Difference between revisions of "Credit Bubble Bulletin 091915"
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− | <br /> | + | <br />Government bond markets across the single-currency bloc have been hurt in recent weeks by optimism over a U.S.-China trade deal and signs of stabilisation in economic data. [https://www.vvip96.net/great-wall-99/ great wall 99] - Reuters (Dhara Ranasinghe and Yoruk Bahceli): “A selloff in southern European bond markets gathered pace on Monday, pushing yields higher, with an inconclusive election in Spain adding to uncertainty in its bond market. European Commission President Jean-Claude Juncker reiterated the EU’s refusal to renegotiate as many of the Conservative Party candidates vying to replace Prime Minister Theresa May said they would seek a new agreement. May 24 - Bloomberg (Jana Randow, Alessandro Speciale, and Piotr Skolimowski): “Mario Draghi is leading a push to stamp out any speculation that the European Central Bank might raise interest rates before it ends quantitative easing. China spell out how it plans to reach as much as $50 billion in agricultural imports annually has become a sticking point in negotiations on a phase one trade deal, according to people familiar with the matter. November 12 - Bloomberg (Sarah Ponczek): “Some of the hottest trades of a tumultuous 2019 are falling out of favor as investors dip their toes into riskier waters. From low-volatility stocks to bonds and gold, the safety trade that reigned among exchange-traded fund investors is unraveling on signs of a rebounding economy and progress in U.S.-China talks.<br /><br />U.S.-based exchange-traded funds have racked up a record $4 trillion in assets under management as of this year, with 136 ETF providers offering 2,062 ETFs to investors… Yet is does have the potential to be the beginning of something important. In aggregate, ETFs tracking stocks that swing less than the broader market have taken in over $22 billion for a record year… And to have a central bank assume the role of savior for an ill-conceived monetary union guarantees precarious runaway monetary inflation. After refitting its tool kit in September, the central bank opted Tuesday to leave policy unchanged, despite sharply cutting its inflation forecasts. April 28 - Bloomberg: “China’s central bank is considering expanding a new lending tool in an effort to bolster demand for local-government bonds, as policy makers seek to develop a municipal debt market and avoid a credit crunch. Again, I don’t want to read too much into October’s abrupt lending slowdown. Most importantly, a surge in state-directed lending saw Total Social Financing jump an incredible $525bn in January, spurring what would be a record $1.5 TN of first-half Credit growth - and full-year 2016 Credit expansion approaching an unmatched $3.0 TN. Total Commercial Paper added $11.0bn to $1.131 TN.<br /><br />By early-2007, pricing for a rising mountain of subprime mortgage paper had nowhere to go but down. Freddie Mac 30-year fixed mortgage rates rose six bps to a near four-year high 4.38% (up 23bps y-o-y). Japanese 10-year "JGB" yields slipped two bps to negative 0.07% (down 7bps y-t-d). For the week on the upside, the New Zealand dollar increased 1.2%, the South African rand 1.0%, the British pound 1.0%, the Swiss franc 0.8%, the Swedish krona 0.6%, the Norwegian krone 0.4%, the Japanese yen 0.4%, and the euro 0.3%. On the downside, the South Korean won declined 0.8%, the Australian dollar 0.7%, the Brazilian real 0.5%, the Mexican peso 0.4%, and the Singapore dollar 0.1%. The Chinese renminbi declined 0.17% versus the dollar this week (down 1.85% y-t-d). The U.S. dollar index declined 0.4% to 97.999 (up 1.9% y-t-d). Japan's Nikkei Equities Index declined 0.4% (up 16.4% y-t-d). During downturns, junk-bond prices tend to start falling three months ahead of equities… Nationally, home prices rose 3.4% annually in May, down from the 3.5% annual gain in April, according to the S&P CoreLogic Case-Shiller home price indices. S&P attributed the cut to the local government’s high debt burden and said the LGFV’s credit profile will remain under pressure for the next two years.<br /><br />Curiously, EM currencies this week under the most selling pressure were in many cases economies on the hook to Creditors for large amounts of foreign-denominated debt. China’s markets are seeing renewed pressure this month as the Federal Reserve projects a faster pace of rate increases for 2017 and its Chinese counterpart tightens monetary conditions to spur deleveraging and defend the exchange rate. November 10 - Reuters (Rodrigo Campos): “Social unrest worldwide is alarming some global investors, who say protests from Hong Kong and Lebanon to Chile are forcing them to be more cautious even though the impact on financial markets has been spotty so far… August 16 - Reuters (Trevor Hunnicutt): “One Federal Reserve policymaker who opposed the Fed’s recent rate cut is considering whether to support such a move now given risks that a U.S.-China trade war and global slowdown could derail the economy. ‘With few signs of slowdown in the pace of debt accumulation, we estimate that global debt will surpass $255 trillion this year,’ the IIF said…<br /><br />China - along with the world more generally - has never been as vulnerable to a sudden Credit slowdown. November 15 - Reuters (Marc Jones): “Global debt is on course to end 2019 at a record high of more than $255 trillion, the Institute of International Finance estimated on Friday - nearly $32,500 for each of the 7.7 billion people on planet. Over the past year, Fed Credit contracted $98.6bn, or 2.4%. Fed Credit inflated $1.196 Trillion, or 43%, over the past 366 weeks. 2.7 trillion and $2.6 trillion, respectively. Government debt alone is set to top $70 trillion this year, as will overall debt (government, corporate and financial sector) of emerging-market countries. ‘Beijing has used intimidation to try to stop ASEAN nations from exploiting the off-shore resources, blocking access to 2.5 trillion dollars of oil and gas reserves alone,’ O’Brien told the ASEAN-U.S. After a summer of market turmoil, China now appears to be at a critical juncture as capital outflows reach hundreds of billions of dollars and Beijing draws down heavily on its, albeit large, currency reserves… Banks were the dominant source of lending, and they were subject to specific restraints on Credit expansion (i.e. bank reserve and capital requirements, the gold standard). |
Latest revision as of 02:23, 18 October 2020
Government bond markets across the single-currency bloc have been hurt in recent weeks by optimism over a U.S.-China trade deal and signs of stabilisation in economic data. great wall 99 - Reuters (Dhara Ranasinghe and Yoruk Bahceli): “A selloff in southern European bond markets gathered pace on Monday, pushing yields higher, with an inconclusive election in Spain adding to uncertainty in its bond market. European Commission President Jean-Claude Juncker reiterated the EU’s refusal to renegotiate as many of the Conservative Party candidates vying to replace Prime Minister Theresa May said they would seek a new agreement. May 24 - Bloomberg (Jana Randow, Alessandro Speciale, and Piotr Skolimowski): “Mario Draghi is leading a push to stamp out any speculation that the European Central Bank might raise interest rates before it ends quantitative easing. China spell out how it plans to reach as much as $50 billion in agricultural imports annually has become a sticking point in negotiations on a phase one trade deal, according to people familiar with the matter. November 12 - Bloomberg (Sarah Ponczek): “Some of the hottest trades of a tumultuous 2019 are falling out of favor as investors dip their toes into riskier waters. From low-volatility stocks to bonds and gold, the safety trade that reigned among exchange-traded fund investors is unraveling on signs of a rebounding economy and progress in U.S.-China talks.
U.S.-based exchange-traded funds have racked up a record $4 trillion in assets under management as of this year, with 136 ETF providers offering 2,062 ETFs to investors… Yet is does have the potential to be the beginning of something important. In aggregate, ETFs tracking stocks that swing less than the broader market have taken in over $22 billion for a record year… And to have a central bank assume the role of savior for an ill-conceived monetary union guarantees precarious runaway monetary inflation. After refitting its tool kit in September, the central bank opted Tuesday to leave policy unchanged, despite sharply cutting its inflation forecasts. April 28 - Bloomberg: “China’s central bank is considering expanding a new lending tool in an effort to bolster demand for local-government bonds, as policy makers seek to develop a municipal debt market and avoid a credit crunch. Again, I don’t want to read too much into October’s abrupt lending slowdown. Most importantly, a surge in state-directed lending saw Total Social Financing jump an incredible $525bn in January, spurring what would be a record $1.5 TN of first-half Credit growth - and full-year 2016 Credit expansion approaching an unmatched $3.0 TN. Total Commercial Paper added $11.0bn to $1.131 TN.
By early-2007, pricing for a rising mountain of subprime mortgage paper had nowhere to go but down. Freddie Mac 30-year fixed mortgage rates rose six bps to a near four-year high 4.38% (up 23bps y-o-y). Japanese 10-year "JGB" yields slipped two bps to negative 0.07% (down 7bps y-t-d). For the week on the upside, the New Zealand dollar increased 1.2%, the South African rand 1.0%, the British pound 1.0%, the Swiss franc 0.8%, the Swedish krona 0.6%, the Norwegian krone 0.4%, the Japanese yen 0.4%, and the euro 0.3%. On the downside, the South Korean won declined 0.8%, the Australian dollar 0.7%, the Brazilian real 0.5%, the Mexican peso 0.4%, and the Singapore dollar 0.1%. The Chinese renminbi declined 0.17% versus the dollar this week (down 1.85% y-t-d). The U.S. dollar index declined 0.4% to 97.999 (up 1.9% y-t-d). Japan's Nikkei Equities Index declined 0.4% (up 16.4% y-t-d). During downturns, junk-bond prices tend to start falling three months ahead of equities… Nationally, home prices rose 3.4% annually in May, down from the 3.5% annual gain in April, according to the S&P CoreLogic Case-Shiller home price indices. S&P attributed the cut to the local government’s high debt burden and said the LGFV’s credit profile will remain under pressure for the next two years.
Curiously, EM currencies this week under the most selling pressure were in many cases economies on the hook to Creditors for large amounts of foreign-denominated debt. China’s markets are seeing renewed pressure this month as the Federal Reserve projects a faster pace of rate increases for 2017 and its Chinese counterpart tightens monetary conditions to spur deleveraging and defend the exchange rate. November 10 - Reuters (Rodrigo Campos): “Social unrest worldwide is alarming some global investors, who say protests from Hong Kong and Lebanon to Chile are forcing them to be more cautious even though the impact on financial markets has been spotty so far… August 16 - Reuters (Trevor Hunnicutt): “One Federal Reserve policymaker who opposed the Fed’s recent rate cut is considering whether to support such a move now given risks that a U.S.-China trade war and global slowdown could derail the economy. ‘With few signs of slowdown in the pace of debt accumulation, we estimate that global debt will surpass $255 trillion this year,’ the IIF said…
China - along with the world more generally - has never been as vulnerable to a sudden Credit slowdown. November 15 - Reuters (Marc Jones): “Global debt is on course to end 2019 at a record high of more than $255 trillion, the Institute of International Finance estimated on Friday - nearly $32,500 for each of the 7.7 billion people on planet. Over the past year, Fed Credit contracted $98.6bn, or 2.4%. Fed Credit inflated $1.196 Trillion, or 43%, over the past 366 weeks. 2.7 trillion and $2.6 trillion, respectively. Government debt alone is set to top $70 trillion this year, as will overall debt (government, corporate and financial sector) of emerging-market countries. ‘Beijing has used intimidation to try to stop ASEAN nations from exploiting the off-shore resources, blocking access to 2.5 trillion dollars of oil and gas reserves alone,’ O’Brien told the ASEAN-U.S. After a summer of market turmoil, China now appears to be at a critical juncture as capital outflows reach hundreds of billions of dollars and Beijing draws down heavily on its, albeit large, currency reserves… Banks were the dominant source of lending, and they were subject to specific restraints on Credit expansion (i.e. bank reserve and capital requirements, the gold standard).