Managed Funds Stay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.. Tue, 27 Jan 2015 10:13:13 +0000 SRA Framework 2.0 en-gb Bonds end on soft note as snowstorm slows trading imageNEW YORK: US Treasury debt prices slipped on Monday ahead of $90 billion of fixed-rate supply and a Federal Reserve meeting later this week in a session marked by low volumes as a major winter storm hit the New York area.

Treasuries had begun the day on a stronger footing after investors spooked by Greece's newly elected government ignited a modest flight-to-quality bid, briefly knocking yields on the US 30-year bond to a record low.

But as the day progressed, and traders began making early exits as transportation authorities from Philadelphia to Boston warned of commuting disruptions, prices weakened in anticipation of Treasury auctions of two-year, five-year and seven-year notes this week.

The storm forced the Treasury Department to alter the auction schedule, moving the $26 billion two-year sale to Wednesday from Tuesday and the $35 billion five-year sale to Thursday from Wednesday.

Traders and portfolio managers said this week's Federal Open Market Committee meeting, which begins on Tuesday and concludes with a monetary policy statement on Wednesday, was also keeping a lid on major moves.

The Fed is not expected to say much to alter the view that the US economy remains on firmer footing than much of the rest of the world.

The main uncertainty around the meeting centers on the degree to which the Fed might nod to weak conditions in Europe, which forced the European Central Bank to announce a massive bond-buying program last week.

That has also helped to drive the US dollar to an 11-year high, a factor that could dent US growth and send inflation further below the Fed's target.

"It's a tug of war in the bond market. You have a better US economy with a Fed that wants to tighten and European yields going down with the ECB action," said Eric Stein, portfolio manager at Eaton Vance in Boston. The prospect of new supply of shorter-dated paper later this week exerted pressure on two-year notes, which dropped about 1/32 in price, pushing their yield up 3 basis points to about 0.52 percent. Yields on benchmark 10-year notes meanwhile, held steady near 1.82 percent, around their closing level on Friday.

The 30-year bond, after briefly touching a record-low yield below 2.34 percent early in the day, weakened by 7/32 in price with the yield rising 1 basis point from Friday's close to 2.40 percent.

With shorter-dated yields rising by a greater margin, the US yield curve continued its flattening trend, and the spread between two- and 10-year notes tightened to just over 1.30 percentage points, the narrowest since July 2012.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Mon, 26 Jan 2015 21:22:12 +0000
Portuguese yields hit record low as QE plan stems Greek contagion imageLONDON: Portuguese bond yields hit record lows on Monday as hopes for the European Central Bank's QE scheme cushioned most euro zone debt from the impact of the anti-austerity Syriza party sweeping to victory in Greece's election.

Greek yields shot higher after the result of the vote, but the ECB's decision last week to launch a roughly 1 trillion euro quantitative easing programme checked any wider contagion.

Syriza has said it will restructure Greece's massive debts and leader Alexis Tsipras promised after Sunday's poll that five years of "humiliation and suffering" imposed under its 240 million euro bailout were over.

His choice of the right-wing Independent Greeks, which also oppose the bailout terms, as a coalition partner, unsettled some investors, however, as it suggests a tough stance in talks with European Union and International Monetary Fund lenders.

The promise of ECB cash helped support other indebted euro zone country's bonds, with Portuguese 10-year yields falling 12 basis points to a new all-time low of 2.112 percent with Spanish and Italian yields also hovering around historic troughs.

German 10-year yields, the benchmark for euro zone borrowing costs, hit a record low of 0.299 percent before rebounding. They closed up 3 bps on the day at 0.35 percent.

The prospect of QE has given fresh legs to a 2-1/2-year bond rally that has dramatically shrunk euro zone borrowing costs.

"The positive implications of the ECB announcement on QE has provided a cushion and is likely to remain the dominant market force," said Maria Paola Toschi, global market strategist at J.P. Morgan Asset Management.

"That said, the sooner the new Greek coalition government is established and negotiations with the Troika can begin, the better for Greece, Europe and the markets." Greek three-year yields shot up nearly two full percentage points to over 12 percent, while 10-year yields rose 45 bps to 9.21 percent.

That kept the yield curve sharply inverted, a sign investors are worried they may not get all their money back. "A Syriza victory was expected but an anti-austerity coalition partner was not," RBS analysts said in a note.

"The Greek curve is quite inverted so already the market has got a lot (of risk) priced in," said Michael Michaelides, an interest rate strategist at the bank. Greece's lenders were quick to warn Syriza against ditching its bailout commitments.

IMF chief Christine Lagarde said Greece must respect euro zone rules while the ECB's Benoit Coeure said it must pay its debts. The ECB's sovereign bond purchases will only include junk-rated debt if the issuer is in an international financial assistance programme, putting Greece at risk of exclusion if Syriza tears up the country's agreement with its lenders.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Mon, 26 Jan 2015 20:49:25 +0000
Mauritius offers 3-year Treasury bond worth 1.4bn rupees imagePORT LOUIS: Mauritius will sell 1.4 billion rupees ($42.88 million) worth of a three-year Treasury bond next week, the central bank said on Friday.

Bank of Mauritius said in a statement it will receive bids on Jan. 28 and auction the bond on the same day. The bank said the bond will carry a coupon rate of 3.10 percent and is due on Dec. 5, 2017.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Fri, 23 Jan 2015 20:31:26 +0000
France sells extra 2.4bn euros of bonds after Thursday auction imagePARIS: France sold on Friday an extra 2.1 billion euros medium-term bonds and 343 million euros of inflation-linked bonds after an auction on Thursday, the Agence France Tresor public debt management agency said on Friday.

The non-competitive bids meant that AFT sold a total 10.6 billion euros ($11.96 billion) of medium-term bonds and 1.843 billion euros of inflation-indexed bonds at the auction.

Under the French system, buyers not only submit competitive bids at the auction, but also have the option, for a limited period after the sale, of buying extra securities at the average auction price. For full results from the auction see for medium term bonds and for inflation-linked bonds.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Fri, 23 Jan 2015 20:12:57 +0000
Long-dated UK bond yields track euro zone debt to new record low imageLONDON: British government bond yields hit new record lows on Friday, dragged lower by a slump in euro zone yields after Thursday's announcement by the European Central Bank of a bond buying plan.

Thirty-year gilt yields led the move downwards and hit a record low 2.126 percent, 8 basis points lower on the day, as long-dated Bund yields also fell sharply. "It's a massive contagion effect," said Marc Ostwald, fixed income strategist at ADM Investor Services International.

"No person in their right mind would buy G7 bonds at these levels. Everything is done on the basis of relative value, so if there is a big flattening in the euro zone it has an impact for gilts." To boost the ailing euro zone economy and prevent deflation from setting in, the ECB said it will buy 60 billion euros of assets a month from March, focusing mainly on sovereign bonds.

The 18-month quantitative easing programme is already surpassing initial expectations for 500-700 billion euros of stimulus and could even be extended.

Bond purchases will cover maturities of up to 30 years -- longer than many in the market had expected. The gilt market shrugged off robust British retail sales data -- which caused only a brief dip in gilt futures prices -- and the prices of medium- and long-dated gilts rose strongly.

Twenty-year gilt yields pushed below 2 percent to hit a record low of 1.951 percent, and 10-year yields fell as low as 1.443 percent, within a few basis points of an all-time trough set in July 2012.

Gilt prices lagged the rally in Bunds, however, and for 10-year yields the spread widened sharply for the second day in a row, with 10-year gilts offering as much as 112.7 basis points over Bunds, the most in a week.

Next week the UK Debt Management Office is due to sell several billion pounds of 40-year index-linked gilts via syndication, which offer a real yield of -0.95 percent, close to a record low.

"The outright valuation is hardly appealing," said RBC fixed income strategist Vatsala Datta. "However, we do not see these factors as being a deterrent to a strong take-up," she added, noting the bond attracted record demand at its launch in July.

Datta said she expected the 2058 index-linked gilt to be priced to yield 2-3 basis points more than 2062 linker, roughly in line with its current spread.

Gilt syndications typically occur on Tuesdays, though next week that will be the same day that a first estimate of Britain's fourth-quarter gross domestic product is due, so Ostwald said it could be deferred until Wednesday.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Fri, 23 Jan 2015 19:44:09 +0000
Ghana 91-day bill yield dips to 25.8335pc imageACCRA: The Bank of Ghana said the yield on its 91-day bill fell to 25.8335 percent at an auction on Friday, from 25.8426 percent at the last sale.

The bank said it had accepted all 1.018 billion cedis ($311.38 million) worth of bids tendered for the 91-day paper.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Fri, 23 Jan 2015 19:24:40 +0000
ECB stimulus plan helps UK gilts bounce back from 9-day low imageLONDON: British government bond prices recovered from heavy losses early on Thursday after the European Central Bank said it would pump hundreds of billions of euros into the sagging euro zone economy.

After outperforming strongly on Wednesday, when two Bank of England policymakers dropped their calls for higher interest rates, gilt prices opened sharply lower on Thursday, pushing 10-year gilt yields up nearly 9 basis points to their highest in more than a week.

But when ECB President Mario Draghi said the bank would pump 60 billion euros a month into the euro zone economy by purchasing mostly government bonds, gilts tracked Bunds higher and prices briefly turned positive on the day before faltering.

At 1630 GMT, 10-year gilt yields were up 1 basis point at 1.52 percent after the biggest intra-day swing in over a month. "Gilts have had a funny old day," said Citi fixed income strategist Jamie Searle.

"The absolute level of gilt yields is being driven by Bunds, albeit gilts are clearly lagging in the rally given that the market is focused on euro zone bond buying," he said.

The yield premium that 10-year gilts offer over Bunds widened by as much as 10 basis points on Thursday to 106 basis points as gilts gave back the gains they had made on Wednesday after the BoE published its January policy minutes.

Searle said Bunds had been lifted by the scale of the planned ECB bond buying, which was slightly larger than the market had expected, and the fact that Draghi said the purchases would continue until inflation showed signs of picking up.

Searle also pointed to the continued outperformance of five-year gilts relative to longer maturities, as British investors continued to favour shorter maturities in the wake of the BoE's renewed unanimity over keeping interest rates low.

The UK Debt Management Office is scheduled to sell several billion pounds of 40-year index-linked gilts via a syndication next week.

Although long-dated gilts underperformed on Thursday, some analysts said the ECB decision could ultimately boost the sector, in which many British funds are required to invest to give them a safe stream of income to pay pensions.

"Despite interest rates in the UK being at historical lows, there is still the possibility that they may drop further, causing more problems for pension funds relying on assets other than government bonds to bridge their deficit gap," said Danny Vassiliades, a consultant at actuaries Punter Southall.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Thu, 22 Jan 2015 19:48:48 +0000
US Treasury yields fall after ECB announces bond purchases imageNEW YORK: US Treasury prices rose on Thursday after the European Central Bank announced more bond purchases than expected, boosting global liquidity that is expected to support US and European bonds.

The ECB said it would buy government bonds from this March until the end of September 2016 despite opposition from Germany's Bundesbank and concerns in Berlin that it could allow spendthrift countries to slacken economic reforms.

"It's likely to impact yields everywhere," said Aaron Kohli, an interest rate strategist at BNP Paribas in New York. "When you put this much stimulus into the markets its going to go other places that you hadn't intended, and one of those places is going to be US debt as well."

The bond purchases will further reduce the supply of high-quality debt, which has supported long-dated Treasuries as investors reach for higher yields. That is likely to continue to support bonds even as investors also anticipate improving growth and inflation that should eventually push yields higher.

"It's bullish for Treasuries," said Kim Rupert, managing director of Action Economics in San Francisco. "We've seen record low yields in the periphery in Europe, and that will provide an underpinning for Treasuries for widening spreads."

Benchmark 10-year notes were last yielding 1.87 percent, after falling as low as 1.82 percent earlier, down from 1.94 percent before the announcement. Thirty-year bonds yielded 2.46 percent, after going as low as 2.41 percent, down from 2.54 percent before the ECB announcement.

German 10-year government bond yields hit record lows of 0.377 percent after the ECB press conference.

The ECB's stimulus may also provide a backstop that will help the Federal Reserve raise interest rates, which many expect to begin in the first half of this year.

"It's a really big positive for the Fed, it gets another major central bank into the system of trying to prop up the markets and support risk sentiment," BNP's Kohli said.

The next major focus for the market is the Fed's Jan. 28 policy announcement at the completion of its two-day meeting.

Copyright Reuters, 2015

]]> (Imaduddin) Managed Funds Thu, 22 Jan 2015 16:15:08 +0000
Long bonds gain as investors grab for higher yields imageNEW YORK: US Treasury prices gained on Tuesday with 30-year bonds leading the rally, as investors bet that the European Central Bank will launch new quantitative easing this week, keeping longer-dated debt in demand as investors hunt for higher yields.

The ECB meeting on Thursday is this week's main focus, when many expect the central bank will announce purchases of government bonds in a bid to fight off deflation and kickstart growth.

"If you are looking for ECB to not disappoint on Thursday, the predominant view is that you still won't have enough long-dated assets, and I think that is driving the flattener today," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

The yield curve between five-year notes and 30-year bonds flattened to 113 basis points, after steepening to 121 basis points on Friday.

Record low yields on German and other European sovereign debt have contributed to demand for US Treasuries, which pay far higher yields, even as the Federal Reserve is expected to increase interest rates this year as the US economy improves.

Short- and intermediate-dated Treasuries are the most sensitive to interest rate hikes and have come under the most pressure from expected rate increases.

Two-year notes yielded 0.48 percent on Tuesday, just above their lowest levels since October. Benchmark 10-year notes were yielding 1.81 percent, just above their lowest levels since May 2013.

Thirty-year bonds yielded 2.41 percent on Tuesday, after falling to record lows of 2.35 percent last week.

The outlook for weak global economic growth also added a bid for bonds on Tuesday.

The International Monetary Fund lowered its forecast for global economic growth in 2015, and called on Tuesday for governments and central banks to pursue accommodative monetary policies and structural reforms to support growth.

China's economy grew at its slowest pace in 24 years in 2014 as property prices cooled and companies and local governments struggled under heavy debt burdens, though many investors were relived growth wasn't as bad as they had feared.

Copyright Reuters, 2015

]]> (Imaduddin) Managed Funds Tue, 20 Jan 2015 16:21:49 +0000
Fed's Williams: bond yields reflect weakness abroad, not at home imageSAN FRANCISCO: Low yields on US Treasuries, often associated with expectations of slow future domestic growth, are "not about the US economy and the Federal Reserve" but mostly reflect weakness in the global economy, a top Fed official said on Friday.

Global weakness is also a key reason for dropping market-based measures of inflation expectations, San Francisco Fed President John Williams told reporters after a speech.

Despite the weakness abroad, he said, the US economy has good momentum, repeating his view that it will likely be ready for a modest interest-rate increase in mid-2015. Speaking a day after the Swiss National Bank shocked markets by lifting a cap on its currency against the euro, Williams said the Fed's goal is not to surprise markets.

If market participants watch the incoming economic data, he said, they will likely be able to anticipate when the Fed is likely to raise rates.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui) Managed Funds Fri, 16 Jan 2015 20:17:24 +0000