Managed FundsStay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.., 21 Oct 2014 13:35:19 +0000SRA Framework 2.0en-gbPrices off as global markets recover YORK: US Treasuries prices posted their second straight day of declines on Friday as Wall Street and European stock markets bounced back from a sharp sell-off.

Benchmark 10-year notes, which rose in price by as much as 3 points on Wednesday on fears over the global economy, were off 12/32 on Friday to yield 2.172 percent in early New York trading.

"Some reason has returned to the market," said Sharon Stark, fixed income strategist at D.A. Davidson in St. Petersburg, Florida. "There's a sense things got a little overdone."

A traditional safe-haven for investors, Treasuries rose steeply early this week on heavy buying as fears mounted that the global economy was slowing and America's growth prospects were dimming.

But on Friday, Wall Street's main indices were up nearly 1 percent, and the MSCI index of world stocks was ahead 0.85 percent. Stocks in Europe, where fears of a recession are building, were also up.

"The US economy is affected by Europe, but it isn't to the degree many investors initially thought, especially with regards to net exports," Stark said.

"European exports on average account for about a half percent of GDP." Thirty-year Treasuries were last off 23/32 in price to yield 2.973 percent, compared with a 2.941 percent yield at Thursday's close.

Short maturities were also down in price, with the seven-year note off 9/32 and yielding 1.86 percent.

Declines in Treasuries deepened after the US Commerce Department reported that housing starts and permits rose in September, a signal the market's modest recovery is supporting what appears to be growing strength in the broader economy.

Groundbreaking rose 6.3 percent to an annual 1.02 million-unit pace.

Economists polled by Reuters had forecast a slightly smaller gain.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 17 Oct 2014 15:49:27 +0000
US bond prices fall on Fed's Bullard remarks YORK: US Treasuries prices fell mid-morning Thursday with the 30-year bond losing more than 1 point after St. Louis Federal Reserve President James Bullard said the U.S. central bank might want to consider maintaining its bond purchase program to help the economy.

"Inflation expectations are dropping in the U.S., and that is something that a central bank cannot abide," the regional Fed chief told Bloomberg television. "We have to make sure that inflation and inflation expectations remain near our target."

Prolonged bond purchase stimulus from the Fed would support domestic economic growth, boosting appetite for stocks and inflation expectations and pushing up bond yields, traders said.

Benchmark 10-year Treasury notes last traded 12/32 lower in price to yield 2.134 percent, up 4 basis points from late on Wednesday.

Copyright Reuters, 2014

]]> (Imaduddin)Managed FundsThu, 16 Oct 2014 15:24:55 +0000
Greek 10-year yields top 8pc, first time since Feb

imageLONDON: Greek 10-year government bond yields rose above 8 percent for the first time since February of this year on Thursday, driven by concerns over the prospect of early elections and Athens' plans to wean itself off international aid.

Greek yields were last 20 basis points higher on the day at 8.05 percent.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsThu, 16 Oct 2014 07:58:18 +0000
Treasuries prices touch new highs as US data disappoints YORK: US Treasuries prices jumped on Wednesday, with the 30-year bond touching a near two-year high as disappointing U.S. economic data aggravated widening worries about a global slowdown.

Prices of 30-year Treasuries rose more than 5 points to yield as little as 2.673 percent, a level last seen in November 2012, before pulling back.

The long bond last traded up 2-11/32 points and yielded 2.847 percent. On Friday, the maturity yielded 3.015 percent.

Benchmark 10-year notes added as many as 3 points in price before easing and were last yielding 2.043 percent, the lowest since May 2013 and below the 2.08 percent level viewed as a key price support by some institutional investors.

"There was a trifecta of weak data this morning: several disappointments in sales, manufacturing and prices," said Kim Rupert, managing director of Action Economics in San Francisco. "That's just adding to the fear of a global slowdown. And then the price action is being exacerbated by the Ebola fears."

Prices widened dramatically in early New York trading after the U.S. Commerce Department reported that U.S. retail sales fell 0.3 percent in September, a surprisingly cautionary sign for the strength of consumer demand seen as central to hopes for U.S. growth.

"The tone of this report was very disappointing and it suggests that consumer spending activity ended the quarter on a very weak footing," TD Securities strategist Millan Mulraine told clients. "And with consumer confidence appearing to be deteriorating in recent weeks, this weakening momentum appears to have been carried into this quarter."

Other U.S. economic reports signaled weakness in prices that American producers get.

Treasuries are widely regarded as the safest of investments and have been benefiting from a streak of losses on Wall Street and buying by investors who had been betting on increases in U.S. interest rates, according to strategists and traders.

Copyright Reuters, 2014

]]> (Imaduddin)Managed FundsWed, 15 Oct 2014 16:37:04 +0000
US 30-year bond yield breaks below 3 percent YORK: The yield on US 30-year Treasuries yield on Tuesday fell below 3 percent for the first time since spring 2013 due to safe-haven demand spurred by the recent sell-off in the stock market and growing worries about a weakening global economy.

In early U.S. trading, the 30-year Treasuries yield touched a session low of 2.943 percent at 5:59 a.m. (0959 GMT), according to Reuters data. This compared with a closing level of 3.009 percent on Friday.

The 30-year yield was last 2.959 percent, hovering at its lowest level since early May 2013.

The U.S. bond market was shut on Monday in observance of the Columbus Day holiday.

Copyright Reuters, 2014

]]> (Imaduddin)Managed FundsTue, 14 Oct 2014 13:54:09 +0000
Singapore's DBS seeks new insurance tie-up, hires adviser:sources Singapore's DBS Group Holdings has hired Morgan Stanley to find a partner to sell life insurance products in Asia under a new deal, after its pact with Aviva Plc ends in 2015, people with direct knowledge of the matter said.

Singapore and Hong Kong - two of DBS's strongest markets - are seen as profitable for insurers due to their status as Asia's main wealth management centres and an ageing population.

According to Swiss Re research, Singapore is an under-penetrated market, with per capita life insurance premiums significantly lower than many other developed economies.

The so-called "bancassurance" model - as opposed to the traditional agency model - is lucrative for commercial banks in Asia because global insurers are willing to pay hefty fees for access to lenders' branch networks.

DBS plans to finalise the new arrangement in the first half of next year, the sources said. The people did not want to be identified because DBS's plans are not public.

"If you compare with precedence this deal could be quite valuable for DBS," one of the sources said.

DBS and Morgan Stanley declined to comment.

In similar moves, AIA Group last year struck a 15-year exclusive deal with Citibank in Asia, for which AIA said it paid an $800 million upfront payment.

Prudential Plc also struck an agreement this year with Standard Chartered, agreeing to pay $1.25 billion in fees, to extend its current agreement for 15 years.

The value of these deals is worth much more than those upfront payments over their 15-year life spans.

MAJOR PLAYERS The new DBS tie-up is expected to be the last major bancassurance deal by an Asian bank until HSBC renews its existing Asia arrangement in 2022. Allianz paid only $100.5 million in upfront fees to HSBC in late 2012 for a 10-year pact.

The DBS deal is likely to attract major insurance companies such as Asia's second-largest insurer by market capitalisation, AIA Group, Canada's No. 1 insurer Manulife and Europe's second-biggest insurer, French group AXA It could also draw in new players such FWD, the insurance firm backed by Hong Kong businessman Richard Li, the youngest son of Asia's richest man Li Ka-shing , banking sources said.

Spokesepeople for AIA, Manulife, FWD and AXA declined to comment.

The new deal could cover DBS's more than 260 branches in Singapore, Hong Kong, Indonesia, Taiwan, China and India.

The incumbent Aviva, which has been a partner with DBS since 2001 and last extended its arrangement with the Singapore bank in 2009, is also expected to bid for the new partnership, the sources said.

Copyright Reuters, 2014

]]> (Saad Jabri)Managed FundsTue, 14 Oct 2014 05:05:07 +0000
China money rates slip after PBOC lowers official yield

imageSHANGHAI: China's money rates fell slightly on Tuesday after the central bank lowered the yield at its bond repurchase agreement auctions the second time since July, as part of an effort to lower real funding costs in support of a slowing economy, traders said.

The People's Bank of China (PBOC) on Tuesday lowered the yield of the 14-day bond repurchase agreements during open market operations to 3.4 percent, down from 3.5 percent in its previous operations last Thursday. In the money markets, the weighted average of the benchmark seven-day repo rate dropped 6 basis points to 3 percent by late morning.

The average of shortest one-day repo rate slipped 1 basis point to 2.53 percent, while the 14-day repo rate fell 3 basis points to 3.29 percent.

Traded rates have remained lower than official rates this year because liquidity conditions in the open markets remain accomodative, traders say, but even though market rates are below the official rate, investors still closely watch the PBOC's official yield as a form of forward-looking pricing guidance from the central bank.

"The PBOC is guiding funding costs lower as the markets appear to have largely failed to respond to related government appeals," said a dealer at an Asian bank in Shanghai.

"So we see the potential for costs of corporate medium- and long-term borrowing to drop in coming months, although the room for short-term money market rates to fall is limited as the rates are already at low levels," she said.

This is the second time since July that the PBOC has lowered the official yield for its repos, a sign that the central bank is trying to keep market interest rates relatively low, while the market widely expects China to post a slew of weak economic data for the third quarter this and next week.

The PBOC also drained 20 billion yuan ($3.27 billion) from the money markets through 14-day repos on Tuesday.

Maturing bills and repos will inject a net 40 billion yuan into the banking system this week. The central bank will conduct its next regular open market operations on Thursday.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsTue, 14 Oct 2014 05:00:44 +0000
Bond yields edge lower on persisting global growth concerns

imageNEW YORK: US long-dated Treasuries yields edged lower on Friday on persisting concerns over global economic growth, while short-dated yields were stable on short-covering after this week's dovish Federal Reserve meeting minutes.

Weak German economic data and the International Monetary Fund's third cut to its global growth forecasts this year have ignited fears about the health of overseas economies this week, and fueled some safe-haven bids for US 30-year Treasury bonds Friday.

"The price action is a continuation largely of the strength that we've been having," said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut, in reference to a climb in 30-year bond prices, which in turn, have lowered yields from 3.38 percent less than a month ago to 3.05 percent on Friday.

He attributed the latest dip in yields to the lingering worries about global economic growth. Alarmed by faltering euro zone growth, top finance officials from around the globe on Friday were expected to press their European peers for action to avert a recession and ward off deflation. Prices were stable for Treasuries with maturities ranging from one to three years, supported by traders buying back those notes they had bet against, or shorted, in the run-up to Wednesday's Fed minutes.

The traders' expectation that the minutes would show a more hawkish tilt on raising interest rates failed to materialize. Their repurchase of the bonds is a process known as short covering.

"What we're seeing is short-sellers losing conviction," said Boris Rjavinski, an interest rate strategist at UBS in New York, The Labor Department said Friday US import prices fell 0.5 percent in September as the cost of petroleum products declined and a strong dollar made it cheaper for Americans to buy goods from the European Union.

Export prices fell 0.2 percent during the month. Import prices fell less than the 0.7 percent forecast of economists, however, according to a Reuters poll, and analysts said the data had little impact on Treasuries yields. Ader of CRT Capital said the data was predictable given the dollar's strength.

Benchmark 10-year US Treasury notes were last up 3/32 in price to yield 2.31 percent, from a yield of 2.327 percent late Thursday, which marked its lowest closing yield since mid-June 2013. US 30-year Treasury bonds were last up 9/32 to yield 3.05 percent, from a yield of 3.063 percent late Thursday.

The latest yield was not far from Thursday's session low yield of 3.029 percent, which marked the lowest level since May 2013. US three-year notes were last roughly flat in price to yield 0.91 percent, from a yield of 0.92 percent late Thursday.

On Wall Street, the benchmark S&P 500 stock index was last down 0.44 percent.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 10 Oct 2014 15:16:21 +0000
German Bund yields resume fall as concern over growth returns Bund yields fell towards new lows on Friday, after poor industrial data from Italy and a report saying Germany will cut its economic forecast.

The prospect of economic slowdown has dominated the euro zone bond market for much of the week, beginning with weaker- than-expected German industry data and continuing with the International Monetary Fund's lowering its economic forecasts.

Yields on German, French, Spanish, Austrian and Belgian bonds all reached record lows on Thursday after minutes of the US Federal Reserve's latest policy meeting suggested it was in no hurry to raise interest rates.

They rose early on Friday, after Fed officials played down the minutes.

But they resumed their decline after data showed Italy's industrial output rose only 0.3 percent in July, versus a 0.5 percent forecast.

Two German government sources said Germany would cut its economic growth forecasts for 2014 and 2015 next week. German Bund yields, the benchmark for euro zone borrowing costs, were 2 basis points lower on the day at 0.88 percent, just off a record low of 0.859 percent. They traded as high as 0.92 percent earlier.

"There are concerns over global growth, and if Germany is going to struggle then the whole Europe is going to struggle," said Alan McQuaid, the chief economist at Merrion Stockbrokers.

The Fed minutes, which said the central bank would wait for a "considerable time" before raising rates after its bond-buying programme ended, prompted some investors to bet the first rate increase would not come until the third quarter of next year.

Fed Vice Chairman Stanley Fischer later said "considerable time" meant somewhere between two and 12 months. And San Francisco Fed President John Williams said a mid-2015 rate rise was "a reasonable guess."

"We thought it was a dovish Fed meeting, but then there was a feeling it wasn't like that," said Jan von Gerich, chief fixed income analyst at Nordea. "Most surprising was vice chair Fischer ... his main point was to play down the minutes."

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsFri, 10 Oct 2014 11:51:24 +0000
JGBs draw foreign demand amid shrinking yield differentials Foreign investors have poured into Japanese government bonds as the yield differential between Japanese and euro zone government debt shrinks and the yen continues to perform well against some currencies other than the US dollar.

Data from Japan's Ministry of Finance show that foreign investors were net buyers of long-term Japanese bonds for 12 straight weeks until the third week of September, the longest such streak since the ministry began compiling the data in 2005.

During the streak, foreigners bought 4.522 trillion yen ($41.84 billion) of yen bonds.

"Contrary to general notions that the yen has weakened significantly, it has performed well against currencies like the euro, Australian dollar and those of emerging markets," said Tadashi Matsukawa, head of fixed-income investments in PineBridge Investments in Tokyo.

Given that situation, Japanese bonds "are attractive assets for foreign buyers looking to diversify their foreign reserves amid narrowing yield differentials," he said.

While the dollar has gained 2.5 percent against the yen this year, and touched a six-year high on Oct. 1, the euro has shed 5 percent versus the Japanese currency in 2014. "Investors such as sovereign wealth funds and central banks, who tend to buy and hold, have shown steady demand for short-term Japanese debt and the yen's strength is a factor," Matsukawa said.


The strong foreign interest in JGBs has coincided with the steady decline in euro zone bond yields, with benchmark German Bund yields falling to record lows as the European Central Bank embarked on unprecedented monetary easing to stave off deflation.

After the ECB cut the interest rate on deposits at the bank to below zero on June 5, the yield on seven euro zone countries' short-term government bonds turned negative.

The spread between Japanese and German 10-year benchmark bond yields, which was 120 basis points at the start of the year, this month has tightened to 40 basis points, near the historic low.

While Bunds still yield more than JGBs, the spread could tighten even more as the ECB is widely expected to loosen policy even further. The Bank of Japan, with extensive quantitative easing already in place, has less room to manoeuvre.

At the short-end of the curve, the yield on two-year French government - which momentarily fell below zero percent in September - is below that of its JGB counterpart.

"For central banks that have to diversify their foreign reserves, the question becomes, why buy French two-year debt that offers negative yields?" said Makoto Noji, senior fixed income strategist at SMBC Nikko Securities.


"On the other hand, they can pick up 0.2 to 0.3 percent on two-year JGBs through swap transactions, which offer not only central banks but other investors all kinds of reasons to buy Japanese debt," he said.

Although much euro zone debt still yields more than JGBs, differentials have shrunk so much that JGBs sometimes offer a higher total level when the premium earned from asset swaps is included.

This is possible because foreign investors get a premium for using dollars or euros to purchase yen through currency swaps based on interbank rates such as Libor.

The premium, when combined with JGB yields and converted to fixed returns through interest rate swaps, gives Japanese paper yields comparable to those offered by euro zone debt.

The higher credit rating that JGBs enjoy over some euro zone counterparts such as Spanish debt is also seen spurring demand for such transactions.

Five-year JGBs may yield less than Spanish bonds but they can still be of interest to foreign investors as Japan is rated higher than Spain, Noji at SMBC Nikko Securities said.

Standard & Poor's rates Japan at AA- and Spain at BBB.

Copyright Reuters, 2014

]]> (Shoaib-ur-Rehman Siddiqui)Managed FundsThu, 09 Oct 2014 06:17:05 +0000