It seems you have JavaScript disabled.

Ummm.. Yeah... I'm going to have to ask you to turn Javascript back on... Yeah... Thanks.

Morning Notes For August 18th 2010 at Trader’s Narrative

Morning Notes For August 18th 2010

The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:

  • American households pared their debts last quarter, closing credit card accounts and taking out fewer mortgages as unemployment persisted near a 26-year high, a survey by the Federal Reserve Bank of New York showed. – Bloomberg
  • Renminbi Depreciation may create US backlash – Bloomberg

renminbi depreciation Aug 2010
Somewhat quietly, the Renminbi has given back one-third to half of the appreciation

  • Mortgages - Bill gross, who was one of the panelists at the Treasury Tues event, did argue that a large refinancing plan could be helpful – Gross called for refinancing all mortgages backed by Fannie/Freddie/FHA that are paying more than 100bp above the current 4.5% market rate (that is 60% of all the total). Such a move would lift home prices ~5-10% according to Gross and provide a ~$50-60B stimulus to the economy. WSJ
  • Americans are divided about future oil drilling in the Gulf, both in terms of maintaining the current moratorium and whether BP should be allowed to drill again in the same area. Since the capping of BP’s damaged well, more Americans approve of BP’s handling of the disaster, but 64% still disapprove. – Gallup
  • Jeremy Siegel oped in WSJ – “the great American Bond Bubble” - If 10-year interest rates, which are now 2.8%, rise to 4% as they did last spring, bondholders will suffer a capital loss more than three times the current yield; compares the bond market to tech stocks in 2000 (WSJ)
  • The Fed’s Senior Loan Officers survey released yesterday showed large banks easing terms on business and consumer loans, the first survey to show easing since 2006. Businesses large enough to borrow in bond markets (both HG and HY) have benefited from easier terms for over a year as demand for bonds has been strong and spreads and yields have declined sharply. While banks are benefiting from the fees earned issuing these bonds they have continued to see their loan books shrink, hurting profitability. It is, therefore, no surprise that banks have eased terms on loans - they want to make more of them – JPM

Other banks ‘eased credit standards somewhat’
credit standards bloomberg Aug 2010

  • Twenty years ago, a fraction of a percent of news articles on the Bloomberg terminal mentioned China. Since then, interest in China has increased as its economic influ¬ence has grown.

china GDP news on Bloomberg

  • The White House is preparing measures that would expand opportunities for Americans to travel to Cuba and send money there, congressional and Obama administration officials said Tuesday – WP
  • 90 years ago today, the 19th amendment was ratified, guaranteeing women the right to vote.

Enjoyed this? Don't miss the next one, grab the feed  or 

                               subscribe through email:  

One Response to “Morning Notes For August 18th 2010”  

  1. 1 stoploss

    Ben is trying to scare everyone out of 10yr notes first. QE Lite. Then, attention will be focused on bonds next. QE Lite 2.0? We can see where this going.

Leave a Reply