Eurex to relaunch Euribor
In a surprise move, FOW understands that Eurex is close to a relaunch of the Euribor contract, the highly liquid three-month STIR contract, following the implementation of its new trading architecture which enables new functionality including the spread matrix.
Trading Technologies to Connect to NASDAQ OMX’s New NLX Exchange
Press Release (TT)
Trading Technologies International, Inc. (TT) announced today that TT will connect its X_TRADER platform and related products to NASDAQ OMX NLX (NLX), a new London-based derivatives trading market.
NLX will initially list European short-term interest rate (STIR) and long-term interest rate (LTIR) euro- and sterling-based futures products. All instruments will clear through LCH.Clearnet,providing optimal initial margin efficiencies for market participants who will have the unique ability to portfolio margin both STIRs and LTIRs in a single clearing house.
Bernanke should banish the babbling barons of bubbleism: Paul Krugman
Bubbles can be bad for your financial health — and bad for the health of the economy, too. The dot-com bubble of the late 1990s left behind many vacant buildings and many more failed dreams. When the housing bubble of the next decade burst, the result was the greatest economic crisis since the 1930s — a crisis from which we have yet to emerge.
Eris Exchange Announces A Single Day Trading Volume Record
Press Release (via Herald Online)
Eris Exchange, a US-based futures exchange offering swap futures as a capital-efficient alternative to traditional OTC interest rate swaps, today announced that on May 10, 2013, market participants traded a record $1.27 billion in notional value. The volume record is equivalent to 12,700 contracts, adjusting for the impending contract size change to $100,000 notional. This change will take effect June 3, 2013, pending all relevant CFTC regulatory review periods.
U.S. stocks extend record run, euro slips on data
U.S. stocks scaled record highs on Wednesday as weak data reinforced expectations that stimulative central bank policies would continue, while evidence that Europe was stuck in recession pushed the euro to a six-week low against the dollar.
European Stocks Climb
The Wall Street Journal
European stock markets climbed to multiyear highs, as weak growth reports from the euro zone raised hopes the European Central Bank would consider more measures to help boost the sluggish economy.
World’s central banks rush to cut rates, but China stands firm
Live Trading News
While central banks worldwide have cut rates and weakened their currencies in response to the plummeting Japanese Yen, China has stood firm, confident that its economy, the world’s 2nd biggest, can withstand current global weakness, a leading economist says.
Rising rates may increase risk in bond market
San Diego Source
A warning last week by Ben Bernanke to Wall Street firms to not “reach for yield” also has a message for individual investors.
The chairman of the Federal Reserve Board was addressing a tendency by some firms to take on excessive forms of risk in order to raise the yields offered on certain investments, as investors search for higher rates of return in a near-zero-interest-rate environment.
Board of Governors of the Federal Reserve System : Federal Reserve offers 28-day term deposits with full allotment at 26 basis points through its Term Deposit Facility
Press Release (via 4-Traders)
On May 20, 2013, the Federal Reserve will conduct a fixed-rate offering of term deposits with full allotment of tenders through its Term Deposit Facility (TDF). The Federal Reserve will offer 28-day term deposits with an interest rate of 0.26000 percent and a maximum tender amount of $1,250,000,000.
Volcker: Government Makes Up 35% Of GDP, Mortgage Markets Are Now A State ‘Subsidiary’
Former Fed Chairman Paul Volcker warned of the risks of an asset bubble forming given the incredible amount of liquidity the Bernanke Fed has injected into the market, even though he said banks are substantially stronger than before the crisis on Wednesday. Volcker also indicated that in the U.S. government makes up about 35% of GDP and that the financing of the residential mortgage market by the state has led to a dysfunctional financial system.
BOND REPORT: Treasurys Snap Losing Streak On Weak Data
Dow Jones Newswires (via Fox Business)
Weak global economic data Wednesday prompted investors to bid up Treasurys, helping the safe-haven debt close out the day with its first gains in a week.
The Fed’s #1 Assumption About QE Relies On A Misunderstanding Of Basic Portfolio Management
For several years now, the Federal Reserve has been buying up Treasury bonds in an attempt to boost the economy with monetary stimulus.
One big channel through which this quantitative easing (central bank bond buying) is supposed to work is known as the “portfolio rebalancing channel,” and the idea is that as central banks draw supply out of government bond markets and bond yields fall, investors will sell their bonds and rebalance their portfolios by investing in riskier assets, like stocks.
Bond prices grind lower amid US optimism
AUSTRALIAN bond futures prices are lower as the US dollar and Wall Street gained ground after a run of positive economic data from the world’s largest economy.
Japan Jolts Bond Market in the Wrong Direction
The Wall Street Journal
The Bank of Japan’s ambitious monetary-easing campaign has hit an early snag: Rising bond yields have emerged as a potential barrier to growth.
Weak yen unlikely to affect interest rates
The central bank is unlikely to adjust interest rates in the short term even in the face of a weakening Japanese yen, the Australia and New Zealand Banking Group Ltd (ANZ) said yesterday in its latest weekly research note.
Now is the right time for interest rate reforms in China
South China Morning Post
Hu Shuli says reform of China’s money markets needs to take place very soon as a lack of progress has hampered nation’s economic system.
Ruble Weakens on Declining Oil as Interest Rate Left Unchanged
The ruble slumped for the first time in three days against the central bank’s target basket of currencies after Russian policy makers left interest rates unchanged and oil fell.
RBI to cut interest rates in June, July after April WPI: BofA-ML
The Economic Times
Bank of America-Merrill Lynch expects the Reserve Bank of India to cut interest rates by 25 basis points on June 17, and then by another 25 bps in July – revising its prior expectation of a cut in October, according to a note on Wednesday.