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You want to buy mah?
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Singapore Bonds
- Thread starter Runifyouhaveto
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You want to buy mah?
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The media is reporting that a lot of bonds of smaller denominations, will be listed for retail investors in the near future.
Asian bond sales smash 2013 record
http://business.asiaone.com/news/asian-bond-sales-smash-2013-record
Reuters
Friday, Sep 12, 2014
SINGAPORE - With more than a quarter of 2014 remaining, Asian issuers have already sold more bonds in dollars, euros and yen this year than ever before, taking advantage of easy monetary policies to lock in financing at low fixed rates.
Asian issuers, excluding Japan and Australasia, have raised US$143.6 billion (S$182 billion), with US$1 billion of new issues on Thursday night taking the total comfortably past last year's US$142.8bn record, according to Thomson Reuters data.
International bond sales from Asia have now hit a record for three years running, and have doubled since 2009. Volumes for the following years are likely to remain high as earlier deals mature and are refinanced with new bonds, market participants said.
"The growth of Asia's credit markets continues apace, helping underpin the region's economic expansion", Alexi Chan, head of debt capital markets for Asia Pacific at HSBC, said by email.
"We are seeing unprecedented levels of global investor liquidity focused on Asia." Investors with cash to invest are seeking out Asia as geopolitical tensions in Europe and the Middle East have made them wary of investing in those regions. Investors who fled risky assets in the US earlier this year also are looking for more generous returns elsewhere.
"Asia has been attracting steady inflow as a relatively stable destination and Asian credits still offer a yield pick-up (compared to similar credits in the US)," said a portfolio manager from a major US hedge fund.
MORE TO COME
Bankers say bond sales are heating up again after a quiet summer, so the final total for 2014 could far exceed last year's. Deutsche Bank, for example, expects Asian companies will sell another US$25bn of bonds in the major G3 currencies this year. "(Financial institutions) will be the largest contributor for the rest of the year, and we are going to see a healthy clip of high-yield corporate issuances from Indonesia, India and China. Also there is a well-defined pipeline from South Korea IG," said Herman van den Wall Bake, head of fixed income capital markets for Asia at Deutsche Bank.
The action started right away in September with US$4.74bn sold in the first week alone. Expectations are new issue volume will remain brisk this month as some market participants predict the monthly total alone will exceed US$20bn.
BASEL BONDS
Bank capital, especially Basel III-qualifying offerings from China, is likely to account for the bulk of the new issues for the rest of the year.
Bank of China and ICBC are preparing to sell a combined US$12.2bn in Basel III-compliant Additional Tier 1 securities in the offshore market. Fitch Ratings expects US$20bn in AT1 and Tier 2 capital to be issued by the big five Chinese banks by the end of the year, both onshore and offshore.
Indian banks are also expected to tap the offshore market, but for senior bonds instead of Basel III-eligible capital. Indian Bank and Allahabad Bank are planning to raise about US$500m each while UCO Bank has also hired banks for a Reg S-only deal.
CORPORATE PIPELINE
In Korea, many of the frequent issuers are likely to tap the market again before the end of the year, a Singapore-based DCM banker said. The growing pipeline includes Korea Hydro & Nuclear Power, Hana Bank, Korea Expressway and Korea Western Power.
High-yield borrowers, which have been relatively quiet this year, are also likely to fill their funding requirements in the following months while interest rates remain conducive.
Investment-grade issuers, meanwhile, may take a breather after a hectic financing schedule earlier this year.
Excluding financial institutions, Asian corporations have already raised US$28.8bn more in G3 bonds this year than last year at this time (US$114.8bn). "We don't see imminent refinancing needs from IG corporates," Deutsche's Bake said. "Many of them are likely to kick the ball forward to the first quarter of next year in order to defer negative carry closer to their actual refinancing needs. We believe most of the IG corporate funding this year is behind us."
http://business.asiaone.com/news/asian-bond-sales-smash-2013-record
Reuters
Friday, Sep 12, 2014
SINGAPORE - With more than a quarter of 2014 remaining, Asian issuers have already sold more bonds in dollars, euros and yen this year than ever before, taking advantage of easy monetary policies to lock in financing at low fixed rates.
Asian issuers, excluding Japan and Australasia, have raised US$143.6 billion (S$182 billion), with US$1 billion of new issues on Thursday night taking the total comfortably past last year's US$142.8bn record, according to Thomson Reuters data.
International bond sales from Asia have now hit a record for three years running, and have doubled since 2009. Volumes for the following years are likely to remain high as earlier deals mature and are refinanced with new bonds, market participants said.
"The growth of Asia's credit markets continues apace, helping underpin the region's economic expansion", Alexi Chan, head of debt capital markets for Asia Pacific at HSBC, said by email.
"We are seeing unprecedented levels of global investor liquidity focused on Asia." Investors with cash to invest are seeking out Asia as geopolitical tensions in Europe and the Middle East have made them wary of investing in those regions. Investors who fled risky assets in the US earlier this year also are looking for more generous returns elsewhere.
"Asia has been attracting steady inflow as a relatively stable destination and Asian credits still offer a yield pick-up (compared to similar credits in the US)," said a portfolio manager from a major US hedge fund.
MORE TO COME
Bankers say bond sales are heating up again after a quiet summer, so the final total for 2014 could far exceed last year's. Deutsche Bank, for example, expects Asian companies will sell another US$25bn of bonds in the major G3 currencies this year. "(Financial institutions) will be the largest contributor for the rest of the year, and we are going to see a healthy clip of high-yield corporate issuances from Indonesia, India and China. Also there is a well-defined pipeline from South Korea IG," said Herman van den Wall Bake, head of fixed income capital markets for Asia at Deutsche Bank.
The action started right away in September with US$4.74bn sold in the first week alone. Expectations are new issue volume will remain brisk this month as some market participants predict the monthly total alone will exceed US$20bn.
BASEL BONDS
Bank capital, especially Basel III-qualifying offerings from China, is likely to account for the bulk of the new issues for the rest of the year.
Bank of China and ICBC are preparing to sell a combined US$12.2bn in Basel III-compliant Additional Tier 1 securities in the offshore market. Fitch Ratings expects US$20bn in AT1 and Tier 2 capital to be issued by the big five Chinese banks by the end of the year, both onshore and offshore.
Indian banks are also expected to tap the offshore market, but for senior bonds instead of Basel III-eligible capital. Indian Bank and Allahabad Bank are planning to raise about US$500m each while UCO Bank has also hired banks for a Reg S-only deal.
CORPORATE PIPELINE
In Korea, many of the frequent issuers are likely to tap the market again before the end of the year, a Singapore-based DCM banker said. The growing pipeline includes Korea Hydro & Nuclear Power, Hana Bank, Korea Expressway and Korea Western Power.
High-yield borrowers, which have been relatively quiet this year, are also likely to fill their funding requirements in the following months while interest rates remain conducive.
Investment-grade issuers, meanwhile, may take a breather after a hectic financing schedule earlier this year.
Excluding financial institutions, Asian corporations have already raised US$28.8bn more in G3 bonds this year than last year at this time (US$114.8bn). "We don't see imminent refinancing needs from IG corporates," Deutsche's Bake said. "Many of them are likely to kick the ball forward to the first quarter of next year in order to defer negative carry closer to their actual refinancing needs. We believe most of the IG corporate funding this year is behind us."
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Viva Industrial Trust agrees to buy two buildings for $115.5m
http://www.straitstimes.com/news/bu...trust-agrees-buy-two-buildings-1155m-20140912
Funded by newly issued bonds
4years, 4.15%pa
http://infopub.sgx.com/FileOpen/Series 001 Pricing Announcement.ashx?App=Announcement&FileID=314740
The net proceeds from the issue of the Notes under the Programme (after deducting issue expenses) will be used for the purpose of on-lending to the REIT Trustee to (a) refinance the existing borrowings of VI-REIT and its subsidiaries (the "Group"), (b) finance or refinance the acquisitions and/or investments of VI-REIT and any development and asset enhancement works initiated by VI-REIT (including the acquisitions of Jackson Square and Jackson Design Hub and their respective mechanical and electrical equipment therein, located at 11 Lorong 3 Toa Payoh, Singapore 319579 and 29 Tai Seng Street, Singapore 534120 respectively) or (c) finance general working capital requirements and capital expenditure requirements of the Group.
http://www.straitstimes.com/news/bu...trust-agrees-buy-two-buildings-1155m-20140912
Funded by newly issued bonds
4years, 4.15%pa
http://infopub.sgx.com/FileOpen/Series 001 Pricing Announcement.ashx?App=Announcement&FileID=314740
The net proceeds from the issue of the Notes under the Programme (after deducting issue expenses) will be used for the purpose of on-lending to the REIT Trustee to (a) refinance the existing borrowings of VI-REIT and its subsidiaries (the "Group"), (b) finance or refinance the acquisitions and/or investments of VI-REIT and any development and asset enhancement works initiated by VI-REIT (including the acquisitions of Jackson Square and Jackson Design Hub and their respective mechanical and electrical equipment therein, located at 11 Lorong 3 Toa Payoh, Singapore 319579 and 29 Tai Seng Street, Singapore 534120 respectively) or (c) finance general working capital requirements and capital expenditure requirements of the Group.
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Trading Alert: 2.60 now
this u-turn looks sustainable
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http://www.maybank-ke.com.sg/product_services/margin_financing.htmWill bank be jumping into bond financing soon?
Good sharing bro. Actually many banks have been offering bond financing to their customers.
i have some thoughts.
1. They offer 3.5x leverage and Kim Eng included REITs in the which are more volatile than preference shares or plain-vanilla bonds. The odds of facing margin calls is very high vs pure-bonds financing. I am not sure why they are classified together.
2. They mentioned that >90 securities are eligible, i believe it includes most REITs and SGX mainboard listed shares. but the link to see the full list appears to be down at this moment.
3. I believe 1.88% is fixed BUT not permanent. In the event, Kim Eng is forced to increased the 1.88%, that means the global interest rates are probably higher = lower bond prices = capital loss if the investor faces margin calls.
4. If you opt for flexi-rates, other banks can give you as low as 1.3-1.5% but the risks are higher, so 1.88% fixed is fair at this moment, but it is probably not a permanent rate.
Conclusion. IF YOU ARE USING THIS TYPE OF FINANCING FACILITY:
Firstly, DO NOT use it for REITS. 3.5x leverage = a 10% drop in REITs price = 35% loss on your initial capital = margin call. This is not what fixed income investment is about.
Next, only use such financing facilities for premium bonds/issuers as the risks are higher.
Lastly, the 1.88% is a fair rate but not permanent. It should not be used to finance bonds of longer margin. In the event that interest rates spiked up, bonds of longer maturity can crash steeply below par = margin calls. In the Apple Bond example in the first 2 pages of this thread, Apple Bonds had a 18% capital loss a year ago = 63% loss on your initial capital if you have 3.5x leverage.
Yeah, I don't think 1.88% is fixed rate.. I won't use leverage to buy bond .. My investment in bond is like FD. However, if there is a super secure short term bond or pref shares @ above 4% yield , some people might be tempted. I think interest rate environment will remain super low for many years to come. Fed has boxed themselves in a situation where they can't increase rate without crashing the financial markets!
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For such financing facility, I do worry that retail investors will overlook the risks of bond-financing and prefers riskier Reits or high-yield bonds. Like you say, this type of financing is a good for short-term bond or pref shares from safe issuers. Bonds that are maturing soon will trade near par even if the market goes crazy.
But having said that, most are still more savvy than RUN; in the next 3 months, i project strong buyer interests for resale bonds that are due to maturity within 2 years because the wider availability of bond financing.
my 99% similar view: Fed has boxed themselves in a situation where they can't increase rate without crashing the global financial markets. US will be quite ok compared to the rest. I am biased about the prospect of IUI - India US Indonesia
Last edited:
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Global Bonds Post Biggest Decline Since 2013 on Fed View
http://www.bloomberg.com/news/2014-...t-biggest-decline-since-2013-on-fed-view.html
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Is Your Fund Manager Equipped to Handle a Bear Market in Bonds?
http://www.zerohedge.com/news/2014-09-13/your-fund-manager-equipped-handle-bear-market-bonds
1. Double confirmed that something bad may be happening soon = please hide in fixed income instruments
2. Double confirmed that even bond market will not be spared = please avoid riskier issuers and REITs, going forward
3. Double confirmed that even bonds from good issuers can be affected = please choose shorter-maturity bonds
Please stick to short-term 1-2 years bonds from safer issuers.
So long they don't default, such bonds will trade near par-100 even if market nose-dive,
then u happily switch to equities.
If nothing happen (no black swan), you got nothing to lose too.
Have a good Sunday!
http://www.zerohedge.com/news/2014-09-13/your-fund-manager-equipped-handle-bear-market-bonds
1. Double confirmed that something bad may be happening soon = please hide in fixed income instruments
2. Double confirmed that even bond market will not be spared = please avoid riskier issuers and REITs, going forward
3. Double confirmed that even bonds from good issuers can be affected = please choose shorter-maturity bonds
Please stick to short-term 1-2 years bonds from safer issuers.
So long they don't default, such bonds will trade near par-100 even if market nose-dive,
then u happily switch to equities.
If nothing happen (no black swan), you got nothing to lose too.
Have a good Sunday!
Not too worry, myself.. I have 160K invested over 13 different bonds with 2 to 13 years maturity. Plan is to ride the storm by just collecting dividend and hold till maturity. Hopefully, no Lehman brother moment for me..
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Outstanding diversification! and i believe all your retail bonds are still on a good premium if u offload now.
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S$1.2bn project - do they need to issue bonds or preference shares soon?
Sembcorp to take stakes in 2 Chongqing power plants
http://www.channelnewsasia.com/news/singapore/sembcorp-to-take-stakes/1362966.html
Sembcorp to take stakes in 2 Chongqing power plants
http://www.channelnewsasia.com/news/singapore/sembcorp-to-take-stakes/1362966.html
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More write-ups.......
Coco Bonds: bonds that automatically get wiped out if the bank runs into trouble
http://www.businessinsider.com/risky-new-form-of-bonds-issued-by-banks-2014-9
Coco Bonds: bonds that automatically get wiped out if the bank runs into trouble
http://www.businessinsider.com/risky-new-form-of-bonds-issued-by-banks-2014-9
Yes.. they are still in good premium.. but I know any crash in the markets ..things can downhill pretty quickly.. Will sit tight
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Dollar Slips as Bonds Climb; Most Asia Stocks Retreat
http://www.bloomberg.com/news/print...xed-amid-tech-slump-before-fed-oil-drops.html
By Emma O’Brien and Yoshiaki Nohara - Sep 15, 2014
The dollar weakened against most major peers and government bonds climbed before the Federal Reserve reviews interest rates. Most Asian stocks fell while metals rebounded.
The Bloomberg Dollar Spot Index slid 0.1 percent by 11:07 a.m. in Tokyo, with the currencies of Japan and South Korea strengthening at least 0.2 percent. Ten-year Australian notes rose for the first time in six days as the yield on 10-year Treasuries slipped one basis point. Two stocks fell for each that advanced on the MSCI Asia Pacific Index. (MXAP) Nasdaq 100 Index futures were little changed after the U.S. gauge of technology stocks sank 1 percent in New York. Gold and nickel rose at least 0.3 percent.
Fed officials meet to review policy from today, with an unexpected decline in American factory output tempering speculation that the timeline for interest-rate increases could be brought forward. Morning trading in Hong Kong is delayed because of a typhoon, while Australia’s central bank said it will monitor risks from rising property prices as policy makers reiterated a period of stability in record-low interest rates.
“The big issue is whether the Fed will change its forward guidance to indicate they are getting closer to the decision on putting interest rates up,” Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management, which oversees about A$170 billion ($154 billion), said by phone from Sydney. “The transition period as the Fed tightens will be difficult for markets in the Asian region. I think we are in for a few months of increased volatility in markets.”
Dollar Rally
The dollar index is retreating after touching a 14-month high yesterday before finishing little changed. The U.S. currency is up at least 0.5 percent against all 16 of its major peers this month, with the currencies of commodity exporters Brazil, Australia and Norway leading declines.
The U.S. central bank has been saying since March that interest rates would stay low for a “considerable time” after it completes the asset purchases known as quantitative easing. Speculation the Fed may bring forward rate increases has boosted the allure of the dollar this month and depressed Treasuries.
The yield on 10-year Treasury notes jumped 23 basis points, or 0.23 percentage point, this month, heading for the biggest advance this year, as the Fed winds down asset purchases.
The rate on 10-year notes was 2.57 percent today. Yields on the notes dropped two basis points yesterday, falling for the first time in eight days to snap the bonds’ longest losing streak since June last year. Australian bonds due in a decade paid 3.63 percent, down three basis points from yesterday.
Topix Falls
U.S. factory production fell 0.1 percent in August from July, when it grew 0.4 percent, data yesterday showed. Economists surveyed by Bloomberg predicted an increase of 0.3 percent. The Empire State manufacturing gauge, however, rose to 27.54 for September from 14.69 in August and exceeding the 15.95 level projected by analysts.
Japan’s Topix index declined 0.4 percent, snapping a five day advance, while the Kospi gauge in Seoul added 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.1 percent.
The morning session on the Hong Kong Stock Exchange will be delayed due to Typhoon Kalmaegi, according to a statement on the exchange group’s website. The city’s third-highest storm signal was issued for the first time this year earlier today. Markets in Malaysia are closed for a holiday.
Futures on Hong Kong’s Hang Seng Index and Hang Seng China Enterprises gauges dropped 0.2 percent in most recent trading. The Shanghai Composite Index was little changed.
Tech Retreat
Yahoo! Inc. (YHOO) dropped 0.8 percent in New York, falling from an 8 1/2-year high as as investors sold some of the bull market’s biggest winners.
The Nasdaq 100 dropped 1 percent to a one-month low, while the Russell 2000 tumbled 1.2 percent, the most since July 31, bringing its retreat in 2014 to 1.5 percent. The Standard & Poor’s 500 Index ended the U.S. day down 0.1 percent, with technology shares leading declines with a 0.6 percent drop. The Dow Jones Industrial Average added 0.3 percent as energy shares rebounded.
Selling in the U.S. was heaviest in stocks with the highest valuations. Facebook Inc. (FB) plunged 3.7 percent for the heftiest loss in the S&P 500. TripAdvisor Inc., Micron Technology Inc. and Netflix Inc. dropped at least 3.9 percent. Tesla Motors Inc. (TSLA) sank 9.1 percent for its worst day since May.
South Korea’s won added 0.4 percent to 1,034.22 per dollar after weakening to a one-month low yesterday. The yen climbed to 106.99 a dollar and the Australian currency bought 90.47 U.S. cents, up 0.2 percent from yesterday.
OECD Forecast
The Organization for Economic Cooperation and Development trimmed its growth forecasts for the biggest developed economies yesterday, in the face of increasing geopolitical risks and subdued European inflation. Euro-area gross domestic product is now expected to expand 0.8 percent this year, down from 1.2 percent forecast in May, while the U.S. will expand 2.1 percent instead of 2.6 percent, the Paris-based OECD said in a report.
West Texas Intermediate crude oil fell to $92.86 a barrel, after ending last session up 0.7 percent. Data from the U.S. Energy Information Administration due tomorrow will probably show crude stockpiles shrank by 1.5 million barrels last week to 357.1 million, according to analysts surveyed by Bloomberg. Brent crude advanced 0.2 percent to $98.10 a barrel.
Nickel for three-month delivery on the London Metal Exchange halted a five-day slide in early trading, rising 0.9 percent to $18,210 a metric ton. Zinc added 1 percent to $2,271.25 a ton, while aluminum gained 0.7 percent to $2,005 a ton.
Gold rebounded 0.3 percent to $1,237.22 an ounce and palladium added 0.8 percent to $841.57.
To contact the reporters on this story: Emma O’Brien in Wellington at [email protected]; Yoshiaki Nohara in Tokyo at [email protected]
To contact the editors responsible for this story: Emma O’Brien at [email protected]; Nick Gentle at [email protected] Nick Gentle, John McCluskey
http://www.bloomberg.com/news/print...xed-amid-tech-slump-before-fed-oil-drops.html
By Emma O’Brien and Yoshiaki Nohara - Sep 15, 2014
The dollar weakened against most major peers and government bonds climbed before the Federal Reserve reviews interest rates. Most Asian stocks fell while metals rebounded.
The Bloomberg Dollar Spot Index slid 0.1 percent by 11:07 a.m. in Tokyo, with the currencies of Japan and South Korea strengthening at least 0.2 percent. Ten-year Australian notes rose for the first time in six days as the yield on 10-year Treasuries slipped one basis point. Two stocks fell for each that advanced on the MSCI Asia Pacific Index. (MXAP) Nasdaq 100 Index futures were little changed after the U.S. gauge of technology stocks sank 1 percent in New York. Gold and nickel rose at least 0.3 percent.
Fed officials meet to review policy from today, with an unexpected decline in American factory output tempering speculation that the timeline for interest-rate increases could be brought forward. Morning trading in Hong Kong is delayed because of a typhoon, while Australia’s central bank said it will monitor risks from rising property prices as policy makers reiterated a period of stability in record-low interest rates.
“The big issue is whether the Fed will change its forward guidance to indicate they are getting closer to the decision on putting interest rates up,” Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management, which oversees about A$170 billion ($154 billion), said by phone from Sydney. “The transition period as the Fed tightens will be difficult for markets in the Asian region. I think we are in for a few months of increased volatility in markets.”
Dollar Rally
The dollar index is retreating after touching a 14-month high yesterday before finishing little changed. The U.S. currency is up at least 0.5 percent against all 16 of its major peers this month, with the currencies of commodity exporters Brazil, Australia and Norway leading declines.
The U.S. central bank has been saying since March that interest rates would stay low for a “considerable time” after it completes the asset purchases known as quantitative easing. Speculation the Fed may bring forward rate increases has boosted the allure of the dollar this month and depressed Treasuries.
The yield on 10-year Treasury notes jumped 23 basis points, or 0.23 percentage point, this month, heading for the biggest advance this year, as the Fed winds down asset purchases.
The rate on 10-year notes was 2.57 percent today. Yields on the notes dropped two basis points yesterday, falling for the first time in eight days to snap the bonds’ longest losing streak since June last year. Australian bonds due in a decade paid 3.63 percent, down three basis points from yesterday.
Topix Falls
U.S. factory production fell 0.1 percent in August from July, when it grew 0.4 percent, data yesterday showed. Economists surveyed by Bloomberg predicted an increase of 0.3 percent. The Empire State manufacturing gauge, however, rose to 27.54 for September from 14.69 in August and exceeding the 15.95 level projected by analysts.
Japan’s Topix index declined 0.4 percent, snapping a five day advance, while the Kospi gauge in Seoul added 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.1 percent.
The morning session on the Hong Kong Stock Exchange will be delayed due to Typhoon Kalmaegi, according to a statement on the exchange group’s website. The city’s third-highest storm signal was issued for the first time this year earlier today. Markets in Malaysia are closed for a holiday.
Futures on Hong Kong’s Hang Seng Index and Hang Seng China Enterprises gauges dropped 0.2 percent in most recent trading. The Shanghai Composite Index was little changed.
Tech Retreat
Yahoo! Inc. (YHOO) dropped 0.8 percent in New York, falling from an 8 1/2-year high as as investors sold some of the bull market’s biggest winners.
The Nasdaq 100 dropped 1 percent to a one-month low, while the Russell 2000 tumbled 1.2 percent, the most since July 31, bringing its retreat in 2014 to 1.5 percent. The Standard & Poor’s 500 Index ended the U.S. day down 0.1 percent, with technology shares leading declines with a 0.6 percent drop. The Dow Jones Industrial Average added 0.3 percent as energy shares rebounded.
Selling in the U.S. was heaviest in stocks with the highest valuations. Facebook Inc. (FB) plunged 3.7 percent for the heftiest loss in the S&P 500. TripAdvisor Inc., Micron Technology Inc. and Netflix Inc. dropped at least 3.9 percent. Tesla Motors Inc. (TSLA) sank 9.1 percent for its worst day since May.
South Korea’s won added 0.4 percent to 1,034.22 per dollar after weakening to a one-month low yesterday. The yen climbed to 106.99 a dollar and the Australian currency bought 90.47 U.S. cents, up 0.2 percent from yesterday.
OECD Forecast
The Organization for Economic Cooperation and Development trimmed its growth forecasts for the biggest developed economies yesterday, in the face of increasing geopolitical risks and subdued European inflation. Euro-area gross domestic product is now expected to expand 0.8 percent this year, down from 1.2 percent forecast in May, while the U.S. will expand 2.1 percent instead of 2.6 percent, the Paris-based OECD said in a report.
West Texas Intermediate crude oil fell to $92.86 a barrel, after ending last session up 0.7 percent. Data from the U.S. Energy Information Administration due tomorrow will probably show crude stockpiles shrank by 1.5 million barrels last week to 357.1 million, according to analysts surveyed by Bloomberg. Brent crude advanced 0.2 percent to $98.10 a barrel.
Nickel for three-month delivery on the London Metal Exchange halted a five-day slide in early trading, rising 0.9 percent to $18,210 a metric ton. Zinc added 1 percent to $2,271.25 a ton, while aluminum gained 0.7 percent to $2,005 a ton.
Gold rebounded 0.3 percent to $1,237.22 an ounce and palladium added 0.8 percent to $841.57.
To contact the reporters on this story: Emma O’Brien in Wellington at [email protected]; Yoshiaki Nohara in Tokyo at [email protected]
To contact the editors responsible for this story: Emma O’Brien at [email protected]; Nick Gentle at [email protected] Nick Gentle, John McCluskey
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Re: Interesting Bond issues
http://www.reuters.com/assets/print?aid=USKBN0HC09B20140917
Fed renews zero rate pledge, but hints at steeper rate hike path
5:58pm EDT
By Michael Flaherty and Howard Schneider
WASHINGTON (Reuters) - The Federal Reserve on Wednesday renewed its pledge to keep interest rates near zero for a "considerable time," but also indicated it could raise borrowing costs faster than expected when it starts moving.
Many economists and traders had expected the U.S. central bank to alter the rate guidance it has provided since March, given generally improving data on the economy's performance.
But the Fed repeated its assurance that rates would stay ultra-low for a "considerable time" after a bond-buying stimulus program ends. In a statement after a two-day meeting of its policy-setting Federal Open Market Committee, it announced a further $10 billion reduction in its monthly purchases, leaving the program on course to be shuttered next month.
The statement was virtually unchanged from July, though new quarterly projections released with it showed the central bank's view on where interest rates should be in future years is diverging from where financial markets have bet they will be.
"While the much analyzed phrase 'considerable time' remained in the FOMC statement, the newly announced scheme for interest rate normalization shows that higher rates are in the cards," said John Kilduff, a partner at Again Capital LLC in New York.
Dallas Federal Reserve Bank President Richard Fisher and Philadelphia Fed chief Charles Plosser dissented, arguing the guidance on rates could tie the central bank's hands if it felt it had to move more quickly to tighten monetary policy.
The Fed has held benchmark overnight rates near zero since December 2008 and has more than quadrupled its balance sheet to $4.4 trillion through a series of large-scale bond purchase programs.
In a further sign the central bank is in no rush to start raising rates, the FOMC repeated its assessment that a "significant" amount of slack remains in the U.S. labor market.
Stocks were little changed after the statement, but the dollar hit its highest level against the Japanese yen since September 2008. Yields on U.S. Treasury bonds rose to session highs as traders moved to price in the possibility of higher future rates.
The most significant change was the new rate projections, which suggested officials were positioning themselves for a potentially faster pace of rate hikes than they had envisioned when the last set of forecasts were released in June.
For the end of next year, the median projection was 1.375 percent, compared to 1.125 percent in June, while the end-2016 projection moved up to 2.875 percent from 2.50 percent. For 2017, the median stood at 3.75 percent - the level officials see as neither stimulative nor restrictive.
By contrast, December 2015 federal funds futures imply an interbank lending rate of 0.745 percent at the end of next year. Contracts for December 2016 point to a rate of 1.85 percent.
Eric Lascelles, chief economist for RBC Global Asset Management in Toronto, called the 2017 projections a "shocker."
"I would have thought it would take a few more years to get all the way up to what they perceive to be a neutral rate," he said.
Fed Chair Janet Yellen played down the shift in a news conference after the statement was released.
"I would say there is relatively little upward movement in the (federal funds rate) path," she told reporters. "I would view it as broadly in line with what one would expect with a very small downward reduction in the path for unemployment and a very slight upward change in the projection for inflation."
EXIT STRATEGY
The Fed also released a new blueprint for how it plans to exit the extraordinary monetary stimulus it put in place to combat the 2007-09 financial crisis and recession.
It said it expects to end or phase out the reinvestment of proceeds from its bond holdings some time after it begins raising rates, depending on the state of the economy.
In addition, it said it would move its target for the overnight federal funds rate by adjusting the amount it pays banks for excess reserves they hold at the central bank. Another tool, so-called overnight reverse repurchase agreements, would play a supporting role.
Prior to this week's policy meeting, several Fed officials said they were uncomfortable with the central bank's rate guidance, given that it was pegged to a calendar reference and not the economy's progress.
Many economists said it would likely get stripped from the statement after the Fed's next meeting in October.
(Reporting by Michael Flaherty and Howard Schneider in Washington; Editing by Tim Ahmann and Paul Simao)
http://www.reuters.com/assets/print?aid=USKBN0HC09B20140917
Fed renews zero rate pledge, but hints at steeper rate hike path
5:58pm EDT
By Michael Flaherty and Howard Schneider
WASHINGTON (Reuters) - The Federal Reserve on Wednesday renewed its pledge to keep interest rates near zero for a "considerable time," but also indicated it could raise borrowing costs faster than expected when it starts moving.
Many economists and traders had expected the U.S. central bank to alter the rate guidance it has provided since March, given generally improving data on the economy's performance.
But the Fed repeated its assurance that rates would stay ultra-low for a "considerable time" after a bond-buying stimulus program ends. In a statement after a two-day meeting of its policy-setting Federal Open Market Committee, it announced a further $10 billion reduction in its monthly purchases, leaving the program on course to be shuttered next month.
The statement was virtually unchanged from July, though new quarterly projections released with it showed the central bank's view on where interest rates should be in future years is diverging from where financial markets have bet they will be.
"While the much analyzed phrase 'considerable time' remained in the FOMC statement, the newly announced scheme for interest rate normalization shows that higher rates are in the cards," said John Kilduff, a partner at Again Capital LLC in New York.
Dallas Federal Reserve Bank President Richard Fisher and Philadelphia Fed chief Charles Plosser dissented, arguing the guidance on rates could tie the central bank's hands if it felt it had to move more quickly to tighten monetary policy.
The Fed has held benchmark overnight rates near zero since December 2008 and has more than quadrupled its balance sheet to $4.4 trillion through a series of large-scale bond purchase programs.
In a further sign the central bank is in no rush to start raising rates, the FOMC repeated its assessment that a "significant" amount of slack remains in the U.S. labor market.
Stocks were little changed after the statement, but the dollar hit its highest level against the Japanese yen since September 2008. Yields on U.S. Treasury bonds rose to session highs as traders moved to price in the possibility of higher future rates.
The most significant change was the new rate projections, which suggested officials were positioning themselves for a potentially faster pace of rate hikes than they had envisioned when the last set of forecasts were released in June.
For the end of next year, the median projection was 1.375 percent, compared to 1.125 percent in June, while the end-2016 projection moved up to 2.875 percent from 2.50 percent. For 2017, the median stood at 3.75 percent - the level officials see as neither stimulative nor restrictive.
By contrast, December 2015 federal funds futures imply an interbank lending rate of 0.745 percent at the end of next year. Contracts for December 2016 point to a rate of 1.85 percent.
Eric Lascelles, chief economist for RBC Global Asset Management in Toronto, called the 2017 projections a "shocker."
"I would have thought it would take a few more years to get all the way up to what they perceive to be a neutral rate," he said.
Fed Chair Janet Yellen played down the shift in a news conference after the statement was released.
"I would say there is relatively little upward movement in the (federal funds rate) path," she told reporters. "I would view it as broadly in line with what one would expect with a very small downward reduction in the path for unemployment and a very slight upward change in the projection for inflation."
EXIT STRATEGY
The Fed also released a new blueprint for how it plans to exit the extraordinary monetary stimulus it put in place to combat the 2007-09 financial crisis and recession.
It said it expects to end or phase out the reinvestment of proceeds from its bond holdings some time after it begins raising rates, depending on the state of the economy.
In addition, it said it would move its target for the overnight federal funds rate by adjusting the amount it pays banks for excess reserves they hold at the central bank. Another tool, so-called overnight reverse repurchase agreements, would play a supporting role.
Prior to this week's policy meeting, several Fed officials said they were uncomfortable with the central bank's rate guidance, given that it was pegged to a calendar reference and not the economy's progress.
Many economists said it would likely get stripped from the statement after the Fed's next meeting in October.
(Reporting by Michael Flaherty and Howard Schneider in Washington; Editing by Tim Ahmann and Paul Simao)
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