Posts Tagged euro
Euro Area Backs Greek Aid, Looks to New Bailout
Posted by Oksana Grebenjuk in Favourites, Trading Markets on Июль 4th, 2011
The euro area approved its share of a 12 billion-euro ($17.4 billion) aid payment for Greece and pledged to complete work in the coming weeks on a second rescue package for the cash-strapped nation to prevent a default.
Finance ministers agreed to disburse 8.7 billion euros of loans under last year’s 110 billion-euro bailout by July 15, rewarding Greek Premier George Papandreou for pushing an extra austerity plan through parliament. The International Monetary Fund is due to provide the rest of the July aid installment, the fifth under the 2010 package.
The spotlight now turns to a second bailout to which banks and insurers plan to contribute following German demands for taxpayer relief. Euro-area governments and investors will provide 70 percent of new aid that may total as much as 85 billion euros, with the IMF offering the rest, Thomas Wieser, an Austrian Finance Ministry official, said on June 30.
“The Greek authorities provided a strong commitment to adhere to the agreed fiscal adjustment path,” the 17 euro-area finance chiefs said in an e-mailed statement yesterday after a conference call that was joined by the IMF’s acting chief, John Lipsky, and European Central Bank President Jean- Claude Trichet. “The precise modalities and scale of private- sector involvement and additional funding from official sources will be determined in the coming weeks.” Read the rest of this entry »
«Probably inevitable» a country will exit euro: Soros
Posted by Oksana Grebenjuk in Currency on Июнь 30th, 2011
Billionaire investor George Soros thinks a country will eventually exit the euro zone and urged policymakers on Sunday to come up with a «plan B» that could rescue the European Union from looming economic collapse.
Soros, famous for making $1 billion by betting against the British pound in 1992, did not name any country he thought might exit the currency, but speculation is mounting about the fate of Greece as its politicians struggle to agree more austerity measures demanded by international lenders as the price for staving off bankruptcy.
Soros reiterated his view in a panel discussion in Vienna that the euro had a basic flaw from the start in that the currency was not backed by political union or a joint treasury.
«The euro had no provision for correction. There was no arrangement for any country leaving the euro, which in the current circumstances is probably inevitable,» he said.
While he called survival of the European Union a «vital interest to all,» he said the EU needed structural changes to halt a process of disintegration. Read the rest of this entry »
The Stupidity of Hope: Greece Is Still Going to Default
Posted by Oksana Grebenjuk in Favourites, Trading Markets on Июнь 2nd, 2011
Keeping in mind that the words “hope” and “Greece” should almost never be used in the same sentence, here would be the one exception: Let’s “hope” markets aren’t rallying on “hope” for “Greece.”
Hope, apparently, does spring eternal, however, and it seems as though despite all the evidence to the contrary, there are still people out there with money to spend who believe that Greece can be rescued yet from its seemingly intractable fiscal position.
How else to explain Monday’s surge in the euro and drop in the US dollar, which had been rallying on well-placed hopes that the periphery of Europe was sliding further into the debt abyss and ready to implode?
Irrationality, we now can conclude, comes in many forms. The latest form is in some weakly substantiated murmurs out of Germany that the core of the core of euro zone nations might be softening its stance towards a Greek bailout and is ready to ease its demands that the nation speed up its ultimately unavoidable debt restructuring.
Despite compelling evidence that Germany is in no political position to turn suddenly benevolent towards its free-spending weak sister to the south, the rally was on. Read the rest of this entry »
Fitch cuts Greek rating, warns over restructuring
Posted by Oksana Grebenjuk in Investing on Май 24th, 2011
Fitch cut Greece’s credit rating by three notches on Friday, pushing the country deeper into junk territory, and warned that any kind of debt restructuring would amount to default. Fitch was the second rating agency to warn that it would consider any loss imposed on bondholders as a default after Standard and Poor’s said the same earlier this month.
«An extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly,» the rating agency said. If private sector ‘burden sharing’ is coercive, the credibility of EU/IMF policy commitments not just for Greece but also Ireland and Portugal would be severely diminished and affect financial stability across the euro area, it said.
One year into its European Union/International Monetary Fund bailout, Greece is struggling with weak revenues and a deep recession, fuelling speculation that it will have to restructure its debt to pull itself out of the fiscal mess that triggered a euro zone crisis.
«The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery,» Fitch said in a statement. Read the rest of this entry »
Portugal Sells Debt but at a Much Higher Rate
Posted by Oksana Grebenjuk in Investing on Апрель 7th, 2011
Portugal was forced to offer higher interest rates to sell short-term debt on Wednesday, underlining concerns among investors about the country’s ability to continue financing itself without an emergency European bailout.
Portugal sold 455 million euros, or $650 million, of one-year Treasury bills at an average yield of 5.9 percent, the country’s debt management agency said. That was significantly higher than the 4.33 percent yield when Portugal last sold such bills on March 16. The auction attracted bids for 2.6 times the amount offered, compared with a bid-to-cover ratio of 2.2 two weeks earlier.
The agency also sold 550 million euros of six-month bills at an average yield of 5.12 percent, compared with a yield of 2.98 percent at a previous auction of on March 2.
The sale came after the ratings agency Moody’s cut the sovereign rating of Portugal on Tuesday for the second time in a month, which helped send yields on Portuguese government debt to their highest levels since the launch of the euro. On Wednesday, Moody’s also downgraded by one or more notches the senior debt and deposit ratings of seven Portuguese banks. Read the rest of this entry »
Despite the party, global policymakers poles apart
Posted by Oksana Grebenjuk in Currency on Февраль 7th, 2011
Even after their annual Alpine get-together, global policymakers cannot agree which of the risks facing the world economy are most pressing let alone decide how to tackle them.
While there was broad agreement that the worst of the euro zone debt crisis has passed, countless panel discussions and bilateral meetings at the World Economic Forum in Davos did little to narrow differences of opinion over the threat of inflation to the global recovery and the imbalances associated with deficits and exchange rates.
The financial crisis forced policymakers to look into the abyss and work together to prevent the global economy going into meltdown. The recovery is seeing countries operating more independently.
«At the early stages of the financial crisis, at G20 level, there was a lot of talk of coordination … I think now everybody is going their own way,» Turkish Finance Minister Mehmet Simsek said during one of the Forum’s panel discussions.
«That’s an issue, that’s a problem,» he said. «Global imbalances are there, probably to grow.»
Turkey is one of a growing number of emerging market nations that have acted to stem «hot money» inflows destabilising their economies. Asian and Latin American nations have done the same, pointing the finger at the United States for flooding the world economy with newly-printed money. Read the rest of this entry »
German 2-Year Yield Rises to More Than 12-Month High on ECB Rate-Rise Bets
Posted by Oksana Grebenjuk in Fund Markets on Февраль 4th, 2011
German two-year government note yields jumped to the highest in more than a year this week on speculation the European Central Bank may act to stem inflation.
ECB President Jean-Claude Trichet said on Jan. 26 that policy makers will do “what is necessary” to keep inflation in check. German consumer-price growth accelerated to the highest level since October 2008. Irish bonds slid before a vote on the budget tomorrow. The debut auction of the European Financial Stability Facility drew bids for almost nine times the securities on offer.
The increase in the German note yield “was driven by fears of tighter monetary policy,” said Patrick Jacq, a senior fixed- income strategist at BNP Paribas SA in Paris. “This is clear when you look at the evolution of the curve. We have hawkish rhetoric coming in from the ECB so it makes sense to be short at the short end.”
The two-year note fell for a fourth straight week, pushing the yield eight basis points higher to 1.37 percent as of 5:27 p.m. in London. It earlier reached 1.43 percent, the highest since Jan. 4. The 10-year yield fell two basis points to end the week at 3.16 percent. Read the rest of this entry »
Strong Stocks and Euro, Weak Dollar on GE’s Earnings
Posted by Oksana Grebenjuk in Fund Markets on Январь 25th, 2011
After a weak 2 days, stocks bounced back. Strong euro is on its 8-week high versus the dollar and against 14 more out of 16 currencies. Companies’ earnings such as General Electric Co.’s are higher than estimates while commodities gain is led by sugar and cotton and German business confidence increased.
The S&P 500 Index was at 1,283.35 (0.2%) in New York at 4p.m. Stoxx Europe rose 0.7%. Credit-default swaps that support Europe’s indebted nations went to largest 2-week drop. 10-year treasuries yield dipped 4 basis points (3.41%).
GE’s 1st increase in 2 years encouraged earning season’s optimism. Since Jan. 10, out of 57 companies, 42 topped per share profit. Fiduciary Trust Co.’s Michael Mullaney said the strong earning season shows sustainable economic recovery and that good sales momentum is promising for the stock market.
S&P 500’s 43 companies in 57 reported 8.4% increase. GE, since March 2009 rallied at 7.1% whose CEO, Jeffrey Immelt, incidentally, will be named by President Obama as outside economic advisers panel head.
Bank of America Corp. was down 2% after $1.24 billion 4th quarter loss report.
Europe’s Stoxx 600 showed 2 gained for every stock decline while Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA were 3.3% up. Following UK bank discussion report on Financial Times, Royal Bank of Scotland Group Plc surged 6.5%. Read the rest of this entry »
U.S. Stocks Decline, S&P 500 Ends Longest Weekly Winning Streak Since 2007
Posted by Oksana Grebenjuk in Favourites, Fund Markets on Январь 24th, 2011
U.S. stocks fell, ending the longest weekly winning streak for the Standard & Poor’s 500 Index since 2007, after Goldman Sachs Group Inc. and Citigroup Inc. failed to beat analysts’ earnings estimates and housing starts slid more than forecast.
The S&P 500 pared its weekly slump yesterday after General Electric Co. reported higher-than-projected profit, driving its shares up 7.1 percent. Goldman Sachs and Citigroup fell more than 4.6 percent this week after less trading hurt their earnings. Freeport-McMoRan Copper & Gold Inc. plunged 8.4 percent after cutting its sales forecasts, while Massey Energy Co. lost 4.8 percent, the most for a week since September.
The S&P 500 declined 0.8 percent to 1,283.35 this week, the first drop after seven straight weeks of gains. It retreated 1 percent on Jan. 19, the biggest one-day drop since November. The Dow Jones Industrial Average added 84.46 points, or 0.7 percent, to 11,871.84. The indexes hadn’t moved in opposite directions since October. Stock exchanges were closed on Jan. 17 for the Martin Luther King Jr. holiday.
“You came into earnings season with the bar set pretty high,” said Scott Migliori, the San Francisco-based U.S. chief investment officer at RCM, a unit of Allianz Global Investors that oversees more than $145 billion in assets. “Expectations have been ratcheted up over the last couple of months as the macroeconomic data points and macroeconomic outlook have improved. A pullback in late January, early February is reasonable and shouldn’t scare anybody.” Read the rest of this entry »
Europe Failed to Clear `Skepticism’ on Debt Crisis
Posted by Oksana Grebenjuk in Trading Markets on Январь 18th, 2011
Europe has yet to allay investor “skepticism” about the sustainability of the region’s debt, and any spread of the crisis would cloud the global economic outlook, the International Monetary Fund’s No. 3 official said.
“At least for now it looks like the spillover from the European sovereign crisis to areas outside of the region will be limited,” Naoyuki Shinohara, deputy managing director at the IMF, said in an interview in Tokyo yesterday. “However, if the European sovereign-debt problems were to become bigger, we need to keep in mind that that could bring about considerable downside risks.”
European officials have indicated they’re ready to expand their efforts to contain the crisis that erupted last year and has led to bailout packages for Greece and Ireland. German Chancellor Angela Merkel this week expressed willingness to take whatever steps are needed to stem the turmoil.
The extra yields investors demand to hold Greek and Irish bonds rather than German bunds “still remain very high, despite the rescue packages,” Shinohara said.
“That means skepticism over the sustainability of their debt in the market hasn’t been cleared away,” said Shinohara, 57, a former top currency official at Japan’s Ministry of Finance. “It’s important that countries reduce their budget deficit, but they also need to tackle structural issues including boosting growth and lowering unemployment.” Read the rest of this entry »
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