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The following news are from Bloomberg.

1. FED

1) Fed’s Fisher Sees High Bar to Support Yield Curve ‘Jujitsu’

Federal Reserve Bank of Dallas President Richard Fisher said he probably won’t support further monetary easing by the Fed, arguing that steps that would boost the recovery are the responsibility of fiscal authorities.

At its next meeting on Sept. 20-21, the Fed may decide to replace short-term Treasury securities in its $1.65 trillion portfolio with long-term bonds in a bid to lower rates on everything from mortgages to car loans, according to economists at Wells Fargo & Co., T. Rowe Price Associates Inc., Barclay’s Capital Inc. and Goldman Sachs Group Inc.

The plan is sometimes called “Operation Twist” because it would twist the yield curve. Fisher described the move as an attempt to “drive down already historically low nominal intermediate and longer-term rates.”

2) Fed’s Fisher Says Low Interest Rate Pledge May Deter Lending

Federal Reserve Bank of Dallas President Richard Fisher said the central bank’s pledge to hold interest rates low until mid-2013 may be sending the wrong signal to consumers, might actually be an incentive to not borrow, because businesses and consumers are deluged with uncertainty.

2. ECB

1) Dithering European Leaders Are Defaulting to the ECB: View

The latest developments in Greece, where a bailout package adopted in July is threatening to fall apart, make clear the danger of the piecemeal solutions that have been deployed so far. Austerity measures are deepening the Greek recession, lessening the government’s chances of paying its debts. European stocks are gyrating, and Italian bond yields have been rising again as investors worry that the trouble could spread to banks and larger governments. Meanwhile, European voters are wearying of failed bailouts, eroding the already limited ability of elected leaders to solve the euro area’s problems.

The market reaction to a disorderly Greek default would put pressure on other countries -- including Spain, Italy and possibly even France, with a combined total of more than 5 trillion euros in sovereign debt -- to do the same. The resulting losses for Europe’s thinly capitalized banks, and for the U.S. institutions that have lent them hundreds of billions of dollars, could trigger a credit freeze bad enough to send the world economy into a deep recession.

2) Draghi’s Hands May Be Tied on Stimulus After Stark Resigns

Mario Draghi may find it harder to keep the European Central Bank in the vanguard of the battle against the euro region’s debt crisis after Juergen Stark resigned in protest at the bank’s bond purchases.

Analyst Comment: With speculation of a Greek default heaping pressure on the ECB to step up its bond buying and reverse interest-rate increases to ease market tensions, Stark’s shock move has publicly exposed a rift among policy makers that may undermine its ability to act quickly. German opposition to further ECB stimulus may also make Draghi less inclined to ease policy when he takes over from ECB President Jean-Claude Trichet on Nov. 1.

It would be very easy for Germans to say here comes the Italian, he’ll cut rates and buy government bonds in massive amounts. Draghi will probably prefer to err on the side of hawkishness on standard measures, which means he may be reluctant to go for a rate cut.

3. ECO

1) Italy Seeks $10 Billion as Contagion Slams Demand: Euro Credit

Italy is auctioning as much as 7 billion euros ($10 billion) of bonds one day after borrowing costs surged at a bill auction, as Greece’s slide toward default roils global markets.

Italian officials have held talks with Chinese counterparts about potential investments in the euro region’s third-largest economy, an Italian government official said late yesterday. The purchase of Italian bonds by China wasn't the focus of the talks, which took place in the past few weeks, the official said on condition of anonymity.

Analyst Comment: It’s rather unfortunate that the Italian auction is taking place when the market is in a panic mode. Borrowing costs are likely to remain at elevated levels. The rise in Italian yields is manifestation of a lack of market confidence in European leaders’ ability to tackle the problem.

The problems in Europe are still not being dealt with, at least to the extent that we can see light at the end of the tunnel, so I would be in a defensive mode. The idea that the Chinese may step up and buy Italian bonds puts to halt the idea of contagion. The big question is whether they actually follow through and buy Italian bonds.

2) Obama Targets Carried Interest in Money Quest From Richest

President Barack Obama is targeting high earners, private equity managers and oil and gas companies in his bid to pay for a $447 billion job-creation plan.

3) Obama Proposes Limits on Tax-Breaks for Muni-Bond Investors

President Barack Obama proposed curbing the amount of interest from municipal bonds that top earners can exclude from their taxable income, a step that may diminish demand for state and local-government securities.

4) More Job Cuts Loom for European Banks Locked Into Higher Pay

European banks may resort to more jobs cuts or zero bonuses as they struggle to maintain fixed compensation levels amid deteriorating financial markets.

Analyst Comment: The absolute last thing banks will want do is cut current salaries unless they have an explicit contractual right to do so. The legal, reputational, commercial and logistical risks of going down that route are huge.

5) Italy Said to Hold Talks With China on Potential Investments

Italian officials have held talks with their Chinese counterparts about potential investments in the euro region’s third-largest economy, an Italian government official said.

The purchase of Italian bonds by China was not the focus of the talks, which took place in the past few weeks, the official said on condition of anonymity, without specifying which assets may be involved.

A report in the Financial Times today that China would buy “significant” amounts of Italian government bonds helped U.S. stocks reverse losses in the last 90 minutes, as concern about Europe’s debt crisis eased.

6) Money Funds’ Cuts to French Banks Could Force Asset Sales

U.S. money-market fund managers, led by Vanguard Group Inc. and Legg Mason Group Inc., have cut their lending to French banks at a pace that may force the banks to raise capital by selling assets, according to William Prophet, a desk analyst at Deutsche Bank Securities Inc.

Analyst Comment: What’s happened very recently is simply unsustainable. While a decent amount of funding is evidently still available to the French banking system, it is all migrating towards the very front end of the money-market curve, and regulators no longer look the other way when this happens.

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关键词：PART ART EWS NEW Top following recovery replace further support

一天最新经济时事 简要介绍

tHAT's a good conclusion!

4. FRX

1) Euro Falls to June 2001 Low Versus Yen on Greece Default Concern

The euro fell, touching its lowest level since 2001 against the yen, as speculation German Chancellor Angela Merkel is preparing for a Greek default curbed demand for the 17-nation currency.

The euro erased losses against the dollar after the Financial Times reported that Italy was in talks with a Chinese investment firm that may buy its bonds. The euro declined earlier to the lowest level versus the greenback since February after Greece’s chance of default in the next five years soared to 98 percent. The yen advanced against all its most-traded counterparts as demand for refuge increased and as the Swiss National Bank-imposed ceiling on the franc leaves Japan’s currency as one of the few haven assets.

Analyst Comment: With the market in the very fractious state that it’s in, it provides the pretense for a little bit of euro short covering. The dollar is strong because it’s a very risk-averse market environment of which euro-zone specific concerns are a fairly key part of, although there’s also global growth worries.


2) Aussie Still a Winner in a Loose Policy World, Barclays Says

Australian dollar’s prospects have improved, Barclays Capital says in note today, citing several key factors.

* Monetary policy in U.S. and Europe is now likely to be even looser than previously expected; if policy is eased further in G-4, more capital will flow to countries with high-     yielding currencies, such as AUD.

* Ongoing global slowdown isn’t as deep a downturn as in 2008, and while Asia isn’t immune to slowdown, it seems to be in better shape and inflationary pressures remain.

* Combination of ongoing global growth and supply issues means commodity prices are likely to rise further, and Barclays still expects RBA to tighten policy as its next move.

* Given potential for sharp moves in EUR/USD because of uncertainty about how the euro-area debt crisis will play out, Barclays recommends going long AUD vs equally weighted basket of EUR and USD.

* AUD/USD little changed at 1.0342.

* AUD/EUR rises 0.1% to 0.7573.


3) Global Funds Buying Record Debt as Rupee Slides: India Credit

The Indian rupee’s decline to a one-year low and the record yield premium for local-currency debt over U.S. notes boosted foreign ownership of the nation’s bonds to the most ever this quarter at almost 7 percent.

Concern that Europe’s debt crisis will stall the global economic recovery has spurred a 5.3 percent slide in the rupee this year, the worst among Asia’s 10 most-traded currencies.

Analyst Comment: Bond yields are fairly close to the highest we are going to see for this cycle. The rupee has weakened substantially recently and these levels offer a bit more attractiveness compared to other markets.


4) Brazil Real Falls to Weakest in 10 Months on Greek Debt Concern

Brazil’s real tumbled to the weakest level since November on concern Greece may default on its debt, limiting capital inflows to emerging markets.

The Brazilian currency fell as much as 3.1 percent earlier today. It pared some losses after the Financial Times reported that Italy’s government was in talks with China Investment Corp. about “significant” purchases of Italian bonds and investments in strategic companies.

Analyst Comment: Everyone is very afraid of a Greek default. You never know what’s going to happen. There’s no upside to hold the real. There’s more to go.


5. Stock Market

1) Most Asian Stocks Rise as European Concerns Ease; BHP Advances

Most Asian stocks rose, with the benchmark regional index snapping two days of losses, as concern eased about Europe’s debt crisis following a report that China may invest in Italy.

Analyst Comment: The reports of Chinese bond-buying come at a critical time when investor confidence is so shattered that any kind of support could be viewed as positive. There is still a question-mark over how much the Chinese would be willing to commit towards such a risky investment. And even if it were to slow the bleeding in Europe, it wouldn’t heal the wound.


2) VIX at Biggest Discount to Europe’s VStoxx Since 2008: Options

Implied volatility for European equities has climbed to the highest level since 2008 compared with the Standard & Poor’s 500 Index, as traders hedge against a potential default by Greece.

Analyst Comment: Volatility markets are definitely implying that the U.S. is a safe haven relative to Europe. People are much more focused on Greece and the potential impact on European banks rather than the U.S., particularly the effects on the French banks.


3) Japanese, Australian Stock Futures Gain on Easing European Worry

Japanese and Australian stock futures gained after a report that China may invest in Italy eased concerns about Europe’s debt crisis.

Analyst Comment: China has been showing that it doesn’t want a default in Euro countries. So, it may buy government bonds in countries such as Italy. Trichet’s remarks will give the market confidence.


4) Stocks Gain on Report of Italy Talks With China

U.S. stocks rose, reversing losses in the last 90 minutes, as concern about Europe’s debt crisis eased following a report that Italy was in talks with China about possible investments.

Analyst Comment: The fact that the Chinese are coming in again is comforting. The question for the markets will be -- is this enough for the depths of the endemic problems facing the European Union? Until we see an easing in credit markets, it’s going to be difficult to take advantage of good valuations.

6. Commodity

1) Gold Rebounds as Two-Day Slump Lures Investors Seeking Safety

Gold rebounded as a two-day slump made the precious metal attractive to investors looking to safeguard their wealth against financial turmoil and economic uncertainty.

Analyst Comment: While gold is exposed to a near-term consolidation after making fresh record highs recently, we recommend buying gold on dips as the ongoing debt/deficit crisis is likely to result in an extended period of super lax monetary conditions in the U.S. and Europe. Gold is likely to make fresh all-time record highs before year-end.


2) Thailand May Give Up Biggest Rice-Exporter Role, Deputy PM Says

Thailand is willing to relinquish its role as the world’s biggest rice exporter as the government prepares to buy grain directly from farmers to boost prices and rural incomes, Deputy Prime Minister Kittiratt Na-Ranong said.

Analyst Comment: The plan to guarantee rice prices may boost export rates by almost 20 percent and erode the nation’s share of the global market. That will be trouble for exporters. It would be difficult to get deals done at that price.


3) Oil Supply Falls in Survey as Storm Cuts Output: Energy Markets

U.S. crude oil supplies fell to the lowest level in five weeks as more than half of Gulf of Mexico production was shut because of Tropical Storm Lee, a Bloomberg News survey showed.

Analyst Comment: We’re going to see a large draw because of the production that was shut in. Demand is still pretty bad.


7. Credit Market

1) ‘Market Gods’ Awaiting Obama Temper Refi Losses: Credit Markets

Mortgage bond investors, who suffered the biggest relative losses in almost three years last month on concern that the U.S. government would accelerate refinancing, are finding relief on speculation that any plan will be limited.

Fannie Mae’s 5 percent, 30-year home-loan securities gained 0.4 cent on the dollar more than U.S. Treasuries after President Barack Obama failed to offer specific plans as he told a joint session of Congress he wants more homeowners to get cheaper loans.

Analyst Comment: The feasibility of a massive refi plan is essentially zero. We’re going to look back 12 months from now and say, I can’t believe the market gods gave us such a great entry point.


2) Treasury 10-Year Yields Rise From Record on Eased Europe Concern

Treasury 10-year note yields rose from a record low on speculation China may seek to buy more European bonds, easing the haven appeal of U.S. government debt from the Europe’s widening sovereign-debt crisis.

Analyst Comment: There’s a story that China is contemplating buying Italian sovereign debt. It places a little bit of hope in the market that someone sees some value out there. Obviously it’s better than Europe falling apart, which is what we hear every night.


3) Disappearing Yield Gap Challenges Azumi Yen Pledge: Japan Credit

Finance Minister Jun Azumi’s pledge to take “bold actions” on the yen may be put to the test after a rally in overseas bonds reduced their yield advantage over Japanese debt.

Gains in Japanese bonds have been outpaced by those in the U.S. and Germany amid speculation Greece will default and the Federal Reserve will signal plans to buy longer-dated debt at a meeting starting Sept. 20.

Analyst Comment: It’s hard to draw a picture of how the yen could weaken unless international interest-rate spreads widen. It’s also the fact that intervention may not be enough to change the trend.