World economy talk

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good morning Asia

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Moody's on France

Moody's: debt cost may be negative for France rating | Reuters

"Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," Senior Credit Officer Alexander Kockerbeck said in Moody's Weekly Credit Outlook dated Nov. 21.

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investors liquidate gold to cover losses in equity markets

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US 10 yr yield


US 30 yr yield

[Monseratto]

Anong balita tungkol sa Debt Reduction Act that's hanging at the US Congress?

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Anong balita tungkol sa Debt Reduction Act that's hanging at the US Congress?

looks like they failed to come to an agreement

Statement from Co-Chairs of the Joint Select Committee on Deficit Reduction - Press Releases - News - Joint Select Committee on Deficit Reduction

After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.

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second biggest bank in Germany

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remember Dexia? that bailed-out/nationalized Belgium bank... the bailout is collapsing

Belgium and France are financing the bailout

Belgium doesnt have enough money

hey France...

[Ry_Tower]

second biggest bank in Germany

Grabe laki ng decline.

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flight to safety

US 5 yr treasury yield now below 1%

Treasury Bonds Rise; Record Low Yield For 5-Year Auction - WSJ.com

NEW YORK (Dow Jones)--Underlining the global hunger for safe assets, the U.S. government sold $35 billion five-year notes on Tuesday at a record low yield of 0.937%.

It was the first time a five-year note was sold at below-1% yield--the previous low of 1.02% was set in the September auction.

[Ry_Tower]

flight to safety

US 5 yr treasury yield now below 1%

Treasury Bonds Rise; Record Low Yield For 5-Year Auction - WSJ.com

I guess in today's economic atmosphere, slow (small) but sure is better.

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China buys minerals from Australia

China economy slowing



HSBC Flash China Manufacturing PMI for November 48.0

below 50 indicates contraction

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check this out

italy 2 yr yield 7.17%


italy 5 yr yield 7.03%


italy 10 yr yield 6.92%


the yield curve has freaking inverted

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Belgium 10 yr yield

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Fitch says euro crisis may threaten France's AAA | Reuters

(Reuters) - France has limited room to absorb any new shocks to its public finances -- such as slowing growth or new provisions for banking sector support -- without endangering its AAA status, Fitch Ratings said on Wednesday.

"Similar to the situation of other major 'AAA' sovereigns, the increase in government debt has largely exhausted the fiscal space to absorb further adverse shocks without undermining their 'AAA' status," Fitch said.

hey France... a bank in Belgium...

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German 10-year bond auction a disaster | Reuters

(Reuters) - A "disastrous" sale of German benchmark bonds sparked fears on Wednesday the debt crisis was beginning to threaten even Berlin, with the Bundesbank forced to dig deep into its pockets to ensure the auction did not fail.

In one of the least successful debt sales by Europe's powerhouse economy since the launch of the single currency, the low returns offered -- just 2 percent annually over 10 years -- deterred investors made uneasy by the escalating cost of the crisis to Germany.

That meant the central bank had to pick up 39 percent of the 6 billion euros ($8 billion) of debt Germany had hoped to sell after commercial banks bought just 3.644 billion euros of the issue.

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the US 7 yr isnt really a favorite

7 yr auctions tend to disappoint

but this time...

Treasury prices gain on strong 7-year note auction
By The Associated Press – 4 hours ago

NEW YORK (AP) — Investors continued to buy U.S. Treasurys despite rock-bottom yields, reflecting the depth of anxiety in global markets.

The U.S. government on Wednesday sold $29 billion in seven-year notes at a record low yield and strong demand.

In Germany, a government debt auction drew the weakest demand in over a decade. Germany is Europe's biggest economy and an anchor for the rest of the continent. That investors would spurn German government bonds was a sign of how worried they were over the deepening debt crisis in the region.

The seven-year Treasury notes in the U.S. drew a yield of 1.415 percent. The ratio of bids to notes sold was 3.2, the highest level of demand since May and higher than an average of 2.8 for the past 10 auctions.

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re the failed bond auction in Germany

in a recent post i mentioned investors are getting out of euro denominated assets

looks like ganun na nga

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http://www.cbsnews.com/8301-201_162-...a-immediately/

(CBS/AP) BEIRUT - The U.S. Embassy in Damascus urged its citizens in Syria to depart "immediately," and Turkey's foreign ministry urged Turkish pilgrims to opt for flights to return home from Saudi Arabia to avoid traveling through Syria.

US aircraft carrier USS G. H.W. Bush is reported to be parked off the coast of Syria

getting ready to strike Syria?

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US 10 yr


UK 10 yr


Germany 10 yr

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the euro is an unfinished project

they have currency union without fiscal union

the union has to integrate further or break apart

further integration means countries have to give up sovereignty and be controlled by a higher power

the union can then issue bonds as a single entity

United States of Europe

ECB’s Paramo Urges ‘Bold’ Step on Fiscal Union to Stem Turmoil - Businessweek

Nov. 25 (Bloomberg) -- European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo urged euro-area politicians to take bold steps toward fiscal union to end the debt crisis, and said they should not rely on the ECB.

“Governments cannot expect the ECB to finance public deficits,” Gonzalez-Paramo said in a speech in Oxford, England, yesterday. “It is now a time for politicians to be bold and courageous” and “complete as soon as possible the great project begun 60 years ago towards ever closer union,” he said.

Paramo Says ECB Can't Be Expected To Fund Deficits

Paramo said the current crisis had demonstrated that "a much more comprehensive approach to economic governance is now the priority for the euro area."

"This means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies."

eurobonds -- not yet

ECB's Gonzalez-Paramo: Eurobonds to exist at some point | Reuters

(Reuters) - Eurobonds will exist at some point in the future but are not suitable at the current time given insufficient integration among euro zone member states, European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said.

"I think eurobonds will exist at some point, there is no doubt," he said in a Q&A following a lecture at Oxford University.

"But at this point in time they would not be commensurate with the degree of integration".