Fixed Income Stay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.. http://www.brecorder.com/markets/fixed-income.html Fri, 24 Oct 2014 10:17:36 +0000 SRA Framework 2.0 en-gb US bond yields rise as data soothes jitters http://www.brecorder.com/markets/fixed-income/americas/201348-us-bond-yields-rise-as-data-soothes-jitters.html http://www.brecorder.com/markets/fixed-income/americas/201348-us-bond-yields-rise-as-data-soothes-jitters.html imageNEW YORK: US Treasuries yields rose on Thursday to their highest levels in over a week as domestic and overseas data reduced jitters about a year-end slowdown in the global economy, paring safe-haven demand for low-risk government debt.

Benchmark yields were on track to rise for a third straight session above 2.50 percent as the US Labor Department said continued jobless claims fell to 2.35 million in the week ended Oct. 11, which was the lowest since December 2000.

The ongoing decline in Americans receiving unemployment benefits signaled some of them might have returned to work and that the labor market is firming.

Earlier, private gauges on business activities in Europe and China showed modest improvement in early October, but analysts said the figures did not signal those economies were poised for significant rebounds.

"There has been an ease of fear. We are in a slow-growing economy. We are plugging along," said Ellis Phifer, senior market analyst at Raymond James in Memphis.

Benchmark 10-year Treasuries notes were 8/32 lower in price to yield 2.261 percent, up 3 basis points from late on Wednesday.

The 10-year yield has risen some 40 basis points since dropping to a 16-month low of 1.865 percent last Wednesday in volatile trading, as anxiety about global growth triggered a stampede of Treasuries buying to exit short bets against them.

The 30-year Treasury bond traded 15/32 lower for a yield of 3.026 percent, up 2.5 basis points from Wednesday.

At 1 p.m. (1700 GMT), the Treasury Department will add $7 billion to an existing 30-year Treasury Inflation-Protected Security it originally issued in February.

In the "when-issued" market, traders expect the additional 30-year TIPS supply to sell at a yield of 0.974 percent, lower than a yield of 1.116 percent at a reopening in June.

This 30-year TIPS fetched a yield of 1.495 percent in February.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Americas Thu, 23 Oct 2014 15:01:38 +0000
Kenya 91-day Treasury bill yield falls to 8.706pc http://www.brecorder.com/markets/fixed-income/middle-east-a-africa/201346-kenya-91-day-treasury-bill-yield-falls-to-8706pc.html http://www.brecorder.com/markets/fixed-income/middle-east-a-africa/201346-kenya-91-day-treasury-bill-yield-falls-to-8706pc.html imageNAIROBI: The weighted average yield on Kenya's 91-day Treasury bills fell to 8.706 percent at auction on Thursday from 8.715 percent a week ago, the central bank said.

The bank said it received bids worth 639 million shillings ($7.16 million) for the 3 billion shillings worth of bills on offer, and accepted the entire amount.

The bank said it would auction a 91-, 182- and 364-day Treasury bills worth a total of 12 billion shillings next week.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Middle East & Africa Thu, 23 Oct 2014 14:56:32 +0000
Upbeat business surveys encourage investors out of Bund refuge http://www.brecorder.com/markets/fixed-income/europe/201285-upbeat-business-surveys-encourage-investors-out-of-bund-refuge.html http://www.brecorder.com/markets/fixed-income/europe/201285-upbeat-business-surveys-encourage-investors-out-of-bund-refuge.html imageLONDON: German government bond yields edged higher on Thursday after an unexpected uptick in euro zone business surveys staved off fears the bloc could be headed for a triple-dip recession.

Markit, which publishes the survey, said the positive reading for the euro zone manufacturing sector points to an expansion in gross domestic product in the current quarter.

"There's been a string of bad news so this is one thing at least to give a little bit of a fillip to the market and show that it's not all bad news, not all one way," said Orlando Green, European fixed income strategist at Credit Agricole CIB.

German 10-year yields rose 1 basis point to 0.87 percent at 1030 GMT, having been as low as 0.84 percent in early trading.

The purchasing manager data showed a strong rebound in German manufacturing, but French business activity slid in October to an eight-month low.

This economic divergence is at the heart of a rift in Brussels where France and Italy are pushing for more fiscal leeway while Germany is keen to keep members' finances in check.

The European Commission is discussing changes with Italy and France to their 2015 draft budgets to avoid having to send back the plans, which break European Union rules, EU officials said on Wednesday.

Investors were also comforted by the fact that China's vast factory sector grew a shade faster in October, though analysts said the figure did not point to a fourth-quarter turnaround for the world's second-largest economy.

US manufacturing PMIs are due at 1345 GMT.

Data showing a mild rebound in US consumer prices on Wednesday reduced bets the Federal Reserve will push back eventual interest rate hikes.

European bond markets have been buoyed by a report that the European Central Bank is considering buying corporate bonds as its next stimulus measure -- a move many see as a prelude to sovereign bond purchases.

Analysts at Unicredit said the latest euro zone data could give the ECB pause as it decides what next steps to take to support the economy.

"Thanks to these better-than-expected preliminary PMI readings, we believe that the ECB will continue with its wait-and-see mode to assess the impact on the real economy of its recent measures," the analysts said in a note.

Traders say volumes remain low as investors wait on the sidelines for the results of the ECB's bank stress tests, due on Sunday.

Shares in Italian banks Monte dei Paschi and Banca Carige were hit on Thursday after Bloomberg reported that both banks were likely to need additional capital.

Pimco's global banking specialist, Philippe Bodereau, told Reuters that he expects 18 banks will be seen to have failed the stress tests.

Italian and Spanish yields were steady at 2.52 and 2.21 percent respectively.

Greek bond yields, which have whipsawed on concerns about political stability and the government's plan for an early exit from Greece's bailout, rose 7 bps to 7.48 percent.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Thu, 23 Oct 2014 11:45:42 +0000
Investors return to periphery debt as ECB mulls corporate bond buys http://www.brecorder.com/markets/fixed-income/europe/200914-investors-return-to-periphery-debt-as-ecb-mulls-corporate-bond-buys.html http://www.brecorder.com/markets/fixed-income/europe/200914-investors-return-to-periphery-debt-as-ecb-mulls-corporate-bond-buys.html imageLONDON: Low-rated euro zone bond yields fell on Tuesday after several sources told Reuters the ECB was considering buying corporate bonds, quelling some concerns that the central bank was not doing enough to stoke inflation and growth.

The report also prompted investors to pull out of safe haven German bonds, where they had sought refuge after a series of weak growth data - the latest of which came from China on Monday - dragged on the global economic outlook.

"Investors now appear to take a little bit more risk on the basis that there is a relief that the ECB is considering doing something else," said Lyn Graham-Taylor, a rates strategist at Rabobank.

To complement the ECB's covered bond and asset-purchase programme that started this week, the ECB is mulling whether to begin buying corporate bonds. It may decide on the matter as soon as December, sources told Reuters.

German 10-year yields rose 4 basis points after the Reuters report, reversing earlier falls and hitting a high for the day of 0.89 percent.

In contrast, Portuguese yields, which had risen by as much as 10 bps in early trading, were 4 bps lower on the day at 3.48 pct. Italian equivalents were 7 bps lower at 2.51 pct, while Spain's were 3bps lower at 2.23 pct.

Greek yields - pressured by the government's bid to exit its bailout and the threat of early elections - were 25 bps lower at 7.81 pct, having earlier climbed as high as 8.17 pct.

Irish yields were the exception - still some 3 bps up on the day at 1.90 percent. Dealers said expectations of a forthcoming 15-year bond sale were weighing on the market.

Some strategists said that while the new programme was supportive for low-rated bonds, it could push back expectations of a sovereign bond-buying quantitative easing (QE) programme.

"The story may suggest government bond buying is not that close on the agenda from the ECB compared to elevated market expectations," said Rainer Guntermann, a strategist at Commerzbank.

DZ Bank strategist Christian Lenk added: "It certainly gives risky assets a little bit of help and puts Bunds under pressure as the ECB might not focus on government bonds but on corporate bonds instead to fulfil the balance sheet expansion that it has announced."

But with Germany's central bank warning on Monday that the country risks coming dangerously close to recession, any further ECB intervention will bring relief.

The bloc's largest economies are at loggerheads on how to boost growth. Countries including Italy and France have called for more fiscal flexibility in the euro zone, while Germany is eager to keep public finances in check.

Italy's draft budget which it submitted last week, and which proposed slower cuts to its deficit, looks set to be rejected by the European Commission.

Germany and France promised on Monday to unveil joint proposals on strengthening investment and competitiveness by early December.

Copyright Reuters, 2014

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imad_kueconomist@yahoo.com (Imaduddin) Europe Tue, 21 Oct 2014 11:42:20 +0000
Solid US data calms euro zone bond market but more volatility seen http://www.brecorder.com/markets/fixed-income/europe/200712-solid-us-data-calms-euro-zone-bond-market-but-more-volatility-seen.html http://www.brecorder.com/markets/fixed-income/europe/200712-solid-us-data-calms-euro-zone-bond-market-but-more-volatility-seen.html imageLONDON: Euro zone bond markets looked more stable on Monday after solid US economic data eased some of the concerns over a slowdown in global growth that led to sharp sell-offs in peripheral debt last week.

Yields on the euro zone's lowest-rated debt rose by 40 to over 200 basis points from lows to highs last week -- among the biggest moves seen since the peak of the debt crisis -- before retreating on Friday.

Signs that another recession may be brewing due to a broader slowdown in global growth have caused investors to refocus on high debt levels in countries like Italy, Spain or Portugal.

But Friday brought a surprisingly strong Thomson Reuters/University of Michigan index of U.S. consumer sentiment -- the highest reading in more than seven years -- while new housing starts also rose more than expected last month.

Markets remained nervous, however.

"The dust is settling at the moment after the terrible week we had," said Patrick Jacq, rate strategist at BNP Paribas.

"Things remain vulnerable.... but there is not such a massive flight to quality as we had last week. The market is not yet really confident, but we see little reason to extend the massive movement we saw last week."

German 10-year Bund yields, which set the standard for euro zone borrowing costs, fell 1 basis point to 0.85 percent. Spanish and Italian yields were 2 bps up at 2.19 percent and 2.52 percent, respectively.

Comments from central bankers provided some support.

Boston Fed President Eric Rosengren said recent volatility in financial markets reinforces the need for the Federal Reserve to be patient with its policy stimulus. He said he could "easily imagine" a scenario in which the U.S. central bank keeps interest rates near zero until 2016.

The European Central Bank has started buying covered bonds as part of its new stimulus package, an ECB spokesman said on Monday.

VOLATILITY AHEAD

But analysts expect bond markets to remain volatile.

"The outlook that investors have at this moment on the economy and central bank policy is not very clear," said Alessandro Giansanti, senior rate strategist at ING.

"The trend should still be positive for Bunds, due to the risk of falling back into recession."

RIA Capital Markets bond strategist Nick Stamenkovic said data due this week were unlikely to ease investor concerns about the economy. Third quarter growth data in China on Tuesday are "almost certainly going to show a slowdown in growth" while flash business surveys in the euro zone on Thursday are likely to show that "the economy still is very much in the doldrums".

"The underlying sentiment remains pretty fragile. The sharp rise in volatility last week is likely to make investors cautious," Stamenkovic said.

Even markets in Greece were calmer on Monday after having their worst week since 2012 due to the risk of early elections next year and nervousness caused by Prime Minister Antonis Samaras' plans to exit the bailout programme early.

He told Reuters in an interview on Friday he can lead his country out of the four-year aid deal and not call early elections. One possibility was a credit line which Athens could tap post-bailout if markets got nervous, he said. However, it is far from clear whether such an option is open.

Greek 10-year yields were 9 basis points lower at 7.96 percent, having climbed above 9 percent last week.

Copyright Reuters, 2014

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imad_kueconomist@yahoo.com (Imaduddin) Europe Mon, 20 Oct 2014 12:51:41 +0000
India's 10-year bonds gain on hopes of more reforms from Modi govt http://www.brecorder.com/markets/fixed-income/asia/200679-indias-10-year-bonds-gain-on-hopes-of-more-reforms-from-modi-govt.html http://www.brecorder.com/markets/fixed-income/asia/200679-indias-10-year-bonds-gain-on-hopes-of-more-reforms-from-modi-govt.html imageMUMBAI: Indian government bonds rose on Monday after the deregulation of fuel prices and Prime Minister Narendra Modi's Bhartiya Janata Party wins in two state elections raised hopes of further reform measures from the government.

The boost to bonds came after the government on Saturday lifted diesel price controls and raised the cost of natural gas - twin moves that are expected to reduce government's fiscal subsidies.

Traders were also enthused by the big gains made by Bhartiya Janata Party in two Indian state elections, that is seen by most analysts as a prelude to unveiling of further reforms by the central government.

However the tightening of liquidity at the start of the new reporting fortnight, worsened by the festival related cash withdrawal from banks, nipped any major rally in bonds.

The overnight cash rates rose to a high of 9 percent versus its Friday close of 7.10/7.15 percent.

"The tightening liquidity will continue to put pressure on bond yields in the near term, although sentiment for bonds remains good," said Ganti Murthy, head of fixed income at IDBI Asset Management in Mumbai.

"Further, signals from the OIS market are extremely positive and movement in OIS usually precedes that in bonds."

The benchmark 10-year bond yield ended down 3 basis points at 8.36 percent. The yield had touched an intra-day low of 8.3449 percent last Thursday, its lowest since Sept. 5, 2013.

The government's move to lift price controls in diesel come as Brent crude has steadied around $86 a barrel on Monday, reinforcing expectations for easing inflation and raising some hopes of earlier-than-expected rate cuts.

India's five-year swap rate dropped 9 bps to 7.45 percent, while the one-year rate falls 15 bps to 8.06 percent, their lowest levels since July 12, 2013.

Traders also said foreign portfolio investors unable to trade in government bonds due to exhaustion of limits were placing bets in the OIS market.

Copyright Reuters, 2014

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imad_kueconomist@yahoo.com (Imaduddin) Asia Mon, 20 Oct 2014 12:05:33 +0000
Indonesia raises $1.77bn from sale of retail bonds http://www.brecorder.com/markets/fixed-income/asia/200535-indonesia-raises-$177bn-from-sale-of-retail-bonds.html http://www.brecorder.com/markets/fixed-income/asia/200535-indonesia-raises-$177bn-from-sale-of-retail-bonds.html imageJAKARTA: Indonesia's finance ministry sold 21.22 trillion rupiah ($1.77 billion) of retail bonds to Indonesians between Oct. 1-16, an official at its debt-management office said on Monday.

The sale topped the target of 20 trillion rupiah.

The three-year bond was sold with a coupon set at 8.50 percent per annum, the same pricing as last year.

A total of 32,638 individuals bought the bonds, including entrepreneurs, company employees and housewives.

Retail bonds are sold every year to domestic individual investors.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Asia Mon, 20 Oct 2014 04:20:16 +0000
India's 10-year bonds snap four-day gain as oil prices bounce back http://www.brecorder.com/markets/fixed-income/asia/200366-indias-10-year-bonds-snap-four-day-gain-as-oil-prices-bounce-back.html http://www.brecorder.com/markets/fixed-income/asia/200366-indias-10-year-bonds-snap-four-day-gain-as-oil-prices-bounce-back.html imageMUMBAI: India's benchmark 10-year bonds snapped a four-day winning streak on Friday as investors pared positions ahead of the weekend, with the uptick in global crude oil prices and the rise in US treasury yields hitting sentiment early on.

Bonds were however supported by gains in the rupee which helped limit the rise in yields.

Brent crude rose more than a dollar to above $87 a barrel, bouncing from near four-year lows as investors bought back into a market they said was oversold in the short term.

Bond traders however said they expect sentiment to remain positive in the near-term after domestic retail and wholesale inflation fell. The outcome of two key state elections due on Sunday will also play a key role in bond movements next week, they said.

"State election results are expected to be positive for the BJP (Bharatiya Janata Party); it would be easier to pass a few crucial bills," said Paresh Nayar, head of fixed income and currencies at First Rand Bank. "Next week will also be a thin market and hence trading could be choppy with the 10-year bond yield holding between 8.30 and 8.40 percent," he added. Markets will be shut next Thursday and Friday to mark local holidays.

The benchmark 10-year bond yield ended up 2 basis points at 8.39 percent.

The yield had touched an intra-day low of 8.3449 percent on Thursday, its lowest since Sept. 5, 2013.

On the week however, yields fell 7 basis points, its second straight weekly fall and its biggest in nearly two months. Some fall in bonds was also seen followwing the results of the 150 billion rupees debt sale as some investors who were allotted the debt offloaded a part of their holdings in the market.

Dealers will continue to monitor moves in global crude prices and US yields for near-term direction. US Treasuries prices fell on Thursday on profit-taking after the prior day's rally as Wall Street stocks steadied.

In the overnight indexed swap market, the benchmark five-year swap rate ended up 3 bps at 7.54 percent while the one-year rate closed 4 bps higher at 8.21 percent.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Asia Fri, 17 Oct 2014 17:12:09 +0000
UK gilts tumble for second day as equities rebound http://www.brecorder.com/markets/fixed-income/europe/200361-uk-gilts-tumble-for-second-day-as-equities-rebound.html http://www.brecorder.com/markets/fixed-income/europe/200361-uk-gilts-tumble-for-second-day-as-equities-rebound.html imageLONDON: British government bonds fell steeply for a second day on Friday, after share prices rebounded and investors judged that Wednesday's leap up in gilt prices was overdone.

Added into the mix were comments from the Bank of England's chief economist that -- although the outlook was gloomier than three months ago, with a risk of long-term stagnation -- a rate rise around the middle of next year was still possible.

A rebound in share prices and a fall in the yields on Greek and Spanish bonds also took the shine off safe-haven British government debt, which is now little changed from last Friday despite some of the biggest one-day moves in more than a year.

Ten-year gilt yields stood 7 basis points higher on the day at 2.16 percent at 1135 GMT, close to a one-week high and well off the trough of 1.937 percent touched early on Thursday, the lowest since May 2013.

Five- and 30-year gilt yields were up a similar amount .

"Peripheral (euro zone) spreads are tighter and equities are higher, so you are seeing a fall in (core) bonds, which gilts are underperforming," said RBC gilts strategist Vatsala Datta.

Ten-year gilts' yield premium over Bunds widened 4 basis points on the day to 131 basis points, and at one point reached their highest in a week at 134.9 basis points. On Wednesday the spread had fallen to a four-month low below 119 basis points.

The effect on the bond market of comments by BoE chief economist Andrew Haldane was harder to tease out.

Haldane said that he -- like financial markets -- had grown gloomier about the economic outlook over the past three months, and had pushed back his expectations of when rates would rise.

But he described expectations of a rate rise in the middle of next year as "not a bad bet". Market expectations for when the BoE will next raise rates have swung sharply this week, exacerbated by a lack of liquidity.

At one point on Wednesday markets appeared to have ruled out any increase in rates at all next year, though on Friday analysts said a move in August or September was now priced in.

Economists polled by Reuters still expect a move in early 2015.

Marc Ostwald, a strategist at ADM Investor Services International, said that markets may have taken Haldane's gloom as a signal that rates would stay on hold for a long time, and moved out of gilts and into riskier assets in a hunt for yield.

RBC's Datta said his comments could be viewed as a reminder that rates would ultimately rise, and that -- particularly for longer-dated bonds -- yields were too low.

Haldane also raised the possibility that Britain's weak productivity and wage growth -- not its recent strong economic expansion -- could prove more typical of the future.

Next week offers more opportunities for investors to take fright at risks to the global economy, particularly with US inflation data due on Wednesday.

Wednesday will also bring a further update of the BoE's views on rates, with the publication of October's Monetary Policy Committee minutes.

The discussion, however, predates the recent market turmoil and data showing a slowing in job creation and a fall in British inflation to a five-year low of 1.2 percent.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 17 Oct 2014 16:27:46 +0000
JGBs gain on global growth scare, yields at 1-1/2-yr low http://www.brecorder.com/markets/fixed-income/asia/199997-jgbs-gain-on-global-growth-scare-yields-at-1-12-yr-low.html http://www.brecorder.com/markets/fixed-income/asia/199997-jgbs-gain-on-global-growth-scare-yields-at-1-12-yr-low.html imageTOKYO: Japanese government bond prices nudged up on Thursday due to rising global growth concerns, pushing the benchmark 10-year yield to the lowest level in a year and a half.

The 10-year JGB yield dipped to as low as 0.470 percent, falling below a yield support around 0.485 percent - a level below which investors had been reluctant to buy.

The move reflected flight-to-quality buying of bonds in the United States and Europe as investors grew wary of possible loss of momentum in the global economy.

US retail sales data disappointed investors who had been falling back on the strength of consumption in the world's largest economy as a main driver of global growth when economies in Europe, Japan and China are showing signs of slowdown.

In abnormally volatile trade, the 10-year US Treasuries yield plunged to as low as 1.865 percent, its lowest since May 2014, at one point on Wednesday, compared with 2.500 percent at the start of this month.

"It's a bit scary. There's negative sentiment on the economy on a global scale," said a trader at a Japanese brokerage firm.

Buying interest appeared strong in 20-year maturities, the trader said. The 20-year JGB yield hit a 1-1/2-year low of 1.310 percent and last stood at 1.315 percent, down 1.0 basis point from Wednesday.

But market players also said they saw substantial profit-taking in JGBs at current levels, as many investors were still not eager to chase the market higher.

The 10-year JGB futures price rose 0.08 point to 146.33, hitting an intraday record high of 146.42 at one point.-Reuters

Copyright Reuters, 2014

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rocking.saad.jabri@gmail.com (Saad Jabri) Asia Thu, 16 Oct 2014 04:07:54 +0000