finisher for the Financials newsletter, Jeff Bergstrom, is experimenting with illness as a work-avoidance strategy today, and finding that while it’s effective, there are subtle drawbacks. So I figured what the heck, since I’m aggregating AND publishing the news today, why not just go ahead and throw a few comments in here before Doug and Jim show up and hog all the good articles. Therefore, if you notice a striking absence of commentary quality, you now know why. There’s a good chance that Jeff will be back at it again tomorrow; meanwhile, read on…

Quote of the Day

You’re going to see more countries and longer maturities in the negative-rate camp.

Jonathan Bayliss, managing director for global government bonds at Goldman Sachs Asset Management, astutely seeing the larger tidal forces in, “European Bond Yields Go Negative”

Lead Stories

European Bond Yields Go Negative
Ben Edwards – WSJ
Record-low interest rates in Europe have flipped bond investing on its head. Some bond buyers, typically paid for lending out their money, have begun paying borrowers to look after their cash.

***JM: The first time in the history of Earth, I think, when a government has returned less than zero for what they took in. Oh, wait… never mind.

Argentina defies U.S. court order by depositing debt payment
Jorge Otaola – Reuters
Argentina deposited a $161 million bond interest payment with a newly appointed local trustee on Tuesday, the Economy Ministry said, defying a U.S. judge who held it in contempt a day earlier for taking illegal steps to meet its debt obligations.

***JM: Well, if “shut up and take my money” doesn’t distract the court, I guess this is what you’re left with.

Hedge funds, securitisation and leverage change P2P game
Kris Devasabai –
Overwhelming institutional demand, hedge funds with a double-digit share of the market’s assets, trendy approaches to underwriting, a nascent securitisation market – these are the forces shaping the peer-to-peer lending business in the US, and some observers are starting to worry. Kris Devasabai reports

Central Banks

Edit the Fed! Crossing Wall Street
One of my recent pet peeves has been the growing length of FOMC policy statements. The statements have grown steadily longer without conveying more information. They’re terribly written and needlessly jargon-filled.

***JM: Jargon is the refuge of the insecure. – Some guy from the Internet. But seriously, do we really want the Fed to release something concise? “YOLO. LOL.” Yeah, that’d work.

Fed’s Powell rejects Treasury-Fed cooperation as threat to central bank independence
Howard Schneider – Reuters
Federal Reserve board member Jerome Powell said on Tuesday he feared any move for the Fed and the U.S. Treasury to cooperate on debt management and other issues would undermine the central bank’s independence and should be avoided.

BOE’s Miles Lukewarm on Extra Rate Guidance
Jason Douglas – MoneyBeat – WSJ
A top Bank of England policy maker said Tuesday he doesn’t think that providing more explicit guidance on the future path of interest rates in the U.K. would be a very good idea.

RBI not biased towards either raising or cutting rates: Rajan
The Reserve Bank of India is not biased towards either raising or cutting interest rates, and its monetary policy stance will depend only on inflation data, Governor Raghuram Rajan told analysts in a conference call on Wednesday.


British Review Suggests Extending Time for Setting Benchmark Currency Rates
Chad Bray – Dealbook – NY Times
The Financial Stability Board said Tuesday that the window for determining currency benchmark rates should be widened, one of a series of proposals the board made to change currency markets in the wake of investigations into whether those markets were manipulated.

Slow boat to China’s currency
Joel Clark – Financial News
The success of CLS, says its chief executive David Puth, can not be measured in weeks or even months, but only in years.

Forex markets face further regulations
Sam Fleming – Financial Times
Participants in foreign exchange markets have been warned they may face further regulatory change even after implementing a long-awaited series of recommendations aimed at removing the taint affecting the sector.

***JM: Flip it around and test whether the reverse makes any sense: “With these regulations in place, the forex industry can relax knowing all necessary regulations are in place.” No, not really. So of course more is on the way.

Guest post: Is China serious about liberalising the renminbi? – beyondbrics – Blogs
Eswar Prasad, Karim Foda, and Abhinav Rangarajan – Financial Times
China continues to gradually open up its capital account, make offshore renminbi liquidity more easily available, and sign up more renminbi trading centers (London and Frankfurt most recently). To become a reserve currency, China also needs to let the renminbi’s value be market-determined rather than being tightly managed relative to the US dollar.

Indexes & Index Products

Short and leveraged ETP assets hit nearly $60 billion
Global assets under management in short and leveraged exchange-traded products reached $59.7bn in August; global listed ETFs and ETPs reached $2.7tn in assets at the end of August; Source launches first ETF for US market

Vanguard expands ETF range with four more launches
Julia Rampen – Investment Week
Vanguard has expanded its exchange-traded fund range with four funds offering exposure to the UK, European and developed world equity markets.


Gold Miners Catch Up…Sort Of
Liam Denning – MoneyBeat – WSJ
Gold mining stocks have finally caught up with the price of their favorite metal. It is just a pity that this has happened heading in the wrong direction.

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