Managed FundsStay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.., 28 Jul 2014 20:30:34 +0000SRA Framework 2.0en-gbBond prices climb as US durable goods data drag YORK: US Treasuries prices jumped on Friday, with fixed-income traders disappointed by soft spots in US durable goods data, knocking benchmark 10-year yields back below 2.50 percent.

Despite a heftier-than-forecast 0.7 percent overall rise during June of long-lasting US manufactured items, analysts and traders focused on weaknesses in airlines and other sectors that shakes optimism about US economic growth.

"The underlying tone of this report was disappointing," said TD Securities strategist Millan Mulraine. "The weak performance in core capital goods shipments ... suggests that this segment of the economy is unlikely to contribute much to economic activity this quarter.

As a result we see some downside risks to our on-consensus expectation for a 3.0 percent (quarter over quarter) rebound in (gross domestic product) in Q2."

Treasury prices had been up moderately or flat amid weakness in European stock markets shortly before the Commerce Department report but climbed afterwards. Price gains were largest in long maturities.

The 30-year Treasury bond last traded up 25/32 in price, cutting its yield to 3.259 percent, after peaking at 3.304 percent. Ten-year Treasuries were up 8/32 in price to yield 2.478 percent.

The yield had been at 2.503 percent just before the durable goods report.

"With that disappointment, it adds still adds another layer of negative color for the second quarter," said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee.

"Recent business surveys suggest that business is turning up but we are not getting confirmation of that in the numbers this morning."

The reported increase in orders for durable goods, which range from toasters to aircraft that are meant to last three years or more, was above economists' expectations for a 0.5 percent rise and followed a 1.0 percent drop in May.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.4 percent after declining 1.2 percent the prior month.

The gain in the so-called core capital goods outpaced economists' expectations for only a 0.5 percent increase.

Many Treasury traders were trading with an eye to next week, when Federal Reserve policymakers meet and data on American employment will be issued, a frequent market-mover, Vogel said.

"It is a reaction to the data as people consider their strategies and tactics for next week," Vogel said.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 25 Jul 2014 15:17:57 +0000
Spanish yields hit record low before bumper debt repayments Spanish bond yields fell to record lows on Friday on expectations that 60 billion euros worth of debt and coupon repayments from Spain and Italy will be reinvested in those markets next week.

A downbeat Ifo German business survey rekindled speculation of further European Central Bank policy moves, offseting the selling pressure on euro zone bonds that came after better than expected manufacturing and services sector surveys on Thursday.

The ECB cut all its interest rates last month and promised up to 1 trillion euros in long-term bank loans from September, but it had not ruled out an asset-buying programme eventually if inflation remains low for too long.

German business sentiment fell for a third consecutive month in July, suggesting firms in Europe's largest economy are getting worried about the crises in Ukraine, Iraq and Gaza.

"The Ifo results confirm a breakdown under way in the main engine of euro zone growth, which raises the ... risk that Russia sanctions may expose weak pockets in the euro zone recovery and challenge the power of recent ECB announcements," said Lena Komileva, chief economist at G+ Economics.

Spanish and Italian 10-year yields fell 3 basis points to 2.53 percent and 2.70 percent, respectively.

Based on the redemption and debt auction schedule over the summer, UBS strategists recommend buying three- and seven-year Italian bonds against five-year paper and selling three-year Spanish bonds for similar-dated Italian paper.

The rationale is that the three- and seven-year Italian bonds would benefit from the fact that repayments are larger than the amount that is likely to be sold at auctions.

German 10-year Bund yields, the benchmark for euro zone borrowing costs, fell 1 bps to 1.17 percent.


Money markets were expected to be calmer in the coming week after a steady rise in rates in the past few days.

Data showed on Friday banks will repay only 3 billion euros of long-term loans to the ECB next Wednesday, down from 21 billion euros this week and compared with a forecast of 5.8 billion in a Reuters poll.

Rabobank strategists said they expected repayments to slow in coming months as banks grow more relaxed that they can swap their current loans for the ones the ECB plans to offer from September.

"However... we would want at least two more low repayment numbers before we become really confident on this view," they said in a note.

The small repayment next week should in theory keep excess liquidity in the euro zone banking system above 100 billion euros for the time being, preventing any stress in interbank markets.

"We expect Eonia rates to settle into quite a narrow range," RBS rate strategist Harvinder Sian said, referring to the euro zone's overnight bank-to-bank borrowing rate.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 25 Jul 2014 12:04:38 +0000
UK 30-year gilt yields rise after pension reform details British ultra-long government bond yields rose on Monday after the government gave more details on plans to allow people to access their pension savings early and spend them how they like.

Thirty-year gilt yields rose by 2 basis to 3.34 percent as prices fell relative to shorter-dated British debt and 30-year German government bonds.

The finance ministry said earlier on Monday that it expected strong demand for British long-dated debt to continue despite the changes, which are likely to reduce demand for annunites which invest in these types of bonds.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsMon, 21 Jul 2014 07:37:13 +0000
Turkish bond yields rise as Ukraine tensions rattle investors Turkish bonds yields rose on Friday, part of a broad move into safe-haven assets after a Malaysian Airlines jet was shot down near the Ukraine-Russia border.

All 298 people on board the aircraft travelling from Amsterdam to Kuala Lumpur were killed in an incident likely to further heighten tensions between Russia and the West.

The benchmark 10-year government bond yield rose to 8.91 percent from 8.82 percent at Thursday's close.

The Turkish lira held largely steady at 2.1233 against the dollar, after the central bank trimmed interest rates on Thursday but resisted calls from the government for swingeing cuts.

After falling earlier in the session, the main Istanbul share index closed up 0.65 percent at 82,314 points, outpacing the broader emerging markets index, which was up 0.07 percent.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 18 Jul 2014 15:37:54 +0000
Mauritius 364-day Treasury bills' yield falls to 2.08pc

imagePORT LOUIS: The weighted average yield on Mauritius' 364-day Treasury bills edged lower to 2.08 percent at auction on Friday from 2.38 percent at the previous sale, the central bank said.

The bank accepted bids for all the 500 million rupees ($16.50 million) of bills on offer.

Bids totalled 2.015 billion rupees, at rates ranging from 2.50 percent to 2.00 percent.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 18 Jul 2014 12:13:52 +0000
JGBs dip on BoJ Kuroda's view on long-term rates Japanese government bond prices edged lower on Wednesday, weighed by Bank of Japan Governor Haruhiko Kuroda's remarks the previous day that the current level of long-term rates was low.

Kuroda, speaking to the press on Tuesday after a two-day monetary policy meeting, said long-term rates at around 0.5 percent was rather low even when considering that inflation expectations held by market participants were more conservative than the central bank's.

"Even the BOJ may be concerned about its monetary policy having a stronger impact than anticipated.

The central bank could have sent a warning against an excessive fall in yields," said a trader at a Japanese bank in Tokyo.

The BOJ unveiled aggressive monetary policy steps in April 2013 to combat deflation and shore up the economy, and the benchmark 10-year JGB yield had drifted down to a 15-month low of 0.530 percent last week.

The central bank expects consumer inflation to accelerate towards its 2 percent target next year, a view many bond market participants do not share.

The 10-year yield stood at 0.545 percent, 1 basis point higher on the day.

September 10-year futures fell 0.03 point to 145.84.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsWed, 16 Jul 2014 03:04:09 +0000
Fed says some tech firms overvalued The Federal Reserve on Tuesday warned that some high-flying technology firms may be overvalued, but rejected the idea of a stock market bubble.

The Fed's semiannual economic report said that stock values in some sectors "do appear substantially stretched particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year."

The comments appeared to be aimed at the surge of investor interest in new ventures, many from Silicon Valley, seeking to be the next Facebook or cashing in on interest in biotech.

Last year, for example, Twitter raised some $1.8 billion in a public offering and its value has topped $20 billion even though it has yet to make a profit. The comments sent some tech shares tumbling in morning trade.

But the Fed suggested that the overall stock market is not in bubble territory despite recent record highs for broad indexes.

"Some broad equity price indexes have increased to all-time highs in nominal terms since the end of 2013," the report said.

"However, valuation measures for the overall market in early July were generally at levels not far above their historical averages, suggesting that, in aggregate, investors are not excessively optimistic regarding equities."

Copyright AFP (Agence France-Presse), 2014

]]> (Muhammad Iqbal)Managed FundsTue, 15 Jul 2014 19:30:52 +0000
JGBs flat, little reaction to steady BoJ rates, forecasts

imageTOKYO: Japanese government bond prices were mostly unchanged across the curve on Tuesday, with a bounce in Tokyo shares stalling a recent surge that took yields to the year's lows.

The bond market's reaction to the Bank of Japan holding pat on monetary policy was limited, as the outcome had been well anticipated.

The BoJ kept monetary policy steady on Tuesday and slightly trimmed its economic growth forecast for the current fiscal year.

The central bank also left unchanged its consumer inflation forecasts in a quarterly review of its long-term projections.

A wait-and-see mood prevailing among bond market participants ahead of Federal Reserve Chair Janet Yellen's congressional testimony later in the day also limited JGB market activity.

Yellen, who will deliver the latest report to Congress on monetary policy, could take a hawkish stance on raising interest rates in response to strong June jobs data, analysts and investors said.

The benchmark 10-year JGB yield was untraded on the broker-to-broker screens after finishing the previous day at 0.535 percent. The yield was not too far from 0.530 percent touched on Friday, the lowest since April 2013.

The 20-year yield was flat at 1.400 percent.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsTue, 15 Jul 2014 04:16:13 +0000
Bond prices slip on prospects of hawkish Yellen comments YORK: US Treasuries prices edged lower on Monday on expectations that Federal Reserve Chair Janet Yellen could take a less accommodative stance on interest rates in a congressional testimony on Tuesday.

Yellen, who will go before the Senate Banking Committee Tuesday to deliver the latest report to Congress on monetary policy, could take a hawkish stance on raising interest rates in response to strong June jobs data, analysts and investors said.

"The data is definitely stronger and getting more indicative that we're going to move closer to that rising rate cycle," said George Rusnak, managing director of global fixed income for Wells Fargo Private Bank in Princeton, New Jersey.

"If you start seeing any signs that they're acknowledging that in the Fed, you could see rates tick up here a little bit." Yellen is also set to speak before a House committee on Wednesday.

The Fed chief delivers testimony on monetary policy twice a year to Senate and House committees.

Private-sector jobs and non-farm payrolls growth in June beat expectations, while the unemployment rate fell to a near six-year low of 6.1 percent.

Traders are watching the Fed closely for signs of when the central bank will raise rates, which will hurt bond prices.

Analysts said the instalment of a new chief executive at Portugal's top bank, Banco Espirito Santo, and a statement that the bank's main shareholder had sold a 4.99 percent stake eased concerns of potentially destabilizing losses at the bank.

"Banco Espirito Santo will have to get its house in order," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago. "The story is still unfolding, but the immediate actions certainly calm fears for the day."

Analysts said June US retail sales data, due early Tuesday, could boost expectations for better second-quarter US economic growth.

Economists expect retail sales to have grown 0.6 percent, up from 0.3 percent in May, according to a Reuters poll.

Benchmark 10-year US Treasury notes were last down 6/32 in price to yield 2.54 percent, from a yield of 2.52 percent late Friday.

US 30-year Treasury bonds were last down 11/32 to yield 3.36 percent, from a yield of 3.34 percent late Friday.

Comments from European Central Bank President Mario Draghi had little effect on Treasuries prices.

Draghi, addressing a European Parliament committee in Strasbourg, reiterated that the ECB would maintain a high degree of monetary accommodation and could use unconventional instruments to counter low inflation.

The Fed bought $1.133 billion in Treasuries maturing August 2039- August 2043 on Monday as part of its ongoing asset purchases, which had little impact on Treasuries prices.

On Wall Street, US stocks rose, with better than expected earnings from Citigroup and more deals in the healthcare space lifting the Dow Jones industrial average to a new intraday high.

Copyright Reuters, 2014

]]> (Muhammad Iqbal)Managed FundsMon, 14 Jul 2014 20:38:30 +0000
China's finmin auctions 3- and 5-year local govt bonds at 4.15pc, 4.28pc China's finance ministry auctioned 23.4 billion yuan ($3.77 billion) of three- and five- year bonds on behalf of eight local governments at yields of 4.15 and 4.28 percent, respectively, traders said on Monday.

For a breakdown of which local governments issued which amount of debt, click here:

In May, the ministry said announced an increase in its annual quota to issue bonds on behalf of local governments to 400 billion yuan for 2014, from 350 billion yuan in 2013.

It also said that 10 local governments had been given quotas to issue a combined 109.2 billion yuan worth of municipal bonds this year - the first time that the government has allowed local governments to issue the US-style bonds.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsMon, 14 Jul 2014 04:48:40 +0000