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[Muthukali]

Euro Lau sai...

 

[Muthukali]

Asia Stocks, Oil Drop as Euro Heads for Loss on Payrolls

Asian stocks and oil retreated for a second day while the euro headed for its worst week this year after interest-rate cuts in Europe and China failed to assure investors the moves will be enough to boost economic growth. Bond risk in Asia rose before a monthly U.S. jobs report.

The MSCI Asia Pacific Index was 0.5 percent lower at 12:14 p.m. in Tokyo while Standard & Poor’s 500 Index futures were little changed. The euro was at $1.238 per dollar after touching a one-month low of $1.2364 yesterday. Crude declined 0.8 percent in New York as corn slid 1.7 percent.

The European Central Bank yesterday reduced its benchmark rate to a record low of 0.75 percent and the People’s Bank of China cut borrowing costs for a second time in a month. U.S. Labor Department data today may show hiring slowed in the second quarter to less than half the pace of the prior three months and the unemployment rate held at 8.2 percent.

“There is weakness around the world,” said Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia. “When you are at extremely low levels of policy interest rates, you can’t expect that that’s going to jump-start the economy.”

ECB President Mario Draghi said the cuts may have only a “muted” effect and downside risks to the economic outlook have materialized. The Bank of England raised the size of its asset- purchase program as the debt crisis in Europe hurts global growth. Last month, the Federal Reserve extended a program of replacing short-term bonds with longer-term debt. Data today is forecast to show industrial production in Germany and Spain fell.

Euro Weakens
“The European economy is in recession and this cut or even another cut of an equal magnitude is not going to change that outcome,” Roach said in a Bloomberg Television interview. “The U.S. economy is still very soft as well and I think the Fed is on the fence as to whether or not it wants to do another easing.”

The cost of insuring corporate and sovereign bonds from non-payment in the Asia-Pacific region increased, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 2 basis points to 167, Standard Chartered Plc prices show. The benchmark, which has ranged between 210 and 132.5 this year, declined for seven- consecutive days through July 4, according to data provider CMA.

The euro is poised for a 2.3 percent drop this week, the sharpest decline since the five-days ended Dec. 16. About five stocks fell for every three that rose on the MSCI Asia Pacific Index, which is still 1 percent higher this week on bets central banks around the world will do more to spur growth.

Chinese Banks
Hong Kong’s Hang Seng Index lost 0.4 percent, led by Chinese lenders, on concern lower interest rates could cut into profits next year. Industrial & Commercial Bank of China Ltd., the nation’s largest, dropped 1.4 percent and China Construction Bank Corp., the second biggest, retreated 2.3 percent.

The effect of China’s rate reduction on the real economy and the market is likely to be limited and the central bank is expected to cut banks’ reserve-requirement ratios again soon, according to Hao Hong, the head of Chinese research at Bank of Communications Co. in Hong Kong.

Foxconn International Holdings Ltd. rose 0.4 percent on a report it’s developing smartphones with Amazon.com Inc. to rival Apple Inc.’s iPhone. Shares of Samsung Electronics Co., the world’s largest maker of televisions and mobile phones, fell 1.7 percent even as the company posted a record quarterly profit.

Oil, Corn
New York crude slid to $86.19 a barrel amid speculation Norway’s government will intervene to stop a strike that threatens to shut the country’s offshore oil production. Prices are up 1.4 percent this week after a European Union ban on Iranian oil exports came into effect July 1.

Corn dropped for the first time in a week after prices climbed as much as 5.7 percent to $7.13 a bushel yesterday, the highest for the most-active contract since Sept. 15. The crop has surged 25 percent since the end of May as hot, dry weather stresses harvests in the U.S., the biggest exporter.

Treasuries headed for a weekly advance on speculation slowing U.S. economic growth and inflation are increasing pressure on the central bank to start a third round of bond purchases. The Fed bought $2.3 trillion of debt in two rounds of so-called quantitative easing from 2008 to 2011 to support the economy.

 

[Muthukali]

Interest rates cut to spur growth

Second reduction in a month to tackle economic slowdown
The central bank cut interest rates for a second time in a month, fueling concerns that the slowdown in the world's second-largest economy is worse than predicted.

The People's Bank of China lowered benchmark deposit rates on Thursday by 25 basis points and cut lending rates by 31 basis points, effective from Friday.

The central bank cut interest rates on June 8 for the first time since 2008 to bolster economic growth.

"The limits for rates charged on individual property loans will not change and financial institutions must strictly implement differentiated policies on property loans to continue constraints on speculative purchases," the central bank said.

A leading economist said that cutting rates twice in a month suggests weak growth.

"The two cuts in interest rates within a month indicate that the GDP growth rate in the second quarter is indeed weaker than expectations," said Lu Zhengwei, chief economist at the Industrial Bank, adding he expected that the figure would be 7.6 percent.

Xu Jianping, president of Soochow Asset Management, said the central bank's move is based on falling inflation and gloomy data for the second quarter, which have yet to be released.

"The cut is aimed to stimulate the economy which is losing steam," he said.

Apart from shoring up the economy, the surprising move is in line with other central banks of major economies, said Zhang Monan, an economist at the State Information Center.

The Bank of England announced on Thursday it will increase its quantitative easing stimulus policy by 50 billion pounds ($78 billion) while keeping the main interest rate at a record low of 0.5 percent.

The European Central Bank also announced on Thursday it will reduce the interest rate on the main refinancing operations of the euro system by 25 basis points to 0.75 percent.

"It is a replica of last year, when the world's six major central banks joined hands to save the market. It seems that the world's major banks have a tacit agreement," Zhang said.

Last December, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the US Federal Reserve (Fed), and the Swiss National Bank announced coordinated action to increase their capacity to provide liquidity support for the global financial system.

Two hours before the Fed announcement, China cut the reserve requirement ratio for commercial banks by 50 basis points, the first reduction since 2008.

Qiu Zhiming, chairman of Beifa Group, a Ningbo-based stationery maker, said despite the cut he does not expect to get cheaper loans.

"Lenders always charge small companies more by adding charges. We are in a weak position in negotiations with banks."

While Zhu Jianfeng, general manager of Wenzhou Gold Emperor Shoes, expected some loans to be cheaper, the overall benefits will be limited.

"We would prefer tax cuts than interest rates cuts.''

The central bank also allowed commercial banks to set the interest rates charged on their loans at or above 70 percent of the government's benchmark rate, down from the previous 80 percent.

Cutting the bank reserve requirement will bring more money into the market, said Liu Ligang, head of China economics study at the Australia and New Zealand Banking Group, forecasting another cut in the requirement in July. He said the central bank's move is due to a lower-than-expected inflation rate, which is scheduled to be published on July 9, and the need to keep interest rates in line with other countries to avoid capital inflow pressure.

China's economy is facing its most difficult moment in 30 years while GDP growth this year will be less than 8 percent, said Oliver Chiu, head of research and investment advisory in the wealth management unit of Citibank (China).

The lender has lowered its forecast for economic growth in 2012 to 7.8 percent, and GDP growth for the second quarter might be as low as 7.3 percent, he said.

With external demand hit by the European debt crisis, growth in fixed-asset investment would be hard to shore up, as local governments are tangled in debt issues, he said.

"Local governments already have little capacity to spur infrastructure construction again after spending 4 trillion yuan ($630 billion) during the global financial crisis."

"However, we don't need to worry about China too much as the government still has sufficient space to resort to fiscal policies as well as monetary instruments."

He forecast there would be two cuts in interest rates and two cuts in the reserve requirement ratio for commercial banks in the second half.

GDP growth for the first half of the year will stand at 7.8 percent, and the official target of 7.5 percent throughout the year will be achieved, Zeng Peiyan, former vice-premier and president of the China Center for International Economic Exchanges, said on Thursday while attending a China-Japan entrepreneurs exchange meeting in Yokohama, Japan.

"Currently the economy is not far away from the 'turning point', and in the second half it will rebound," he said, adding in the next 10 to 20 years China will have "very sound" economic growth.

 

[boylover]

http://www.businessweek.com/ap/2012-07-05/oil-prices-volatile-after-govt-says-supplies-fell

Asia Stocks, Oil Drop as Euro Heads for Loss on Payrolls

Asian stocks and oil retreated for a second day while the euro headed for its worst week this year after interest-rate cuts in Europe and China failed to assure investors the moves will be enough to boost economic growth. Bond risk in Asia rose before a monthly U.S. jobs report.

The MSCI Asia Pacific Index was 0.5 percent lower at 12:14 p.m. in Tokyo while Standard & Poor’s 500 Index futures were little changed. The euro was at $1.238 per dollar after touching a one-month low of $1.2364 yesterday. Crude declined 0.8 percent in New York as corn slid 1.7 percent.

The European Central Bank yesterday reduced its benchmark rate to a record low of 0.75 percent and the People’s Bank of China cut borrowing costs for a second time in a month. U.S. Labor Department data today may show hiring slowed in the second quarter to less than half the pace of the prior three months and the unemployment rate held at 8.2 percent.

“There is weakness around the world,” said Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia. “When you are at extremely low levels of policy interest rates, you can’t expect that that’s going to jump-start the economy.”

ECB President Mario Draghi said the cuts may have only a “muted” effect and downside risks to the economic outlook have materialized. The Bank of England raised the size of its asset- purchase program as the debt crisis in Europe hurts global growth. Last month, the Federal Reserve extended a program of replacing short-term bonds with longer-term debt. Data today is forecast to show industrial production in Germany and Spain fell.

Euro Weakens
“The European economy is in recession and this cut or even another cut of an equal magnitude is not going to change that outcome,” Roach said in a Bloomberg Television interview. “The U.S. economy is still very soft as well and I think the Fed is on the fence as to whether or not it wants to do another easing.”

The cost of insuring corporate and sovereign bonds from non-payment in the Asia-Pacific region increased, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 2 basis points to 167, Standard Chartered Plc prices show. The benchmark, which has ranged between 210 and 132.5 this year, declined for seven- consecutive days through July 4, according to data provider CMA.

The euro is poised for a 2.3 percent drop this week, the sharpest decline since the five-days ended Dec. 16. About five stocks fell for every three that rose on the MSCI Asia Pacific Index, which is still 1 percent higher this week on bets central banks around the world will do more to spur growth.

Chinese Banks
Hong Kong’s Hang Seng Index lost 0.4 percent, led by Chinese lenders, on concern lower interest rates could cut into profits next year. Industrial & Commercial Bank of China Ltd., the nation’s largest, dropped 1.4 percent and China Construction Bank Corp., the second biggest, retreated 2.3 percent.

The effect of China’s rate reduction on the real economy and the market is likely to be limited and the central bank is expected to cut banks’ reserve-requirement ratios again soon, according to Hao Hong, the head of Chinese research at Bank of Communications Co. in Hong Kong.

Foxconn International Holdings Ltd. rose 0.4 percent on a report it’s developing smartphones with Amazon.com Inc. to rival Apple Inc.’s iPhone. Shares of Samsung Electronics Co., the world’s largest maker of televisions and mobile phones, fell 1.7 percent even as the company posted a record quarterly profit.

Oil, Corn
New York crude slid to $86.19 a barrel amid speculation Norway’s government will intervene to stop a strike that threatens to shut the country’s offshore oil production. Prices are up 1.4 percent this week after a European Union ban on Iranian oil exports came into effect July 1.

Corn dropped for the first time in a week after prices climbed as much as 5.7 percent to $7.13 a bushel yesterday, the highest for the most-active contract since Sept. 15. The crop has surged 25 percent since the end of May as hot, dry weather stresses harvests in the U.S., the biggest exporter.

Treasuries headed for a weekly advance on speculation slowing U.S. economic growth and inflation are increasing pressure on the central bank to start a third round of bond purchases. The Fed bought $2.3 trillion of debt in two rounds of so-called quantitative easing from 2008 to 2011 to support the economy.

 

[Muthukali]

BoT: Foreign reserves up by US$1.6bn

The foreign reserve as of June 29 totalled 174.7 billion baht, or about 5.56 trillion baht, the Bank of Thailand (BoT) reported on Friday.

Based on the exchange rate at 31.60 baht to US dollar, the foreign reserves rose by US$1.6 billion, or 50.6 billion baht, from 173.1 billion baht reported last week, the BoT said.

The net forward position on June 29 stood at US$30.7 billion, down from US$31.1 billion reported last week, according to the central bank.

BoT attributed the increase in foreign reserves to it decision to stabilize value of the Thai currency by intervening in the money market to prevent it from being heavily fluctuate by the impact of the current Eurozone debt crisis.

The central bank disclosed that it had bought the US dollar in the spot market to increase the country’s foreign reserves for the purpose.

 

[Muthukali]

U.S. hiring stuck in low gear in June

(Reuters) - U.S. employers hired at a dismal pace in June, raising pressure on the Federal Reserve to do more to boost the economy and further imperiling President Barack Obama's chances of reelection in November.

The Labor Department said on Friday non-farm payrolls expanded by just 80,000 jobs in June, falling short of forecasts though a tad higher than a revised May reading of 77,000.

Job creation during the month wasn't enough to bring down the country's lofty 8.2 percent unemployment rate. The report appeared sure to fuel concerns that Europe's debt crisis is shifting the U.S. economy into low gear.

"There's just not a lot of momentum in the economy," said Sam Bullard, an economist at Wells Fargo & Co in Charlotte, North Carolina.

Mitt Romney, Obama's Republican challenger, is focusing his campaign on the weak jobs market that has dogged Obama's presidency.

The details of the report were also unsettling. The government said the economy created 1,000 fewer jobs during April and May than previously estimated.

The somber report might push the Federal Reserve closer to taking new actions to lower borrowing costs to encourage companies to increase hiring. Analysts polled by Reuters expected an increase in payrolls of 90,000 jobs.

Debt woes have bogged down much of Europe, sending some countries into recession. The euro zone crisis in turn has dulled economic growth around the world from China to Brazil. A survey on Monday found U.S. manufacturing contracted for the first time in nearly three years in June.

Europe is not the only worry weighing on the U.S. outlook. Washington plans enough belt-tightening at the start of 2013 to easily send the economy into recession. Cautious observers wonder if lawmakers can avoid this "fiscal cliff."

"Firms are saying, 'Is there really a reason to ramp up hiring right now?'," said Bullard.

Job creation averaged 75,000 per month during the second quarter, compared with an average increase of 226,000 in the first quarter. Part of the slowdown could be because mild weather led companies to boost hiring in the winter at spring's expense.

But recent weakness in everything from retail sales to business sentiment suggests something more fundamental is at play.

"We're not expecting things to take off in the second half of the year," said Sara Klein, an economist at Moody's Analytics in West Chester, Pennsylvania. "Weather wasn't the only factor."

STORM BREWING
Until recently, the United States had been a relative bright spot in the global economy, especially in manufacturing. Most economists still expect lackluster growth over the rest of 2012 rather than a slip toward recession.

But economic weakness abroad has lately become a formidable hurdle, as Obama has acknowledged, and global policymakers are acting like a storm is brewing.

China, the European Central Bank and the Bank of England all eased monetary policy on Thursday, raising speculation they had coordinated their action.

The Fed eased policy further last month, but the recent run of weak data has fueled speculation the U.S. central bank could deliver more stimulus when its next meeting concludes on August 1.

Even though June's pace of hiring was decidedly weak, the Fed might not want to unveil bold new measures now because the real storm could be months down the road.

"Hiring isn't as strong as earlier this year ... but not to the point where you see obvious need for Fed action," said Cooper Howes, an economist at Barclays in New York.

 

[Muthukali]

Futures extend losses after payrolls data

(Reuters) - Stock index futures extended their decline on Friday after non-farm payrolls for June rose less than Wall Street expectations.

S&P 500 futures fell 7.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures lost 67 points and Nasdaq 100 futures declined 10.5 points.

 

[boylover]

deh, can i ask if the US economy has hit rock bottom, what do you think?

Futures extend losses after payrolls data

(Reuters) - Stock index futures extended their decline on Friday after non-farm payrolls for June rose less than Wall Street expectations.

S&P 500 futures fell 7.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures lost 67 points and Nasdaq 100 futures declined 10.5 points.

 

[Muthukali]

deh, can i ask if the US economy has hit rock bottom, what do you think?

Seriously, rock bottom or not, I am not in the position to advise vs advice, personally I think still weak. U trade futures?

 

[Muthukali]

Singapore to give HK a run for its money

Trading shares in yuan will help 'raise currency's global status'
Singapore's stock exchange plans to start listing securities denominated in the yuan as it challenges Hong Kong and Tokyo for a bigger share of equities and currency trading from the world's second-largest economy.

The move is also seen by analysts as a boost to the Chinese mainland's ambition to internationalize the yuan.

Singapore Exchange Ltd, or SGX, announced on Friday that it is ready to list, quote, trade, clear and settle securities denominated in the yuan as the city-state strives to be an offshore trading center for yuan assets.

"SGX, as the Asian gateway, is committed to being the exchange of choice for issuers with RMB fundraising needs and for investors who are keen to participate in the China growth story," SGX CEO Magnus Bocker said in a statement.

"The listing and trading of RMB securities on SGX will also extend Singapore's position as an offshore RMB center."

Issuers listing yuan securities on the exchange have the option of offering dual currency trading, either in the yuan or Singapore dollar, according to the exchange, which is the world's first exchange to offer the clearing of over-the-counter foreign exchange forwards for the yuan.

The first-ever offshore yuan IPO was conducted in Hong Kong last year, where billionaire Li Ka-shing's Hui Xian Real Estate Investment Trust raised 10.48 billion yuan ($1.65 billion). There are no yuan-denominated stocks in Singapore.

Global financial centers are scrambling for opportunities in the surging offshore trading of yuan assets, boosted by growing offshore yuan deposits accumulated in part through yuan-denominated trade settlement.

Singapore is competing against Hong Kong, Tokyo, London and many others to capture the yuan's growing offshore activities, as the Chinese mainland encourages the yuan's cross-border flow.

In April, London issued its first yuan-denominated bond, totaling 1 billion yuan.

Hong Kong also took a step forward this week, as lenders in the city are allowed to extend yuan loans to companies in the Qianhai Bay development zone in Shenzhen, created in part to test a freer yuan.

There are more than 4,000 Chinese companies operating in Singapore and 142 of them are listed on SGX with a total market capitalization of $606 million as of June 30, according to stock exchange data.

Ong Chong Tee, deputy managing director of the Monetary Authority of Singapore, the country's central bank, said last month that yuan deposits in Singapore had grown to about 60 billion yuan. Singapore-based companies such as Global Logistics Properties and Singamas issued renminbi debts in 2011.

Singapore's central bank is one of 17 central banks that have bilateral swap agreements with the People's Bank of China, the central bank. It also inked an agreement with the PBOC on the establishment of a representative office in Beijing last month, the third overseas representative office following London and New York.

Nathan Chow, a Hong Kong-based economist with DBS Group Holdings, a Singaporean bank, said that Singapore faces two challenges on its road to becoming an offshore yuan center.

First, the Singapore dollar has appreciated by more than 10 percent against the yuan over the past decade, and the constant appreciation makes investors reluctant to hold the Chinese currency, he said.

Second, the amount of yuan is limited in the city-state, which means the market will lack liquidity.

There is currently around 60 billion yuan in deposits in Singapore, around one-tenth of that in Hong Kong.

"But I am bullish on Singapore as it could facilitate yuan trading in the ASEAN countries should it become an offshore center," Chow said.

SGX's move to begin yuan-denominated securities trading will not pose a threat to the yuan-denominated business of Hong Kong Exchanges and Clearing Ltd, analysts said.

"SGX was always flexible enough to introduce innovative financial products to compete with the HKEx," said Dickie Wong, a Hong Kong-based analyst and director at Kingston Securities Research.

"There is no doubt that SGX also wants to get a slice of the yuan-denominated share trading business."

However, Wong said that Hong Kong will still be the primary destination for mainland enterprises to list.

"Hong Kong's stock market is more active in trading and mainland companies can get higher valuation when they list in Hong Kong," Wong told China Daily.

"Singapore does not possess as huge of a yuan liquidity pool as Hong Kong does to support yuan-denominated share trading. Therefore, I do not think SGX’s move will pose a threat to the HKEx," said Linus Yip, chief strategist at Hong Kong's First Shanghai Securities.

According to the Hong Kong Monetary Authority, yuan deposits in the city totaled 554.3 billion yuan in March.

SGX's announcement was made on the same day as the mainland and Singapore signed documents to promote cooperation in the banking sector.

Banking authorities in Singapore will quicken the approval of two mainland banks filing for full banking licenses in Singapore, according to a statement by the China Banking Regulatory Commission. It did not reveal the names of the banks.

In return, the commission will accelerate its examination of requests by three Singaporean banks — United Overseas Bank Ltd, DBS Group Holdings and Oversea-Chinese Banking Corp Ltd — to set up subsidiaries on the mainland.

 

[Muthukali]

IMF chief warns over slowing global growth

International Monetary Fund chief Christine Lagarde on Friday warned that the global economy was slowing, with a soon-to-be published growth outlook lower than earlier forecasts.

"What I can tell you is that it will be tilted to the downside and certainly lower than the forecast that was published three months ago," she told an economic forum in Tokyo.

In April, the IMF hiked its global growth forecasts to an annual rate of 3.5 percent this year, accelerating to 4.1 percent in 2013, up from the January forecast of 3.3 percent and 4.0 percent respectively.

Lagarde declined to elaborate on its upgraded assessment due later this month but said that the outlook since the last IMF forecast had "regrettably" become "more worrisome".

The IMF had said its improved global forecast in April was due in part to better global financial conditions and easing fears about the eurozone debt crisis.

"The outlook for the global economy is slowly improving again but is still very fragile," it said at the time.

On Tuesday, the Washington-based IMF cut its growth forecast for the US economy and warned that the Obama administration could be slicing the deficit too fast for the weak economy.

The IMF estimated 2012 US economic growth at 2.0 percent, down from an April forecast of a 2.1 percent expansion for the world's biggest economy.

 

[Muthukali]

JPMorgan, Goldman Shut Europe Money Funds After ECB Cut

JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. and BlackRock Inc. (BLK) closed European money market funds to new investments after the European Central Bank lowered deposit rates to zero.

JPMorgan, the world’s biggest provider of money-market funds, won’t accept new cash in five euro-denominated money- market and liquidity funds because the rate cut may result in losses for investors, the company said in a notice to shareholders. Goldman Sachs won’t accept new money in its GS Euro Government Liquid Reserves Fund, and BlackRock, the world’s largest asset manager, is restricting deposits in two European funds.

“The European market environment is in unchartered territory with such historically low -- or even negative -- yields for high-quality issuance,” Goldman Sachs (GS) said in a memo to fund shareholders, citing the ECB’s rate cut. “It is not currently feasible for our portfolio managers to deploy capital without substantially diluting the yield for the existing base of shareholders.”

The ECB yesterday reduced its benchmark rate to a record low of 0.75 percent and took its deposit rate to zero. Money funds have been struggling to invest client assets at a profit as interest rates globally are near record lows and Europe’s sovereign debt crisis has reduced the supply of available debt. Managers have been forced to cut fees to keep customer returns above zero, and some have abandoned the business.

All three firms said the restrictions are temporary and they will monitor market conditions. Investor redemptions from the funds are not being limited.

‘Negative Territory’
JPMorgan’s five closed funds had 23.7 billion euros ($29.2 billion) in assets as of July 5, the bank said in an e-mail, about 22 percent of all euro-denominated money funds. The funds are JPMorgan’s Euro Liquidity Fund (JPMEULC), Euro Government Liquidity Fund, Euro Money Market Fund, Euro Liquid Market Fund and JPMorgan Series II Funds -- EUR.

The deposit rate cut “will almost certainly move cash bids in short-dated instruments into negative territory, and so we have taken the step to restrict subscriptions and switches into the funds in order to protect existing shareholders from yield dilution,” JPMorgan said on its website.

The company had $417 billion in money fund assets as of May 31, making it the world leader, according to Crane Data LLC, a research firm based in Westborough, Massachusetts. The entire euro-denominated money fund industry has about 108 billion euros, Crane Data’s statistics show.

BlackRock’s Funds
No other global liquidity funds are at risk of being closed, “but we will not hesitate to restrict investments if we feel the market environment warrants such action in order to protect the interests of existing shareholders,” JPMorgan said on its website.

BlackRock is restricting subscriptions into two funds in its Institutional Cash Series, the Institutional Euro Liquidity Fund and the Institutional Euro Government Liquidity Fund, Jessica Greaney, a spokeswoman for the firm, said in an e-mail.

“We’re continuing to monitor the situation and evaluate options that are consistent with the best interest of fund shareholders,” Greaney said.

$2.5 Trillion
Vanguard Group Inc., the world’s largest mutual-fund firm, closed two money funds in 2009 and the funds have remained closed, spokesman John Woerth said in an e-mail. The two funds, Vanguard Admiral Treasury Money Market Fund and the Vanguard Federal Money Market Fund, have about $18 billion in assets, according to data compiled by Bloomberg.

The Valley Forge, Pennsylvania-based firm said at the time of the closing that the action was taken to protect existing shareholders. Vanguard has $1.8 trillion in U.S. mutual fund assets.

Fidelity Investments, based in Boston, restricted investments in four of its money market funds in December 2008. The funds were reopened in July 2010, spokesman Adam Banker said in an e-mail.

“We took those measures because we believed they were in the interests of the funds’ shareholders at the time,” Banker wrote. Boston-based Fidelity had $403 billion in money fund assets of May 31, according to Crane Data.

The $2.5 trillion U.S. money fund industry has been wrestling with the impact of low interest rates since the Federal Reserve cut rates to near zero in December 2008.

Industrywide revenue fell from about $12.5 billion in 2008 to $4.7 billion in 2012, according to Crane Data. Yields that reached 5 percent in 2007 today average about 0.06 percent, President Peter Crane, said in a telephone interview.

“Investors have lost hundreds of billions of dollars of interest income,” Crane said. While industry profits have been squeezed, very few major players have left the business, Crane said.

 

[Muthukali]

Rate rigging probe escalates in UK and Germany

(Reuters) - A global investigation into manipulation of interbank lending rates widened on Friday with Britain's fraud squad taking up the case and sources telling Reuters that Germany's markets regulator had launched a probe into Deutsche Bank.

Authorities in the United States, Europe, Japan and Canada are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate (Libor). Britain's Barclays has so far been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million.

The rate-fixing scandal has exploded into the front ranks of politics, especially in Britain, where politicians say the bankers responsible should end up in jail.

Barclays CEO Bob Diamond was forced to resign this week and told a parliamentary committee that some of his firm's former staff could face criminal charges.

The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars worth of contracts around the world.

Germany's BaFin regulator has initiated a "special investigation" into Deutsche Bank, a process which is more severe than a routine investigation initiated by a third party, two sources said on Friday. The sources included a banker and a regulator, both of whom spoke on condition of anonymity.

In Britain, the lack of criminal prosecutions of the rate fixing has been one of the issues infuriating politicians, after e-mails were published showing bankers boasting of fiddling figures and congratulating each other with offers of champagne.

Britain's Serious Fraud Office said in a brief statement that its Director David Green had decided formally to accept the Libor case for investigation.

CALLING LAWYERS
The SFO will now assemble a case team to pursue an investigation - although it could take years. A spokesman noted that its remit would not be confined to Barclays.

"We don't mention Barclays in our statement, just Libor," the spokesman said.

A source close to the SFO and familiar with its Libor case file said: "A lot of people will be calling around to find lawyers."

The SFO considered launching an investigation into Libor last summer but dropped the plans in September, in part for budgetary reasons, said the source, who spoke on condition he would not be identified.

The SFO has been criticized in the past for failing to achieve convictions in high-profile fraud cases. It gave no further details of how it would conduct its probe.

News of a "special investigation" in Germany also raises the stakes. Deutsche Bank said earlier this year it was cooperating with authorities investigating accusations of manipulation of Libor, the only German bank to make such a disclosure so far.

One of the sources who disclosed the investigation to Reuters said the results were expected in mid July.

The bank declined to comment on Friday but referred to its quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates.

BaFin declined to comment specifically on whether it was probing Deutsche Bank but said it was in looking into suspected manipulation of Libor rates by banks.

"We are making use of our entire spectrum of regulatory instruments, so far as this is necessary," a spokesman said.

Deutsche Bank has disclosed that it is cooperating with the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the European Commission on Libor. These inquiries relate to periods between 2005 and 2011.

As the credit crisis intensified between 2006 and 2008, allegations started mounting that Libor no longer reflected the real cost banks were paying for funds. Authorities have been examining whether traders tried to influence the rate to profit on bets on the direction it would go.

The daily Libor poll asks banks at what rate they think they will be able to borrow money from each other in 10 major currencies and for 15 borrowing periods ranging from overnight loans to 12 months.

The rates submitted by banks are compiled by Thomson Reuters, parent company of Reuters, on behalf of the British Bankers' Association.

 

[boylover]

cheh...ask like no ask!:-p

i'd buy US dollars for long term, and also think buy oil soon.

http://seattletimes.nwsource.com/html/businesstechnology/2018624271_oilprices07.html

Seriously, rock bottom or not, I am not in the position to advise vs advice, personally I think still weak. U trade futures?

 

[Muthukali]

cheh...ask like no ask!:-p

i'd buy US dollars for long term, and also think buy oil soon.

http://seattletimes.nwsource.com/html/businesstechnology/2018624271_oilprices07.html

u go buy both physical ah?????

 

[boylover]

u go buy both physical ah?????

yes, i have snapped up olive oil for cooking from the supermarts and all US 1 dollar bill from the money exchange

 

[boylover]

u go buy both physical ah?????

yes, i have snapped up olive oil for cooking from the supermarts and all US 1 dollar bill from the money exchange:p

 

[Muthukali]

yes, i have snapped up olive oil for cooking from the supermarts and all US 1 dollar bill from the money exchange

people snapped up bigger notes like 100 greenback one la.
Olive oil u can keep and wipe your kaching.

 

[boylover]

people snapped up bigger notes like 100 greenback one la.
Olive oil u can keep and wipe your kaching.

you laugh me huh...

that's all i can afford...:(

maybe, we can form an alliance to buy out america!!!:p

 

[Muthukali]

China's CPI eases to 2.2% in June

BEIJING -- China's Consumer Price Index, a main gauge of inflation, grew 2.2 percent in June, down from May's 3.0 percent, the National Bureau of Statistics said Monday.