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22 Aug 2011

COMMENTARY

Merkel says she’ll resist pressure for Euro bonds

German Chancellor Angela Merkel attempted to shut the door on common euro-area bonds as a means to solve the debt crisis, saying that she won’t let financial markets dictate policy. Joint euro bonds would require European Union treaty changes that would “take years” and might run afoul of Germany’s constitution, Merkel said. While common borrowing might arrive at some point in the “distant future,” bringing in euro bonds at this time would further undermine economic stability and so they “are not the answer right now.” “At this time -- we’re in a dramatic crisis -- euro bonds are precisely the wrong answer,” Merkel said. Investor calls for euro bonds intensified last week as concerns about the debt crisis and a stuttering global economy drove European stocks to their lowest in more than two years. “Politicians can’t and won’t simply run after the markets,” Merkel said.


HEADLINE NEWS

  • Treasuries price in QE3 as Barclays says traders anticipate $500 billion
  • Yen, Franc weaken amid speculation Japan, Switzerland ready to intervene
  • Asian stocks pare retreat as Fed stimulus speculation tempers Euro impasse
  • Gold rallies sixth day to all-time high
  • Emerging-market bonds show ratings don’t matter as debt rallies like Bunds
  • Oil drops for third day as Qaddafi regime teeters as rebels enter Tripoli

BENCHMARK CURRENCY RATES - GAINERS & LOSERS



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COMMENTARY
24 Aug 2011
Japan unveils $100B effort to cope with Yen

Japan’s government unveiled a $100 billion effort to help companies cope with persistent strength in the yen that threatens to thwart the nation’s recovery from three straight quarters of economic contraction. Officials will release foreign-currency reserves to the Japan Bank for International Cooperation to aid exporters and spur purchases overseas, Finance Minister Yoshihiko Noda told reporters today in Tokyo. JBIC, as the lender is known, is a state-run export credit agency. Today’s announcement is “somewhat underwhelming and unlikely to have much impact” on the exchange rate, said Mitul Kotecha. The move seems “unlikely” to increase the limited appetite that Japanese firms have for overseas purchases, the analyst said. The ministry will bolster monitoring of the currency market, requiring major financial institutions to disclose trading positions, Noda said.



HEADLINE NEWS

  • Central banks to retain gold to manage debt in crisis, Morgan Stanley says
  • Japan debt rating cut to Aa3 by Moody’s
  • Yuan approaches 17-year high on speculation central bank to tolerate gains
  • U.S. stock futures retreat after S&P 500 index’s biggest advance in a week
  • Merkel rejects seeking collateral in European bailouts as splits emerge
  • Oil climbs for third day as report shows decline in U.S. crude stockpiles




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