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 Sun, 23 Nov 2014 12:00:31 +0000 SRA Framework 2.0 en-gb UK gilts hit five-week high on global economy worries http://www.brecorder.com/markets/fixed-income/europe/206056-uk-gilts-hit-five-week-high-on-global-economy-worries.html http://www.brecorder.com/markets/fixed-income/europe/206056-uk-gilts-hit-five-week-high-on-global-economy-worries.html imageLONDON: British government bond prices hit their highest level in more than a month on Thursday, boosted by gloomy business surveys from the euro zone and China that sounded warning bells for the global economy.

As global equities retreated sharply, the 10-year gilt troughed at 2.072 percent, its lowest level since Oct. 16.

At 1505 GMT it was at 2.0 percent - down around 5 basis points on the day and on track for its biggest fall this week.

The five-year British government bond yield also touched its lowest level since Oct. 16.

British government bond prices were boosted last week by forecasts from the Bank of England that showed a weak outlook for inflation and by comments from its governor, Mark Carney, who said markets were right to price in looser monetary policy.

Gilts showed little reaction to better-than-expected British retail sales data. But yields dropped sharply on the publication of a German survey of purchasing managers that augured poorly for an already troubled euro zone economy.

The yield spread between 10-year gilts and the equivalent German Bund fell on the day by 1 basis point to 128 basis points, its lowest level in about a month.

Demand was strong at an auction of 900 million pounds of the 0.625 percent index-linked gilt due 2042, attracting bids 2.14 times the amount on offer - the highest demand at a linker auction since Aug. 6.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 20 Nov 2014 15:57:41 +0000
German bond yields dip after PMI miss, ECB stimulus bets firm http://www.brecorder.com/markets/fixed-income/europe/205997-german-bond-yields-dip-after-pmi-miss-ecb-stimulus-bets-firm.html http://www.brecorder.com/markets/fixed-income/europe/205997-german-bond-yields-dip-after-pmi-miss-ecb-stimulus-bets-firm.html imageLONDON: German bond yields dipped on Thursday as disappointing business activity data fed demand for safe-haven assets and firmed up bets that the European Central Bank will adopt more stimulus measures.

Markit's Composite Flash Purchasing Managers' Index for the euro zone, seen as a good growth indicator, fell to 51.4 in November, missing the lowest forecast in a Reuters poll. New orders dropped for the first time in over a year.

The weak outlook prompted some investors to take refuge in top-rated German bonds, but there was little evidence of selling pressures in the bloc's riskier debt markets as accounts remained positioned for additional central bank easing.

The ECB is set to start buying asset-backed securities this week, extending its purchase scheme from covered bonds, but many remain sceptical that this will help expand the central bank's balance sheet by the trillion euros pledged.

These barriers, plus the weakening outlook, are enough to convince many that controversial purchases of public debt are just around the corner.

"You can argue that the worse the situation gets the more likely it is that the ECB will buy government bonds," said Alessandro Tentori, global head of rates strategy at Citi.

"That is why you have a hard time getting people to sell BTPs (Italian bonds) and Bonos (Spanish bonds) just because the economy is faltering."

German 10-year yields dipped 3 basis points to 0.81 percent.

Italian and Spanish equivalents were both 2 bps lower at 2.30 and 2.11 percent, respectively, after Spain offloaded 3 billion euros of debt at auction.

France also issued around 7.5 billion euros of bonds maturing in 2017 and 2019.

Rabobank strategists, describing France's sale as "solid", said expectations of Japanese buying had proved supportive.

Focused on the bloc's economic outlook, euro zone markets shrugged off US Federal Reserve minutes released on Wednesday.

The Fed opted not to nod to financial market volatility and a weakening global economy in its policy statement last month, minutes released on Wednesday showed, though it kept a passage on holding rates low for a "considerable time".

U.S Treasury yields seesawed after the minutes, but eventually forged higher as bets firmed for a rate rise in the middle of 2015.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 20 Nov 2014 12:13:17 +0000
Bund yields rise amid UK, US rate hike hints http://www.brecorder.com/markets/fixed-income/europe/205848-bund-yields-rise-amid-uk-us-rate-hike-hints.html http://www.brecorder.com/markets/fixed-income/europe/205848-bund-yields-rise-amid-uk-us-rate-hike-hints.html imageLONDON: German Bund yields rose on Wednesday after Bank of England minutes and data hinting at a rebound in the U.S. housing market provided evidence that a rate hike in both the UK and the U.S. could be on the cards.

Bond traders and brokers said the move was exacerbated by pressure on the Bund future which traded through a technical level, prompting some investors to automatically sell.

"The BoE minutes were quite hawkish and maybe they acted as a trigger for those who ... were seeking to cut their Bund positions ahead of the (Fed) minutes," said Cyril Regnat, fixed income strategist at Natixis.

BoE minutes showed two policymakers again voted for a UK rate hike despite a weaker economic outlook - -- a hawkish stance that some in the market anticipate from the Fed as well.

There had been speculation that at least one previous voter for an immediate increase in interest rates might have backed down this month due to the increasing risk that weakness in the euro zone economy will start to affect British growth.

But the fact that neither Ian McCafferty nor Martin Weale changed their minds raised concerns that the wording of the Federal Reserve minutes due later might contain a similar surprise and increased selling pressure on top-rated bonds.

Data on Wednesday showed a jump in U.S. housing permits to a 6-1/2 year high, a promising sign even though housing starts dipped unexpectedly in October.

Improving economic data is key to convincing the Fed to hike rates, a move markets expect in the middle of 2015.

Highly-rated bonds such as Bunds, British gilts and U.S. Treasuries often move in sync due to their perceived safe-haven status, and the prospect of rate hikes in one of those economies usually affects borrowing costs in the other two as well.

Ten-year Bund yields, which set the standard for euro zone borrowing costs, rose 4 basis points to 0.84 percent, having traded as low as 0.79 percent earlier.

Meanwhile, equivalent gilts rose 2 bps to 2.14 pct, and Treasuries jumped 3 bps to 2.35 pct.

Market watchers said the move in German yields was exaggerated by technical trading in the Bund future, as investors booked profits as the steady rise in price of the contract since the end of October tailed off.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Wed, 19 Nov 2014 16:45:15 +0000
Bund yields edge up after BoE hawks stick to their guns http://www.brecorder.com/markets/fixed-income/europe/205775-bund-yields-edge-up-after-boe-hawks-stick-to-their-guns.html http://www.brecorder.com/markets/fixed-income/europe/205775-bund-yields-edge-up-after-boe-hawks-stick-to-their-guns.html imageLONDON: German Bund yields edged up on Wednesday after Bank of England minutes showed two policymakers again voted for rate hikes despite a weaker economic outlook -- a hawkish stance that some in the market anticipate from the Fed as well.

There had been speculation that at least one previous voter for an immediate increase in interest rates might have backed down this month due to the increasing risk that weakness in the euro zone economy will start to affect British growth.

But the fact that neither Ian McCafferty nor Martin Weale changed their minds raised concerns that Federal Reserve minutes due later in the day might contain a similar surprise and increased selling pressure on top-rated bonds.

In the Fed's case it would be the wording of the statement rather than the votes. Markets expect the U.S. central bank to hike rates in the middle of next year.

Highly-rated bonds such as Bunds, British gilts and U.S. Treasuries often move in sync due to their perceived safe-haven status, and the prospect of rate hikes in one of those economies usually affects borrowing costs in the other two as well.

Ten-year Bund yields, which set the standard for euro zone borrowing costs, rose 2 basis points to 0.82 percent, having traded as low as 0.79 percent earlier.

"The BoE minutes were quite hawkish and maybe they acted as a trigger for those who ... were seeking to cut their Bund positions ahead of the (Fed) minutes," said Cyril Regnat, fixed income strategist at Natixis.

It was also a reason for investors to book profits on a small rally that took Bund yields to one-month lows of 0.767 percent on Monday after European Central Bank President Mario Draghi said any future ECB asset purchases could include government bonds.

Such a possibility, even though strongly opposed in Germany, is likely to limit the impact of the Fed statement. Bund yields remain just 10 bps above record lows and most other euro zone yields are relatively close to their troughs.

"The overall picture is one where the euro area recovery is fragile, feeble and the ECB is going to take further action," RIA Capital Markets bond strategist Nick Stamenkovic said.

"It's a question of when rather than if."

Further clues on whether the euro zone was getting closer to further ECB easing measures may come on Thursday when manufacturing and services sector PMI surveys will be released.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Wed, 19 Nov 2014 12:31:54 +0000
Bund yields steady before German ZEW survey http://www.brecorder.com/markets/fixed-income/europe/205521-bund-yields-steady-before-german-zew-survey.html http://www.brecorder.com/markets/fixed-income/europe/205521-bund-yields-steady-before-german-zew-survey.html imageLONDON: German bond yields held steady on Tuesday before a survey expected to show more settled German investor and analyst morale in November after it plunged to its lowest in almost two years last month.

The monthly ZEW survey is forecast to have edged back into positive territory after falling below zero last month, but this is unlikely to change market bets on further European Central Bank easing.

On Monday a Bundesbank survey showed business confidence among German companies is declining, with only one in three now expecting production to increase next year and one in four anticipating a rise in exports.

"We are looking for a stagnant reading (of the ZEW) rather than a clear direction either way. Even the consensus is for a very modest rebound," said Marius Daheim, chief strategist for global interest rates at Bayerische Landesbank.

"That would at least argue for the Bund market to remain supported at current levels rather than be weighed down by the data."

The market remained supported by comments from ECB President Mario Draghi that further policy measures could include sovereign bond purchases, he said.

German 10-year yields, the benchmark for euro zone borrowing costs, were unchanged on the day at 0.79 percent.

Rabobank strategists, who expect the ECB to announce it would start buying government bonds at the end of the first quarter of 2015, forecast Bund yields to hit 0.65 percent in the first three months of next year.

"However, on the Bund front intermittent sell-offs seem likely as talk of QE ramps up. Meanwhile, narrower peripheral (spreads) seem more certain," they said in a note.

Yields on lower-rated bonds were also flat to a touch lower after outperforming Bunds on Monday in the wake of Draghi's comments.

Peripheral euro zone bond issuers, especially Italy and Spain, stand to benefit most from any government bond purchases by the ECB.

Copyright Reuters, 2014

]]>
s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Tue, 18 Nov 2014 09:58:59 +0000
Gilts jump on Japan recession shock, weak UK inflation outlook http://www.brecorder.com/markets/fixed-income/europe/205332-gilts-jump-on-japan-recession-shock-weak-uk-inflation-outlook.html http://www.brecorder.com/markets/fixed-income/europe/205332-gilts-jump-on-japan-recession-shock-weak-uk-inflation-outlook.html imageLONDON: British government bond prices rose sharply on Monday as Japan's unexpected return to recession caused investors to seek safe-haven assets, and top officials at the Bank of England stressed the weak outlook for British inflation.

The yield on 10-year British gilts fell as low as 2.077 percent, its lowest since Oct. 16. At 1236 GMT it was at 2.09 percent - down 3 basis points on the day.

The yield premium that 10-year gilts offer over the equivalent German Bund narrowed as investors continued to bet against a rate hike by the Bank of England until deep into 2015 or later.

"The key driver this morning is the Japanese third-quarter GDP figures," said Nick Stamenkovic, a strategist at RIA Capital in Edinburgh. "The market was positioned for a modest rebound."

Instead, Japanese gross domestic product shrank by an annualised 1.6 percent in the July-September period, after plunging 7.3 percent in the second quarter.

Investors also focused on comments from BoE Governor Mark Carney and the central bank's chief economist Andy Haldane who both spoke about the weak outlook for inflation in Britain.

Carney told The Australian newspaper that Britain was facing "huge disinflationary forces" from its trading partners, particularly in the euro zone. Haldane said in a speech he was watching "like a dove" for signs that expectations of very low inflation in Britain could become entrenched.

The BoE said last week inflation could dip below 1 percent in the next six months and was likely to hit its target of 2 percent only towards the end of its three-year outlook period.

Economists at HSBC pushed back their expectation of when the BoE would raise interest rates until the first quarter of 2016, a year later than they previously thought.

"In an environment of fragile growth and low inflation, tightening is just too frightening," Simon Wells and Liz Martins said in a report published on Monday.

Short sterling interest rate futures indicated that investors were also looking at late 2015 or early 2016 as a possible timing for the start of rate hikes by the BoE.

The biggest gains were centred on the late 2016 and early 2017 contracts saw the biggest gains, suggesting markets are now pricing in a much more gradual cycle of interest rate hikes in the years ahead.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Mon, 17 Nov 2014 15:38:48 +0000
Bund yields dip as Japan recession stokes fears over global economy http://www.brecorder.com/markets/fixed-income/europe/205263-bund-yields-dip-as-japan-recession-stokes-fears-over-global-economy.html http://www.brecorder.com/markets/fixed-income/europe/205263-bund-yields-dip-as-japan-recession-stokes-fears-over-global-economy.html imageLONDON: German bond yields fell on Monday after data showing Japan unexpectedly slipped into recession in the third quarter, stoking investor concerns about global growth.

The world's third-largest economy contracted at an annualised rate of 1.6 percent in the period, way below the 2.1 percent expansion forecast by economists in a Reuters poll.

The data, coupled with deteriorating relations between the West and Russia over the Ukraine conflict prompted investors to sell equities and park money in safe-haven bonds such as U.S. and German government paper.

"The weak data set against the backdrop of geopolitical trouble has prompted the slide in Bund yields," said Societe Generale strategist Ciaran O'Hagan.

German 10-year yields fell 2 bps to 0.78 pct, just above a record low of 0.716 pct, while U.S. equivalents were also 2 bps lower at 2.30 pct.

Lower-rated euro zone bond yields such as those in Greece, Portugal, Spain and Italy were flat or a tad higher on the day.

Russian President Vladimir Putin left the weekend's G20 summit in Australia early as U.S. President Barack Obama accused Russia of invading Ukraine and Britain warned of a possible "frozen conflict" in Europe.

With little euro zone data due out on Monday, markets focused on speeches from ECB policymakers which could throw up hints of more policy easing

ECB Executive Board member Yves Mersch said on Monday the ECB could theoretically extend its asset purchase programme to buy state bonds, gold, shares or exchange traded funds in order to expand its balance sheet.

Board members Peter Praet and Benoit Coeure are also due to speak, while ECB president Mario Draghi will give his quarterly testimony before the European Parliament.

The euro zone economy beat market expectations to expand 0.2 percent in the third quarter, data on Friday showed, while preliminary factory activity data for November this week will help markets gauge conditions in the fourth quarter.

Belgium will sell five- and 10-year bonds in its last auction of the year. Belgian 10-year yields were 1 bp lower at 1.06 percent despite Fitch revising the outlook on its AA rating to negative from stable on Friday.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Mon, 17 Nov 2014 12:12:21 +0000
Euro zone yields dip as ECB QE bets stay intact despite GDP uptick http://www.brecorder.com/markets/fixed-income/europe/204794-euro-zone-yields-dip-as-ecb-qe-bets-stay-intact-despite-gdp-uptick.html http://www.brecorder.com/markets/fixed-income/europe/204794-euro-zone-yields-dip-as-ecb-qe-bets-stay-intact-despite-gdp-uptick.html imageLONDON: Euro zone bond yields fell on Friday after data showed modest and patchy third quarter growth in the currency bloc, keeping intact bets for more easing from the European Central Bank.

A preliminary estimate by the European Union's statistics office showed the euro zone economy expanded 0.2 percent quarter-on-quarter after Germany dodged recession and France beat market expectations.

Growth remained uneven in the 18-nation bloc. Italy -- the biggest economy on its periphery -- stayed in recession while Portugal grew 0.2 percent, below forecasts.

There was some relief in the market that the region avoided recession but the minimal recovery and confirmation of ultra-low inflation did little to cool expectations of more ECB stimulus.

"It's a tiny bit better but I can't really say it has led us into revising our view on anything. We're anticipating weak ECB forecasts in December and the the bigger backdrop of what's going on elsewhere remains fairly bearish on euro zone inflation and growth," said Lyn Graham-Taylor, a strategist at Rabobank.

"We're sticking with our March 2015 likely date (for ECB sovereign bond purchases)."

German 10-year yields slipped 1.5 basis points to 0.78 percent while French equivalents were down 2 bps at 1.14 percent. German yields have edged closer to a record low of 0.716 percent, hit last month as pressure mounted on the ECB to take more aggressive monetary measures to revive anaemic growth in the currency bloc.

Bets that the ECB will in coming months start buying government bonds with new money, a measure known as quantitative easing, firmed on Thursday after experts surveyed by the central bank lowered inflation forecasts.

"We still have this deflationary risk, and of course the ECB has outlined that they want to extend balance sheet to around three trillion (euros).

It's not like they're going to change that target just because of these GDP numbers," said Daniel Lenz, a strategist at DZ Bank.

Greek yields fell the most, though moves there are exaggerated by thin liquidity, down 13 bps at 8.06 percent after the economy posted three consecutive quarters of growth this year, emerging from its worst recession since World War Two.

Elsewhere, Italian and Spanish 10-year yields were 1-2 bps lower at 2.34 percent and 2.13 percent respectively.

Italy and Spain, the largest economies in the periphery and among the most indebted, would stand to benefit the most if the ECB buys sovereign bonds.

Copyright Reuters, 2014

]]>
s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 14 Nov 2014 12:15:55 +0000
Spanish yields fall as market shrugs off Catalonia's symbolic vote http://www.brecorder.com/markets/fixed-income/europe/204070-spanish-yields-fall-as-market-shrugs-off-catalonias-symbolic-vote.html http://www.brecorder.com/markets/fixed-income/europe/204070-spanish-yields-fall-as-market-shrugs-off-catalonias-symbolic-vote.html imageLONDON: Spanish bond yields dipped on Monday as investors shrugged off a symbolic vote on independence in the country's wealthy Catalonia region.

Market sentiment in the rest of Europe was also broadly positive on Monday on bets that flash euro zone data this week would support the case for the European Central Bank to expand its asset purchases to government bonds.

Millions of Catalans voted in Sunday's ballot, which supporters hope will propel the issue further despite opposition from Madrid. The "consultation of citizens" in the northeastern region of Spain follows a legal block by Madrid against a more formal, albeit non-binding vote.

Spanish bonds had underperformed most euro zone bonds last week in the run-up to Sunday's ballot amid some uneasiness that a big turnout could stoke tensions between Madrid and a region which accounts for one fifth of the country's economic output.

Spanish 10-year yields fell 2 basis points to 2.14 percent, trading in line with Italian equivalents.

"What happened in Catalonia was not completely legal, which means that whatever the result of the vote is, it will not have an impact on the institutions," said Patrick Jacq, an interest rate strategist at BNP Paribas.

Commerzbank strategists said that, while initial market reaction to the Catalan vote should be muted, there was still a risk investors might turn nervous in coming weeks as attention turns to a general election in Spain due next year where a new, increasingly popular leftist party Podemos ("We Can") could unsettle the established parties.

Early regional elections also look likely and the Catalan governing parties could turn Sunday's vote into a measure of support for independence, other analysts said.

"Spanish government bonds have not felt much pressure due to the issue so far, but increased tensions between Catalonia and the central government continue to have potential to cause losses for Spanish bonds," Nordea strategists said in a note.

Among top-rated debt, German 10-year yields, the benchmark for euro zone borrowing costs, were 1 bp lower at 0.82 percent, subdued by the ECB's affirmation last week that it could ease policy further if the economy deteriorates.

Third quarter euro zone growth numbers due on Friday is seen at just 0.1 percent with the year-on-year figure little better at 0.7 percent.

Copyright Reuters, 2014

]]>
imad_kueconomist@yahoo.com (Imaduddin) Europe Mon, 10 Nov 2014 12:08:56 +0000
Portugal to issue up to 1bn euros bonds Nov. 12 http://www.brecorder.com/markets/fixed-income/europe/203762-portugal-to-issue-up-to-1bn-euros-bonds-nov-12.html http://www.brecorder.com/markets/fixed-income/europe/203762-portugal-to-issue-up-to-1bn-euros-bonds-nov-12.html imageLISBON: Portugal's IGCP debt agency said on Friday it will issue between 750 million euros and 1 billion euros in bonds due Feb. 2024 at an auction on Nov. 12.

The bonds have a coupon of 5.65 percent and settlement will be on Nov. 14.

Portugal has easily recovered bond market access since it exited its bailout in May and its yields are currently trading near all-time lows thanks to the European Central Bank's expansive monetary policy.

Copyright Reuters, 2014

]]>
s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 07 Nov 2014 15:52:27 +0000