Europe Stay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.. http://www.brecorder.com/markets/fixed-income/europe.html Sat, 29 Nov 2014 01:14:39 +0000 SRA Framework 2.0 en-gb Russian assets sink on oil price collapse http://www.brecorder.com/markets/fixed-income/europe/207561-russian-assets-sink-on-oil-price-collapse.html http://www.brecorder.com/markets/fixed-income/europe/207561-russian-assets-sink-on-oil-price-collapse.html imageMOSCOW: Russia's rouble and shares hit new lows on Friday as oil prices collapsed after OPEC decided to leave its output unchanged despite heavy oversupply.

At 1000 GMT, the rouble was around 2.2 percent below the previous close at 49.72 roubles per dollar, and 1.7 percent weaker against the euro at 61.94 roubles.

It earlier hit an all-time low of 49.90 to the dollar.

Traders said market moves were exacerbated by thin volumes, which mean that even small purchases of foreign currency were able to move the market.

Brent crude was last trading at around $72 a barrel after falling as much as $6.50 a barrel a day earlier, when the OPEC oil producer group made known its decision not to cut its output targets.

"Yesterday's rouble drop has more legs amid a negative outlook on crude," Maxim Korovin, a forex analyst at VTB Capital bank in Moscow, said in a note.

Oil and gas account for around two-thirds of Russian exports, making the rouble and other Russian assets sensitive to changes in the oil price.

A senior Finance Ministry official said late on Thursday that Russia's budget policy should be adapted to low oil prices, saying he saw a scenario of $80 per barrel in the coming years as moderately optimistic.

Such an oil price fall would necessitate major changes to Russia's recently adopted budget, which envisages an average oil price of around $100 a barrel.

Russia's central bank let the rouble float this month after spending over $70 billion defending the currency this year. But it has warned it could still carry out ad hoc interventions to defend the rouble if needed.

The rouble is down over 30 percent against the dollar since the start of the year, making it one of the worst-performing emerging-market currencies.

The currency's slide has had a strong impact on Russian shares. On Friday, the dollar-denominated RTS index was 3.4 percent lower at 972 points, after earlier hitting a five-year low of 969 points, while the rouble-denominated MICEX index edged up 0.1 percent to 1,533 points.

Domestic-focused stocks performed poorly, while some Russian commodities exporters were lifted by the weaker currency, since it boosts the rouble value of their export earnings.

Top bank Sberbank fell 1.3 percent, while Norilsk Nickel rose over 2 percent.

Top oil producer Rosneft was down 1 percent.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 28 Nov 2014 13:33:20 +0000
UK 10-year gilts' yield premium over Bunds hits 6-month low http://www.brecorder.com/markets/fixed-income/europe/207560-uk-10-year-gilts-yield-premium-over-bunds-hits-6-month-low.html http://www.brecorder.com/markets/fixed-income/europe/207560-uk-10-year-gilts-yield-premium-over-bunds-hits-6-month-low.html imageLONDON: The yield premium of 10-year British government bonds over German Bunds fell to a six-month low on Friday, extending recent outperformance after data showed euro zone annual inflation fell to 0.3 percent in November.

Ten-year gilts' yield spread over Bunds tightened by more than 2 basis points on the day to hit 120 basis points, its lowest level since late May .

Ten-year gilt yields fell to their lowest level since May 2013 at 1.901 percent and 30-year yields hit a fresh record low of 2.645 percent, both 2 basis points down on the day.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 28 Nov 2014 13:32:45 +0000
Euro zone bond yields hold at lows as inflation outlook dims http://www.brecorder.com/markets/fixed-income/europe/207548-euro-zone-bond-yields-hold-at-lows-as-inflation-outlook-dims.html http://www.brecorder.com/markets/fixed-income/europe/207548-euro-zone-bond-yields-hold-at-lows-as-inflation-outlook-dims.html imageLONDON: Euro zone sovereign bond yields held near record lows on Friday, as falling energy prices pulled down consumer price growth across the bloc, raising the chances of more ECB stimulus. Preliminary data showed euro-wide inflation cooled to 0.3 percent in November, in line with analysts' estimates and down from 0.4 pct the previous month.

Consumer inflation has not been at the ECB's target level of close to 2 percent since the start of 2013, and recent data has ramped up expectations the European Central Bank will start buying government bonds to reverse the trend.

Plunging oil prices, which tumbled to four-year lows after OPEC decided not to reduce output, are also weighing on the outlook for consumer price growth.

"It's pretty clear that the vast majority of the disinflation trend has been due to oil prices but it is also clear that this is not a development the ECB can ignore," said Credit Agricole's senior euro zone economist Frederik Ducrozet.

German 10-year yields - the benchmark for euro zone borrowing - were down a fraction at 0.70 percent.

The French equivalents were 2 bps lower at 0.98 pct.

Italian 10-yields also dropped 2 bps to 2.06 percent, even though unemployment in the country reached a record high in October.

The spread between Italian and German yields was near the tightest levels seen this year.

Strategists say any quantitative easing programme would see higher-yielding debt outperform further.

ECB Vice President Vitor Constancio said on Wednesday the central bank may decide as early as the first quarter of 2015 whether to begin buying public debt.

Some think a decision could come even earlier. BNP Paribas joined Credit Suisse on Thursday predicting QE would be announced at the next week's ECB meeting.

The recent sell-off in Greek bonds paused, with yields flat at 8.45 percent.

Athens on Thursday acknowledged a risk of delay to its planned exit from an EU/IMF bailout by the end of the year.

Portugal was the main outlier, as weakness in its stock market, which includes large energy companies, flowed over to government bonds where 10-year yields rose 2 bps to 2.86pc.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 28 Nov 2014 13:14:57 +0000
UK 30-year gilts hit record high after weak German inflation http://www.brecorder.com/markets/fixed-income/europe/207343-uk-30-year-gilts-hit-record-high-after-weak-german-inflation.html http://www.brecorder.com/markets/fixed-income/europe/207343-uk-30-year-gilts-hit-record-high-after-weak-german-inflation.html imageLONDON: British 30-year government bonds hit a record high on Thursday, after weak German inflation data boosted the attraction of fixed income investment and added to seasonal investment flows into long-dated gilts.

Germany's annual inflation rate fell to 0.5 percent in November, its lowest in nearly five years and a development that suggests the risk of deflation in the euro zone has not yet abated.

Thirty-year gilt yields fell to an all-time low of 2.686 percent at 1333 GMT, down more than 4 basis points on the day.

"Definitely if you look at the spike in prices, that would fit (with the German data), but there is also decent general buying interest out there," said Andy Chaytor, fixed income strategist at Nomura.

Thirty-year gilt yields have tumbled by 50 basis points since mid-September, reflecting concerns about stagnation in the euro zone and Japan and comments from the Bank of England that interest rates are unlikely to rise until late 2015.

November was a popular time for British pension and investment funds to add to their bond portfolios before liquidity started to dry up in December, Chaytor said.

Such funds are under long-term regulatory pressure to move more of their investments into safer assets such as long-dated gilts. Chaytor said he saw little value for general investors in 30-year gilts when they were yielding more than 3 percent, never mind at current yields.

Yields on 10- and 20-year gilts fell by more than 4 basis points to their lowest since May 2013 and September 2012 at 1.932 percent and 2.505 percent respectively .

The yield premium that two-year gilts offer over German Bunds reached its tightest in six months, narrowing by 3 basis points to 53.9 basis points, while 10-year spreads touched a six-week low of 122.7 basis points.

Next week, finance minister George Osborne offers his half-yearly fiscal update and the UK Debt Management Office publishes revised gilt issuance plans.

Underlying measures of borrowing are above target this year, but many analysts expect less of an increase in the sum the government wants to raise from the gilt market this financial year, as one-off factors lower cash borrowing needs.

Copyright Reuters, 2014

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imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 27 Nov 2014 16:08:09 +0000
Spanish inflation data pins euro zone yields at record lows http://www.brecorder.com/markets/fixed-income/europe/207301-spanish-inflation-data-pins-euro-zone-yields-at-record-lows.html http://www.brecorder.com/markets/fixed-income/europe/207301-spanish-inflation-data-pins-euro-zone-yields-at-record-lows.html imageLONDON: Euro zone government bond yields held around record lows on Thursday after a sharp fall in Spanish consumer prices kept markets hooked on the prospects for further monetary policy easing by the European Central Bank.

Spanish EU-harmonised consumer prices fell by 0.5 percent on the year in November, data showed, compared with a consensus forecast for a 0.3 percent drop and a 0.2 percent decline a month earlier.

German inflation later in the day is expected to come in at 0.6 percent, while the figure for the entire euro zone - due on Friday - is seen at 0.3 percent, well below the ECB's target of just below 2 percent.

Ten-year German Bund yields, which set the standard for euro zone borrowing costs, were down 1 basis point at 0.726 percent, just above a record low of 0.716 percent.

Spanish and Italian 10-year yields fell 2 bps to 1.96 percent and 2.14 percent, respectively - both within touching distance of their troughs.

"Deflationary pressures are still very active," said Patrick Jacq, rate strategist at BNP Paribas. "We know the ECB is willing to deliver and ready to deliver via sovereign bond purchases and this is giving some support to bond markets."

Jacq said the market was gearing up for a possible ECB move as early as next week, but added that he thought comments from ECB policymakers suggested the bank's governing council would wait until next year.

ECB Vice President Vitor Constancio said the central bank may decide as early as the first quarter of next year whether to begin buying sovereign bonds. The bank is already buying covered bonds and asset-backed securities, but many analysts believe those would not be enough to expand the ECB's balance sheet by about one trillion euros as planned.

A Reuters poll of economists showed there was a 50-50 chance the ECB would buy government bonds, unchanged from earlier this month.

ABN AMRO calculations showed Greek, German, Portuguese and Spanish bonds would benefit most if the ECB started buying sovereign debt and focused on longer maturities. http://link.reuters.com/fan53w

Italy will issue up to 7 billion euros of five- and 10-year bonds as well as 2020 debt linked to euro zone inflation later in the day. It will be its last auction of medium- and long-term bonds for 2014, having cancelled remaining sales due to ample cash levels and reduced funding needs.

Copyright Reuters, 2014

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imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 27 Nov 2014 13:15:39 +0000
US yields drop on weak US data, continued low euro zone rates http://www.brecorder.com/markets/fixed-income/europe/207095-us-yields-drop-on-weak-us-data-continued-low-euro-zone-rates.html http://www.brecorder.com/markets/fixed-income/europe/207095-us-yields-drop-on-weak-us-data-continued-low-euro-zone-rates.html imageNEW YORK: Benchmark US Treasury yields fell to their lowest levels in over a month on Wednesday, while long-dated yields also hit fresh over one-month lows, on weaker-than-expected US economic data and continued low yields in Europe.

A disappointing batch of US economic data underpinned a bid for safe-haven Treasuries. Analysts said the data supported the notion that the Federal Reserve will hike interest rates later than expected, and that the impact was pronounced given low volumes ahead of the Thanksgiving holiday.

"Anytime (US data) veers off that very strong course, people start decreasing their probability of a Fed move," said Chris McReynolds, head of US Treasury Trading at Barclays in New York.

The Commerce Department said consumer spending increased 0.2 percent last month, while economists polled by Reuters had forecast a 0.3 percent gain, and also said non-defense capital goods orders excluding aircraft declined 1.3 percent last month. Economists polled by Reuters had expected a 1 percent gain.

The Labor Department said initial claims for state unemployment benefits rose to 313,000 for the latest week, above expectations for a 288,000 rise according to a Reuters poll, while home sales and consumer sentiment data also disappointed.

Benchmark 10-year yields fell to 2.2289 percent, their lowest since Oct 23, while 30-year yields fell to 2.9369 percent, their lowest since Oct. 21.

Euro zone bond yields hovered near record lows after the European Central Bank's vice president said it might decide in the first quarter of next year whether to begin buying sovereign bonds.

The statement pressured US yields lower, said Lou Brien, strategist at DRW Trading in Chicago.

Anticipation of the Treasury's sale of $29 billion in new 7-year notes supply capped gains, however, said McReynolds.

The auction will occur at 11:30 AM EST (1630 GMT). Benchmark 10-year US Treasury notes were last up 6/32 to yield 2.24 percent, from a yield of 2.26 percent late Tuesday.

US 30-year bond yields were last up 13/32 to yield 2.95 percent, from a yield of 2.97 percent late Tuesday.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Wed, 26 Nov 2014 15:52:54 +0000
Turkey's 10 year benchmark bond yield drops to lowest in 1-1/2 years http://www.brecorder.com/markets/fixed-income/europe/207038-turkeys-10-year-benchmark-bond-yield-drops-to-lowest-in-1-12-years.html http://www.brecorder.com/markets/fixed-income/europe/207038-turkeys-10-year-benchmark-bond-yield-drops-to-lowest-in-1-12-years.html imageISTANBUL: Turkey's 10-year benchmark bond yield dropped to 7.97 percent, its lowest in 1-1/2 years, on lower oil prices and expectations that inflation will fall in the coming period.

The Turkish lira firmed to 2.2248 against the dollar by 1140 GMT from 2.2292 late on Tuesday, while Istanbul's main share index was up 0.18 percent.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Wed, 26 Nov 2014 13:15:14 +0000
Portugal swaps 1.75bn euros in bonds for longer issues http://www.brecorder.com/markets/fixed-income/europe/207024-portugal-swaps-175bn-euros-in-bonds-for-longer-issues.html http://www.brecorder.com/markets/fixed-income/europe/207024-portugal-swaps-175bn-euros-in-bonds-for-longer-issues.html imageLISBON: Portugal on Wednesday swapped almost 1.75 billion euros in bonds expiring next year and in 2016 for longer maturities, postponing its medium-term debt repayments after completing an EU/IMF bailout earlier this year.

Lisbon is also taking advantage of record low yields for its longer-term debt in the secondary market to effectively reduce its average financing costs, analysts said. Even though some in the market had expected Portugal to shift greater volumes of debt, especially after a much stronger 6.6 billion euro ($8.2 billion) swap in October 2013, analysts were generally upbeat about the results.

"The operation eases the burden, reduces the redemptions over the next two years in reasonably decent volumes," said Orlando Green, debt strategist at Credit Agricole.

"It is a small operation in the context of debt sustainability, but it gives investors a bit of confidence that Portugal is now in much better condition in terms of its debt." Filipe Silva, debt manager at Banco Carregosa, said the volume was limited by some players' relatively rigid portfolio investment rules, and the fact that investors willing to exchange their debt for longer issues was positive.

"This swap is good for Portugal, the yields are now lower than a year ago and our average debt cost has just come down."

Portugal now has around 15 billion euros in medium- and long-term debt expiring in 2015 and 2016, plus 8 billion euros in repayments to make to its EU and IMF creditors.

It has already prefinanced some of its 2015 needs.

The benchmark 10-year bond yield hit a record low of 2.923 percent just before the results came out, then edged up to 2.928 percent. Yields have been falling on expectations of radical European Central Bank policy measures next year.

The IGCP debt agency bought back 240 million euros of October 2015, 3.35 percent coupon bonds; 553 million euros in 6.4 percent February 2016 bonds; and 955 million in 4.2 percent October 2016 bonds.

Those were replaced with 943 million euros in 3.85 percent April 2021 bonds and 805 million euros in 4.95 percent October 2023 bonds.

Portugal has gradually returned to normal market financing this year after resorting to a 78 billion euro EU/IMF bailout in 2011.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Wed, 26 Nov 2014 12:52:34 +0000
Euro zone bond yields hold at new lows on ECB easing prospects http://www.brecorder.com/markets/fixed-income/europe/206800-euro-zone-bond-yields-hold-at-new-lows-on-ecb-easing-prospects.html http://www.brecorder.com/markets/fixed-income/europe/206800-euro-zone-bond-yields-hold-at-new-lows-on-ecb-easing-prospects.html imageLONDON: Euro zone bond yields held at record lows on Tuesday with financial markets lulled by European Central Bank President Mario Draghi's vow to lift inflation from near-zero level by whatever means necessary.

Spanish 10-year yields were below 2 percent, Irish yields below 1.5 percent and Portuguese yields under 3 percent.

Most euro zone yields were at or near all-time lows as investors bet the ECB would expand its asset buying to include sovereign debt.

The central bank has started to buy asset-backed securities and covered bonds and is due to offer a new round of long-term loans to banks next month as it tries to encourage lending to businesses and consumers.

The ECB is hoping to pump an additional trillion euros into the economy but many analysts say its current measures are unlikely to achieve that goal.

The ECB meets next week for the last time this year. "The strong performance of peripheral bonds does feel like a market increasingly speculating substantial monetary loosening by the ECB as soon as next week," said Orlando Green, fixed income strategist at Credit Agricole.

"We expect this theme to persist in the near-term." German 10-year Bund yields, which set the standard for euro zone borrowing costs, fell 1 basis point to 0.77 percent.

Investors see sovereign debt as the most liquid asset the ECB could buy to expand its balance sheet.

But German opposition to financing governments and potential legal difficulties are still fuelling some doubt.

Bundesbank President Jens Weidmann reiterated on Monday his opposition to the ECB buying government bonds.

Greek 10-year yields were 5 bps lower on the day but remained very high at almost 8 percent. Representatives from Greece, which defaulted in 2012, are holding talks in Paris with their international creditors on the bailout deal. Athens had set a Dec. 8 deadline to complete the review of the aid programme, which it plans to quit by the end of the year and potentially open a precautionary credit line instead.

Prime Minister Antonis Samaras is banking on that move to win him enough support to push through his candidate in presidential elections next year. Failure to do so will lead to early polls, which the radical leftist Syriza party might win.

"We only expect a last-minute agreement in early December," Commerzbank strategists said in a note.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Tue, 25 Nov 2014 11:36:29 +0000
Romania sells 300mn lei in April 2020 T-Bonds http://www.brecorder.com/markets/fixed-income/europe/206612-romania-sells-300mn-lei-in-april-2020-t-bonds.html http://www.brecorder.com/markets/fixed-income/europe/206612-romania-sells-300mn-lei-in-april-2020-t-bonds.html imageBUCHAREST: Romania sold a planned 300 million lei ($84.04 million) worth of April 2020 treasury bonds on Monday, with the average accepted yield at 2.93 percent, central bank data showed.

Debt managers last sold the paper in July at an average yield of 3.5 percent.

Since then, comfortable market liquidity and rate cuts by the central bank have helped yields hover near record lows.

Earlier this month, the finance ministry sold June 2019 bonds at an average yield of 2.77 percent.

So far this year, Romania has sold roughly 37.6 billion lei and 930 million euros at domestic debt tenders, and has tapped foreign markets three times.

Copyright Reuters, 2014

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Mon, 24 Nov 2014 13:39:11 +0000