The Bravest Bond Buyers Now Have Ways to Beat Boring 1.5% Yields
Lisa Abramowicz – Bloomberg
Are you an investor who’s spent years waiting for yields to rise?
There’s some good news on this front: Plummeting oil prices and disappointing prospects for global growth have created a swelling pool of bonds that yield at least four times more than benchmark securities.
The only caveat is you’d better have a strong stomach for risk. There’s a reason this debt’s being sold at firesale prices in a world awash with central-bank cash, where the average rate on sovereign debt plunged to a record-low 1.5 percent on Jan. 6, Bank of America Merrill Lynch index data show.
US SEC economists to write paper on risky ETFs and market volatility
By Sarah N. Lynch, Reuters
U.S. Securities and Exchange Commission economists have begun scrutinizing riskier types of exchange-traded funds as part of an effort to determine whether they may inflame already rocky market conditions.
This Guy Called Bonds in ’14. You Listening This Time?
Anchalee Worrachate – Bloomberg
Steven Major did something weird in 2014: he got the bond market right.
When most experts said sell, Major said buy. And he’s defying the consensus again this year.
Wall Street, as a whole, is still pointing the other way — but then, Wall Street, as a whole, blew it last year.
Decision time for GFI shareholders
Philip Stafford, FT
The GFI shareholder meeting scheduled for January 27 to vote on its sale to CME Group should be a date marked in the diary. It may settle some questions after another week of thrusts and parries in the market structure industry’s most involved takeover battle in several years.
Nasdaq Looks to Operate Dark Pools for Banks; Move Follows Years of Trying to Coax Trading Back Onto Exchanges
By Bradley Hope, WSJ
After years of fighting for more trading to come back onto stock exchanges, Nasdaq OMX Group Inc. is considering joining the dark side.
GMEX readies for launch with Virtu deal
Swap futures exchange GMEX has signed up electronic market maker Virtu Financial as a liquidity provider as the venue prepares to go live in April this year.
‘Joyflation’ Poised to Lift British Economy From Misery
Simon Kennedy – Bloomberg
The U.K. economy is about to get a dose of “joyflation.”
That’s the term coined by Oxford Economics Ltd. to describe the combination of the oil-driven slowdown in inflation and accelerating economic growth. It’s enough to force the Misery Index — a measure of an economy’s health generated by adding the rates of unemployment and inflation — to its lowest since at least 1989 when consumer-price data became available.
Gross Says Pimco Fired Him After Offer to Scale Back Role
Mary Childs – Bloomberg
Bill Gross said he was fired from Pacific Investment Management Co., the first time he has publicly confirmed that he was dismissed from the firm he co-founded in 1971.
Gross, speaking in an interview with Bloomberg View’s Barry Ritholtz, said he offered to step down from the executive committee and compensation committee and oversee closed-end funds after differences with management over his personality and the firm’s business direction.
India moves closer to electronic trading for rate swaps
Indian regulators could clear the way for the electronic trading of interest rate swaps as early as this month, officials said, as part of a Reserve Bank drive to increase trade volumes in the country’s under-developed domestic debt market.
RBC Picks Fields to Head North American Fixed-Income Sales Team
Sridhar Natarajan and Lisa Abramowicz – Bloomberg
Royal Bank of Canada, the largest arranger of Canadian corporate bonds, appointed Jeff Fields to head its North American fixed-income sales team as it seeks to expand its presence in the U.S. debt market.
Tullett Prebon Hires 40 U.S. Bond Brokers From Murphy & Durieu
Zeke Faux – Bloomberg
Tullett Prebon Plc (TLPR), the British interdealer brokerage, hired 40 bond brokers from Murphy & Durieu LP to expand in the U.S.
Tullett Prebon will now have almost 550 brokers in the U.S., the London-based company said today in an e-mailed statement. The new hires work with corporate bonds, government, high-yield, convertible and distressed securities, according to the statement. Terms weren’t disclosed.
Citigroup makes last-minute cut in year-end bonuses for traders
Citigroup Inc this week cut its bonus pool for fixed-income and equity market traders after market revenues plunged during the last two weeks of the year, according to a person familiar with the matter.
Banking bonuses set to disappoint in City and on Wall Street
Martin Arnold in London and Tom Braithwaite in New York, FT
Bankers on both sides of the Atlantic are fighting over a diminished bonus pool this year, according to executives. In the UK, most investment banks expect to see bonuses fall after a tough year, but are still braced for political sensitivities over the topic given the looming general election.
UBS loses two blue-chip corporate broking clients
Peggy Hollinger, FT
UBS has lost two more blue-chip corporate broking clients, in a further blow to the Swiss bank as it seeks to restore its image after recent scandals.
Fed’s Williams Says June Rate Rise ‘Reasonable’ Amid Labo
Jeff Kearns – Bloomberg
Federal Reserve Bank of San Francisco President John Williams, who will vote on policy this year, said raising interest rates in June would be a close call amid “strong momentum” in the labor market and weaker wage gains.
“I would expect by June that the argument pro and con for lifting off rates will be probably a close call” assuming that inflation doesn’t fall further, Williams said today in a telephone interview from his San Francisco office. “It’s a reasonable guess.”
European Central Bank’s Bond-Buying Plans Face Doubt
Brian Blackstone – WSJ
The European Central Bank is widely expected to follow the U.S. Federal Reserve’s lead this month with a new program of bond purchases meant to stimulate the eurozone’s limp economy.
Whether it works is another matter.
Craig Dawson named to board of Federal Reserve’s Seattle branch
The Seattle Times
Craig Dawson, president and CEO of Retail Lockbox in Seattle, was appointed to the Federal Reserve Bank of San Francisco’s Seattle branch board of directors.
Dawson founded Retail Lockbox in 1994, a company which specializes in payment processing, online payments and digital image and retrieval services.
The winners of the Central Banking Awards 2015
Raghuram Rajan wins Governor of the Year while Reserve Bank of New Zealand picks up Central Bank of the Year; Jacques de Larosière honoured with Lifetime Achievement Award; 12 more awards announced
Yen’s Top Forecaster Halts Sell Call as Oil Cuts Japan Deficit
Andrea Wong – Bloomberg
The best forecaster on the yen says he hasn’t recommended selling the Japanese currency in a few months as lower oil prices provide solace for Japan’s deteriorating trade balance.
Jens Nordvig, managing director of currency research at Nomura Holdings Inc., said the 45 percent slump in oil since the end of October will trim Japan’s trade deficit by around $500 million. The deficit was at 894 billion yen ($7.6 billion) in November, a 29th straight month of shortfall.
Argentina Said to Secure $400 Million More in China FX Swap
Charlie Devereux – Bloomberg
Argentina is set to boost its reserves by $400 million after requesting the fourth installment of an $11 billion currency swap agreed with China.
The central bank will receive the funds in the coming days, said a central bank official who requested anonymity because he’s not authorized to speak publicly.
Ruble Drops on Oil as Russia Credit Risk Climbs After Fitch Cut
Ksenia Galouchko and Vladimir Kuznetsov – Bloomberg
The ruble weakened for a second day and the cost of insuring Russian debt against default increased after oil extended losses and Fitch Ratings lowered the country’s credit score to one step above junk.
The currency of the world’s biggest energy exporter dropped 2.3 percent to 63 versus the dollar by 8 p.m. in Moscow. The yield on Russia’s five-year ruble bonds rose 126 basis points to 16.68 percent, the highest since Dec. 17. Five-year credit default swaps increased 22.5 basis points to 601, making it the world’s sixth-riskiest credit, according to data compiled by Bloomberg.
Indexes & Index Products
The European ETF/ETP Industry Gathered A Record Level Of 62 Billion US Dollars In Net New Assets In 2014 According To Research By ETFGI
ETFGI’s research finds 2014 was a good year for the European ETF/ETP industry.
MSCI Launches New US Equity Model Suite
MSCI’s new Barra US Total Market Equity Model Suite has been built to include a new set of factors and factor structures that are aligned with multiple investment horizons marking a new era for advancing the standard for measuring and managing risk in US Equity markets.
The MICEX10 Index Revised
As from 13 January 2015, constituents of the MICEX 10 Index will remain unchanged following the conclusion of its regular quarterly review.
R.J. O’Brien Appoints Danca, Connolly To Build Out Precious Metals Institutional Offering
Chicago-based R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, announced today the appointment of Kevin J. Danca, 45, and Michael G. Connolly, 42, as Directors, FX and Precious Metals, based in the New York office. The two bullion market veterans have joined RJO’s global foreign exchange (FX) division to spearhead precious metals sales and trading, building out the firm’s expertise in the area as part of its growing institutional offering.
Gold Rises to 1-Month High on Slower Rate Gain Outlook
Joe Deaux and Laura Clarke – Bloomberg
Gold futures rose to a four-week high on speculation that the Federal Reserve will keep U.S. interest rates low for a considerable time to bolster the economy.
Average hourly earnings for all U.S. employees fell 0.2 percent in December from a month earlier, the most since comparable records began in 2006, government data showed Jan. 9. Gold priced in euros rose to the highest since September 2013 as Greece prepared for a Jan. 25 election amid speculation that the country will exit the currency bloc. Japan plans a record budget to support an economy that fell into recession.
Gold Picks With Sustainable Business Models
During the past several sessions, gold prices have acted well despite crashing global oil prices and the dollar achieving five-year highs.
Since falling to a four-year low in November, gold prices have recovered strongly on political turmoil in Greece and speculation that global central banks would bolster economic stimulus. Visible continuity from the Federal Reserve Board regarding an elongated zero-interest-rate policy, global central bank balance-sheet expansion driving higher non-dollar gold prices, varied global economic data, supportive gold physical demand, and technicals should aid price trends.
It’s Game Time For Gold
Ben Lockhart – Seeking Alpha
It’s Saturday morning and as usual I have been perusing this week’s selection of articles published on various investing sites, looking to see what other analysts think about the future prospects for metals. As is normal for early January a sense of optimism prevails, and although some acknowledge the potential for a further quick drop and reverse in the price of precious metals, I would say that the general consensus for gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV) is a bumper 2015, and a big rally that is likely underway already.