Tag: news

With all eyes focused on China (shadow bank liquidity fears), Emerging Market currencies, and US equities; something very concerning has been going on in short-dated Treasury Bills. The ultra-short-term remain bid (near zero yield) as the saftey crush demand bids for them but move out one month – across the dreaded late-February debt-ceiling debacle maginot line – and suddenly yields are exploding! The March 16th yields have screamed from 1bps to 12.75bps in the last 2 days – now above the October debt ceiling levels..

 

Bills around the debt-ceiling are exploding…

 

While near-term bill demand is huge as safety of cash is sought…

via Zero Hedge http://ift.tt/1b11E7Z Tyler Durden

With all eyes focused on China (shadow bank liquidity fears), Emerging Market currencies, and US equities; something very concerning has been going on in short-dated Treasury Bills. The ultra-short-term remain bid (near zero yield) as the saftey crush demand bids for them but move out one month – across the dreaded late-February debt-ceiling debacle maginot line – and suddenly yields are exploding! The March 16th yields have screamed from 1bps to 12.75bps in the last 2 days – now above the October debt ceiling levels..

 

Bills around the debt-ceiling are exploding…

 

While near-term bill demand is huge as safety of cash is sought…

via Zero Hedge http://ift.tt/1b11E7Z Tyler Durden

In a 2-line statement, offering very few details, ICBC's China Credit Trust Co. said it reached an agreement to restructure the CEG#1 that ha sbeen at the heart of the default concerns in recent weeks. The agreement includes a potential investment in the 3 billion-yuan ($496 million) product but didn’t identify the source of funds, or confirm whether investors would get all of their money back. The media is very excited about this entirely provisional statement and we note, as Bloomberg reports, investors in the trust product must authorize China Credit Trust to handle the transaction if they want to recoup their principal which will involve the sale of investors' rights in the trust at face value (though no mention of accrued interest). As BofAML notes, however, "the underlying problem is a corporate sector insolvency issue…  there may be many more products threatening to default over time," and while this 'scare' may have raised investors' angst, S&P warns "a bailout of the trust product [leaves] Chinese authorities with a growing problem of moral hazard," and they have missed an opportunity  for "instilling market discipline."

 

1) ICBC issues a 2 line statement on a CEG#1 restructuring – no details and no comments from anyone involved

China Credit Trust Co. said it reached an agreement to restructure a high-yield product that sparked concern over the health of the nation’s $1.67 trillion trust industry…

 

Beijing-based China Credit Trust’s two-line statement on its website didn’t identify the source of funds, or say whether investors would get all of their money back.

2) Investors claim they "could" be able to sell their rights to the CEG#1 trust to an "unidentified buyer" at par (though receive no accrued interest as far as is clear)

Industrial and Commercial Bank of China Ltd. told investors of a China Credit Trust product facing possible default about an offer in which they can receive back their full principal, according to an investor with direct knowledge of the offer.

 

Rights in the 3 billion-yuan ($496 million) product issued by China Credit Trust Co. can be sold to unidentified buyers at a price equal to the value of the principal invested, according to one investor who cited an offer presented by ICBC and asked to be identified only by his surname Chen.

 

China Credit Trust earlier said it reached an agreement for a potential investment and asked clients of ICBC, China's biggest bank, to contact  their financial advisers.

3) “A default was bound to lead to systemic risks that China is unable to cope with, so in that sense a bailout is a positive step to stabilize the market,”

As one analyst noted, the PBOC is running scared…

 

“It indicates the government still won’t tolerate any ultimate default and retail investors will continue to be compensated in similar cases.”

4) This confirms S&P's recent warning that "A bailout of the trust product would leave Chinese authorities with a growing problem of moral hazard," and an opportunity for “instilling market discipline” will have been missed.

…said Xu Gao, the Beijing-based chief economist at Everbright Securities Co. Still, implicit guarantees distort the market and “delaying the first default means risks are snowballing,” he said.

5) of course, China may have shown its moral hazard hand on this occasion but as BofAML warns, "We suspect that, at a certain point, the involved parties will be either unwilling or unable to bail them out [again], which may trigger a credit crunch…The underlying problem is a corporate sector insolvency issue…  there may be many more products threatening to default over time."

 

There are plenty more trust products facing maturity/default in the short-term…

The most volatile part of the system is the financial market and the weakest link of the financial market is shadow banking. Within the shadow banking sector, we believe that the trust market faces the biggest default risk because credit quality here is among the lowest. The stability of the shadow banking sector is based on public confidence and any meaningful default will chip away some of the confidence. We suspect that trust defaults by private borrowers may work on public sentiment gradually while any LGFV trust default may immediately trigger significant market volatility. 2Q & 3Q this year will be another peak trust maturing period.

 

 

 

 

via Zero Hedge http://ift.tt/1jBb0iP Tyler Durden

In a 2-line statement, offering very few details, ICBC's China Credit Trust Co. said it reached an agreement to restructure the CEG#1 that ha sbeen at the heart of the default concerns in recent weeks. The agreement includes a potential investment in the 3 billion-yuan ($496 million) product but didn’t identify the source of funds, or confirm whether investors would get all of their money back. The media is very excited about this entirely provisional statement and we note, as Bloomberg reports, investors in the trust product must authorize China Credit Trust to handle the transaction if they want to recoup their principal which will involve the sale of investors' rights in the trust at face value (though no mention of accrued interest). As BofAML notes, however, "the underlying problem is a corporate sector insolvency issue…  there may be many more products threatening to default over time," and while this 'scare' may have raised investors' angst, S&P warns "a bailout of the trust product [leaves] Chinese authorities with a growing problem of moral hazard," and they have missed an opportunity  for "instilling market discipline."

 

1) ICBC issues a 2 line statement on a CEG#1 restructuring – no details and no comments from anyone involved

China Credit Trust Co. said it reached an agreement to restructure a high-yield product that sparked concern over the health of the nation’s $1.67 trillion trust industry…

 

Beijing-based China Credit Trust’s two-line statement on its website didn’t identify the source of funds, or say whether investors would get all of their money back.

2) Investors claim they "could" be able to sell their rights to the CEG#1 trust to an "unidentified buyer" at par (though receive no accrued interest as far as is clear)

Industrial and Commercial Bank of China Ltd. told investors of a China Credit Trust product facing possible default about an offer in which they can receive back their full principal, according to an investor with direct knowledge of the offer.

 

Rights in the 3 billion-yuan ($496 million) product issued by China Credit Trust Co. can be sold to unidentified buyers at a price equal to the value of the principal invested, according to one investor who cited an offer presented by ICBC and asked to be identified only by his surname Chen.

 

China Credit Trust earlier said it reached an agreement for a potential investment and asked clients of ICBC, China's biggest bank, to contact  their financial advisers.

3) “A default was bound to lead to systemic risks that China is unable to cope with, so in that sense a bailout is a positive step to stabilize the market,”

As one analyst noted, the PBOC is running scared…

 

“It indicates the government still won’t tolerate any ultimate default and retail investors will continue to be compensated in similar cases.”

4) This confirms S&P's recent warning that "A bailout of the trust product would leave Chinese authorities with a growing problem of moral hazard," and an opportunity for “instilling market discipline” will have been missed.

…said Xu Gao, the Beijing-based chief economist at Everbright Securities Co. Still, implicit guarantees distort the market and “delaying the first default means risks are snowballing,” he said.

5) of course, China may have shown its moral hazard hand on this occasion but as BofAML warns, "We suspect that, at a certain point, the involved parties will be either unwilling or unable to bail them out [again], which may trigger a credit crunch…The underlying problem is a corporate sector insolvency issue…  there may be many more products threatening to default over time."

 

There are plenty more trust products facing maturity/default in the short-term…

The most volatile part of the system is the financial market and the weakest link of the financial market is shadow banking. Within the shadow banking sector, we believe that the trust market faces the biggest default risk because credit quality here is among the lowest. The stability of the shadow banking sector is based on public confidence and any meaningful default will chip away some of the confidence. We suspect that trust defaults by private borrowers may work on public sentiment gradually while any LGFV trust default may immediately trigger significant market volatility. 2Q & 3Q this year will be another peak trust maturing period.

 

 

 

 

via Zero Hedge http://ift.tt/1jBb0iP Tyler Durden

Today’s AM fix was USD 1,270.00, EUR 927.82 and GBP 767.14 per ounce.
Friday’s AM fix was USD 1,259.25, EUR 920.44 and GBP 757.40 per ounce.
 

Gold rose $0.56 or 0% on Friday to $1,264.51/oz. Silver slipped 0.20 or 1% to $19.74/oz.

Gold surged to its highest level in two months on the open in Asia overnight. Gold was steady at $1,268.60 late morning, after earlier hitting a two-month high of $1,278.01. Other precious metals also edged higher.

Safe haven buying was evident as equities fell on worries about capital outflows from emerging economies, currency crises and macroeconomic and geopolitical risk.

Asian and European shares dived as emerging markets remained under pressure due to concerns that the U.S. Federal Reserve may discontinue its ultra loose monetary policies and unease about the shadow banking system and credit conditions in China. This is raising the possibility of a sharper economic slowdown.

Risks posed to depositor’s cash were seen in the UK after HSBC imposed cash withdrawal limits on clients and Lloyds ATM machines and debit cards experienced difficulties.

The Financial Times has told investors that they should act like the German Bundesbank and “demand physical gold” and warned that gold price “manipulation” could end “catastrophically“.

“There’s surely no chance that the Fed’s little delivery difficulty has anything to do with the cat’s-cradle of pledges based on the gold in its vaults?  As has been remarked here before, forecasting the price is for mugs and bugs.

But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery.”

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – The Essential Guide To Storing Gold In Singapore

via Zero Hedge http://ift.tt/1eaxmUF GoldCore

Today’s AM fix was USD 1,270.00, EUR 927.82 and GBP 767.14 per ounce.
Friday’s AM fix was USD 1,259.25, EUR 920.44 and GBP 757.40 per ounce.
 

Gold rose $0.56 or 0% on Friday to $1,264.51/oz. Silver slipped 0.20 or 1% to $19.74/oz.

Gold surged to its highest level in two months on the open in Asia overnight. Gold was steady at $1,268.60 late morning, after earlier hitting a two-month high of $1,278.01. Other precious metals also edged higher.

Safe haven buying was evident as equities fell on worries about capital outflows from emerging economies, currency crises and macroeconomic and geopolitical risk.

Asian and European shares dived as emerging markets remained under pressure due to concerns that the U.S. Federal Reserve may discontinue its ultra loose monetary policies and unease about the shadow banking system and credit conditions in China. This is raising the possibility of a sharper economic slowdown.

Risks posed to depositor’s cash were seen in the UK after HSBC imposed cash withdrawal limits on clients and Lloyds ATM machines and debit cards experienced difficulties.

The Financial Times has told investors that they should act like the German Bundesbank and “demand physical gold” and warned that gold price “manipulation” could end “catastrophically“.

“There’s surely no chance that the Fed’s little delivery difficulty has anything to do with the cat’s-cradle of pledges based on the gold in its vaults?  As has been remarked here before, forecasting the price is for mugs and bugs.

But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery.”

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – The Essential Guide To Storing Gold In Singapore

via Zero Hedge http://ift.tt/1eaxmUF GoldCore

The taper-driven rate-rise scare mid-summer that stalled home-buyer (speculator) confidence has been matched by the Decmeber 2013 numbers. New Home sales plunged 7.0% against expectations of only a 1.9% drop as total sales (seasonally adjusted and annualized) dropped to 414k – the biggest miss (against 455k exp.) since July 2013. Of course the data is dreadfully sparse and noisy, as we note a mere 1,000 (non-seasonally-adjusted) homes were sold in the Northeast. Notably, the exuberant levels of the last few months have also been revised markedly lower.

 

 

Perhaps the most disturbing data point was the number of actual new houses sold in the Northeast region when observed on an unadjusted, not annualized basis. The only thing one can possibly say here is that at 1,000, at least it wasn’t zero.

via Zero Hedge http://ift.tt/1bsAZRn Tyler Durden