Archive for the ‘my paper’ Category

Impact of China’s Reserve Ratio Cut

February 21, 2012 by · Leave a Comment
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(As written for My Paper on 21 February 2012. Click here to enlarge)

Over the weekend, China announced a 50 basis-point cut in the Reserve Requirement Ratio.

This is essentially the proportion of cash that banks must set aside as reserves. The change will take effect on 24 February, and the figure will fall to 20.5% from 21%.

This is the second time in three months that China has cut its reserve ratio. According to ANZ Bank and UBS AG, the cut may add 350 to 400 billion yuan to the financial system. Read more…

Lull before the Storm

February 14, 2012 by · Leave a Comment
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(As written for My Paper on 14 February 2012. Click here to enlarge)

Over the weekend, Greek Prime Minister Lucas Papademos won parliamentary approval for austerity measures to secure a second international bailout and avoid national bankruptcy.

Out of 300 lawmakers, a total of 199 backed the bill. The passing of the austerity bill was a boon for market traders who heaved a sigh of relief and piled on risk trades; causing markets to rally.

The temporary cheers in the financial world seem to hide the deep resentment among the Greeks. Before bill was passed, protesters and rioters were having a field day, setting cinemas, cafes, shops and banks ablaze in central Athens. Read more…

Cut in Aussie Cash Rate Likely

February 7, 2012 by · Leave a Comment
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(As written for My Paper on 7 February 2012. Click here to enlarge)

Last week, US government data beat all estimates when it reported that Non-Farm Payrolls rose by 243,000 in January. The official figures easily surpassed the 140,000 estimate by economists.

Additionally, the unemployment rate came in at 8.3%, the lowest level in nearly 3 years. This also recorded the fifth consecutive month of falling unemployment in the US.

Immediately after the announcement, yields on 10-year US Treasuries spiked up 10 basis points to 1.92%, and the EUR/USD dropped over 100 pips. Read more…

Greek Creditors Open to Bigger Haircut

January 31, 2012 by · 3 Comments
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(As written for My Paper on 31 January 2012 issue. Click here to enlarge)

After intense negotiations at the recent World Economic Forum in Davos, Switzerland, a deal with Greek bondholders seems imminent.

In October 2011, the bondholders agreed to take a 50% cut in the face value of their bonds, worth more than 200 billion Euros. In simple terms, this means that bondholders will only be paid 100 billion Euros once the debt matures, effectively shaving off 100 billion Euros off Greece’s debt load. Read more…

Euro Trades Squarely On News

January 17, 2012 by · 4 Comments
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(As written for My Paper on 17 January 2012 issue. Click here to enlarge)

What a week it has been for the Euro.

Mid-week, ECB chief Mario Draghi gave a press conference, stating that the bank’s policy of extending low interest loans to financial institutions had been successful in stabilizing the region’s credit markets.

Proof of his statement was seen in the recent Spanish and Italian bond auctions, which saw solid demand for their respective paper. In fact, Spain had doubled the size of their offering.

This caused the EUR/USD to rally to 1.2879 on Friday.

However, the party came to an abrupt halt late last week when news about the S&P downgrade of top European nations hit the wire. Read more…

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