EURO GOVT-Bunds rise on weak U.S. economic outlook

July 30, 2010 By Leave a Comment

July 29 (Reuters) – Bund futures opened higher on Thursday, lifted by concerns over the U.S. economy after weak data in the previous session, with a euro zone sentiment survey seen adding to safe-haven bids if it fails to meet expectations. The euro zone survey released at 0900 GMT is expected to show a small gain in economic sentiment, but could lend further support to Bunds if it falls below the forecast of 99.0.

“The risk is that it comes in below forecast and people start questioning the strength of the recovery,” a trader said.

On Wednesday, a Federal Reserve report showed lacklustre growth and U.S. durable goods orders unexpectedly fell.

“It feels like we might have seen the lows of the week. I think the market is looking for signs of (risk appetite) calming down,” the trader said.

At 0605 GMT, the Bund future FGBLc1 was 8 ticks up on Thursday’s settlement close at 127.89, although slightly below the official close after a rally in late trading.

The 10-year German bond yield DE10YT=TWEB was 2.742 percent, down around 1 basis point while the two-year Schatz yield DE2YT=TWEB was flat at 0.852 percent.

In supply, benchmark peripheral sovereign Italy will come to market with auctions of conventional and floating-rate bonds worth up to 9.5 billion euros.

Although recent warmer sentiment towards the euro zone’s higher-yielding countries has seen peripheral debt sales draw good demand, a trader said there was likely to be some attempt to cheapen the Italian paper further ahead of the auction. (Reporting by William James)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Nikkei posts fifth day of losses; eyes on yen

July 23, 2010 By Leave a Comment

July 22 (Reuters) – Japan’s Nikkei slipped 0.6 percent to its fifth straight day of losses and a three-week closing low on Thursday, hurt by a stronger yen after Federal Reserve Chairman Ben Bernanke expressed concern about the U.S. economy.

Investors awaiting the results of European bank “stress tests” later this week were closing positions, while the yen’s rally hit shares of exporters.

The benchmark Nikkei .N225 shed 57.95 points to 9,220.88, its lowest close since July 2, while the broader Topix lost 0.5 percent to 825.48.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , ,

Pew Report Finds Credit Cards More Transparent, Yet Problems Remain

July 23, 2010 By Leave a Comment

WASHINGTON, July 22 /PRNewswire-USNewswire/ — Most of the practices deemed “unfair” or “deceptive” by the Federal Reserve have disappeared from new credit card offers since federal passage of the Credit CARD Act last year, according to a new report by the Pew Health Group’s Safe Credit Cards Project. Yet new trends have emerged that could cost cardholders significantly.

The report finds that issuers have eliminated practices such as “hair trigger” penalty rate increases (disproportionate charges for minor account violations), unfair payment allocation, and raising interest rates on existing balances. However, Pew’s research also highlights a sharp rise in cash advance fees, continued widespread use of other penalty interest rates and an emerging trend of credit card companies failing to disclose penalty interest rates in their online terms and conditions.

“While it’s been less than a year since passage of the Credit CARD Act, the new law appears to be working for millions of Americans who have credit cards,” said Shelley A. Hearne, managing director of the Pew Health Group. “The elimination of most of the ‘unfair’ or ‘deceptive’ practices of the credit industry since we last surveyed the marketplace marks a major milestone in the move to make credit cards safer, transparent and more fair for consumers. Most of the news is good, but we are seeing the rise of new harmful behavior.”

The study, Two Steps Forward: After the Credit CARD Act, Cards Are Safer and More Transparent—But Challenges Remain, is the latest in a series of reports from the Pew Safe Credit Cards Project that has examined all consumer credit cards offered online by the nation’s 12 largest banks and 12 largest credit unions. Together these institutions control more than 90 percent of the nation’s outstanding credit card debt. For this latest report, which measures how the industry has changed since the passage of the Credit CARD Act, Pew gathered data in March 2010 on nearly 450 cards. Full details, including previous research, can be found at www.pewtrusts.org/creditcards.

Key findings show:

* Many of the most troublesome practices of the credit card industry have been eliminated. A credit card issuer can no longer unilaterally decide to raise interest rates on existing balances. Likewise, practices including “hair trigger” penalty rate increases, unfair payment allocation, and overlimit fees without prior consent are a thing of the past. Earlier Pew research found that before the implementation of the law, 100 percent of the credit cards surveyed included at least one of these practices.
* Beyond the requirements of the new law, there are new practices that benefit consumers. Less than 25 percent of all cards examined had an overlimit fee, which is down from more than 80 percent of cards in July 2009. Additionally, mandatory arbitration clauses, which can limit a consumer’s right to settle disputes in court, are now found in 10 percent of cards compared to 68 percent in July 2009.
* Predictions that legislation would spawn the growth of new fees have yet to materialize. There was minimal change in the number of cards that include an annual fee (down 1 percentage point from July 2009 to March 2010). During that period, the median size of these fees increased from $50 to $59 for banks and from $15 to $25 for credit unions.
* Some disclosures stopped including the size of penalty interest rates even as issuers reserved the right to impose them. At least 94 percent of bank cards and 46 percent of credit union cards came with interest rates that could go up as a penalty for late payments or other violations. But nearly half these warnings failed to inform the consumer of the actual penalty interest rate or how high it could climb.

“Although we applaud changes by the card industry to create a fairer and more transparent marketplace, our research shows that some challenges remain,” said Nick Bourke, director of Pew’s Safe Credit Cards Project and report co-author. “For the first time, we have seen credit card disclosures warning consumers that interest rates could go up as a penalty for certain actions, but not stating how high those rates could go. Federal regulators should pay attention to this problematic new trend. When issuers withhold vital pricing information, it leaves cardholders in the dark and puts their financial security at risk, which is why federal regulations have long required issuers to disclose their rates and fees up front.”

Two Steps Forward includes a number of policy recommendations to address new challenges, including:

* Federal bank regulators should enforce existing regulations that require companies to disclose full and reliable credit card penalty rate information.
* The Federal Reserve should prohibit issuers from charging penalty interest rates that are higher than initially disclosed when the consumer opened the card account.

The report also shows that surcharge fees for cash advances rose sharply between July 2009 and March 2010. Bank cash advance and balance transfer fees increased on average by one-third during this period, from 3 percent of each transaction to 4 percent. Credit union cash advance fees went up by one quarter, from 2 percent to 2.5 percent.

Other pricing data is also included in the report, showing recent increases in a variety of credit card interest rates and fees.

About the Pew Health Group

The Pew Health Group is the health and consumer-product safety arm of The Pew Charitable Trusts, a nonprofit organization that applies a rigorous, analytical approach to improve public policy, inform the public and stimulate civic life. www.pewtrusts.org/creditcards

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Even Direct Online Payday Lenders Are ‘Leaving’ Arizona as New Law Takes Effect

July 17, 2010 By Leave a Comment

LOS ANGELES, July 15 /PRNewswire/ — About PayDayLoan.com – As a new law which prohibits the practice of payday lending takes effect in Arizona, many responsible and licensed payday lenders and finance groups such as Solomon Finance have already stopped access to their lending services to customers in Arizona. This new law, which limits the maximum APR allowable to a mere 36% (or $1.38 for $100 borrowed for 2 weeks), has many in the payday lending industry claiming that they will be “regulated out of business.” Already, many storefronts have shut their doors permanently, leaving many to speculate on the results of restricting middle class families’ already limited access to short term consumer credit.

Arizona is not the first state to enact a 36% APR cap or a flat out “ban” on payday loans, and at any given time there is usually some legislative movement under consideration against these personal short term loans. Of course much of this regulation against payday loans comes from the “bad reputation” that these lenders have somehow gathered throughout the years. Most notably of which came from a rather biased study released by the Center For Responsible Lending (CRL) that condemned payday lending as a “debt-trap” which targets their customers with expensive loans. But a 2008 staff report by the Federal Reserve Bank of New York systematically responded to nearly every claim against payday lending made by the CRL, by studying the statistics of both Georgia and North Carolina who had banned payday lending in 2004 and 2005, respectively. The report states “Most of our findings contradict the debt trap hypothesis” and that “households in Georgia bounced more checks after the ban, complained more about lenders and debt collectors, and were more likely to file for bankruptcy under Chapter 7.”

The elimination of payday lending stores does not always result in the elimination of credit options, as reported from states that have already passed restrictions on payday lending. With the current accessibility of the internet, most people who are in need of a short term loan end up turning to online payday lenders. And although many responsible direct lenders such as pay1day.com will traditionally stop lending to customers in these states that have banned payday lending, there are many others who will not. Enforcement of lending through the internet across state borders is sketchy at this time, as there are not very clear rules dictating the practice of online lending or generating payday loan leads at this time. But there have been a few court cases over this “choice of law” model, so most responsible lenders will pull out of those states leaving consumers dealing with the unregulated, online “wild-west” of lenders, resulting in more complaints than when consumers still had regulated lenders to reach out to.

SOURCE PayDayLoan.com

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Nikkei slips from 3-wk highs on investor economy worry

July 16, 2010 By Leave a Comment

July 15 (Reuters) – Japan’s Nikkei average fell 1.1 percent on Thursday after the Federal Reserve’s caution on the U.S. economic recovery and souring near-term technicals prompted investors to take profits after a jump this month to three-week highs.

The benchmark Nikkei shed 109.71 points to 9,685.53, after falling as low as 9,667.00 at one stage. On Wednesday, the index rose nearly 3 percent to hit its highest close since late June.

The broader Topix lost 1.6 percent to 856.60 on Thursday. (Reporting by Aiko Hayashi)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Nikkei slips from 3-wk highs on investor economy worry

July 16, 2010 By Leave a Comment

TOKYO, July 15 (Reuters) – Japan’s Nikkei average fell 1 percent on Thursday after hitting three-week highs the day before, hovering near support after a Federal Reserve statement expressing concerns about the U.S. recovery fed investor jitters.

Asian stock markets slightly pared falls after data showing China’s annual economic growth eased to 10.3 percent in the second quarter, but inflation at the producer and consumer level also eased in June from May, reducing the need for further policy tightening. [ID:nTOE66D06L] [ID:nTOE66D060]

The figures were announced just after the bechmark Nikkei ended morning trade, and sent S&P futures SPc1 to turn positive.

“The Nikkei is now stuck in a place where it’s hard to go either significantly higher or lower. Investors are trying to understand if signs of a slowdown in U.S. economic data show the recovery is at a lull, or if it’ll continue at a slow pace,” said Junichi Misawa, a senior fund manager at STB Asset Management.

He also said the China data initially helped the stock market trim earlier losses, but investors seem to lack a consensus on how to interpret them at this point.

“Stock markets trimmed losses after the China data but they are under pressure again. That shows how fluid the markets’ views still are on China. If the data was too strong it would spark concerns and if it was too weak it could lead to worries about a slowdown,” Misawa said.

The benchmark Nikkei .N225 shed 96.00 points to 9,699.24, after falling as low as 9,667.00 at one stage. On Wednesday, the index rose nearly 3 percent to hit its highest close since late June.

The broader Topix lost 1.5 percent to 857.84.

Market players said the Nikkei was slightly overstretched going into the day and it was no surprise it was taking a bit of a breather.

Minutes of the Fed’s June meeting showed policy makers felt they should be ready to consider additional steps to boost the U.S. economy if an already softening outlook worsens, adding to worries stoked by a report showing June retail sales fell more than expected. [ID:nN14148574] [ID:nN14122226]

“A lot of investors are quite sensitive to anything the Federal Reserve says, and that kind of statement has chilled the recent rapid growth of market optimism,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

News from Japan’s central bank has little impact on the market. The Bank of Japan revised up its economic forecast for the current fiscal year but reiterated that it will keep monetary policy easy, with deflation likely to persist at least until early 2011. [ID:nTKU106138]

The Nikkei was hovering just above support provided by its 25-day moving average, currently at 9,680, and additional support on its daily Ichimoku charts at around 9,670, which was its kijun-sen.

The kijun-sen is an indicator of medium-term trends that can be either support or resistance but is currently pointing sideways, while Ichimoku charts are a popular charting method among Japanese traders.

But other momentum indicators are mixed, with the Nikkei’s slow stochastic — a measure of how oversold the market is and whether it is in a short-term up or down trend — falling to just below overbought territory. Yet its MACD continues to rise after a bullish cross.

“Longer-term, the Nikkei may still be in a bit of a downtrend. But it’s on the upper end of this and sharp slides are unlikely,” added Yamagishi.

CARS, EXPORTERS, TECH

Automakers lost ground after helping boost the broader market on Wednesday, when shares of Japan’s top three automakers all jumped about 4 percent.

Shares of Nissan Motor Co (7201.T), Japan’s No.3 automaker, slid 3 percent to 650 yen after it said it would idle two U.S. assembly plants for three days starting on Thursday because of a shortage of electronic control units from Hitachi Ltd (6501.T). [ID:nN14156554]

Nissan said earlier this week it would halt part of its vehicle production in Japan for three days starting on Wednesday after Hitachi said delivery of engine control units was running behind schedule. [ID:nTOE66C052]

Top automaker Toyota Motor Corp (7203.T) slid 2.6 percent to 3,165 yen and Honda Motor Co (7267.T), the No.2, retreated 2.1 percent to 2,684 yen.

Techs and exporters, some of the main impetus behind the Nikkei’s climb on Wednesday, fell broadly as well, with gains by the yen adding weight.

Oki Electric Industry (6703.T) lost 3.9 percent to 74 yen after Goldman Sachs downgraded it to “sell”, citing a possible undershooting of guidance for the business year ending next March.

Takeda Pharmaceutical (4502.T) fell 1.9 percent to 3,945 yen as a rival to Takeda’s flagship diabetes drug won support from a U.S. panel for sustained marketing approval. [ID:nN14274445] (Editing by Michael Watson)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

TREASURIES-Edge higher, extend gains made on Fed minutes

July 16, 2010 By Leave a Comment

July 15 (Reuters) – U.S. 10-year Treasury notes edged higher in Asian trading on Thursday, extending gains made the previous day due to weak retail sales data and a pared-back economic outlook from the Federal Reserve.

* Ten-year notes rose about 4/32 in price to yield 3.034 percent US10YT=RR, down 1 basis point from late U.S. trading on Wednesday. Ten-year note futures rose 3/32 to 122-10.5/32 TYv1.

* Two-year notes were unchanged in price to yield 0.6089 percent US2YT=RR, down about 1 basis point from late New York trading and hovering near a record low of 0.590 percent hit in late June. On Wednesday, the two-year yield had slid nearly 7 basis points for its biggest one-day drop in about six weeks.

* While the 10-year yield may head lower in the near term, a sustained drop from current levels seems unlikely, said Junji Kojima, senior deputy manager of Sompo Japan Insurance’s global securities investment department.

* “If the economy weakens too much, that may spur speculation about the possibility of further monetary easing steps and could give a lift to equities,” Kojima said.

* On the other hand, if the U.S. economy holds up relatively well that could also bode ill for Treasuries, which look a bit over-bought, Kojima said.

* Minutes from the Fed’s June policy meeting showed officials felt they should be ready to consider additional steps to boost the U.S. economy if an already softening outlook took a noticeable turn for the worse. [ID:nN14148574]

* Data on Thursday showing that China’s economy slowed in the second quarter contained no surprises, and gave little reason to think that China’s economy was headed for a sharp slowdown that could prompt market players to revise down their outlook for the global economy, said Kojima at Sompo Japan. [ID:nTOE66D06L] (Reporting by Masayuki Kitano; Editing by Michael Watson)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Even Direct Online Payday Lenders Are ‘Leaving’ Arizona as New Law Takes Effect

July 16, 2010 By Leave a Comment

LOS ANGELES, July 15 /PRNewswire/ — About PayDayLoan.com – As a new law which prohibits the practice of payday lending takes effect in Arizona, many responsible and licensed payday lenders and finance groups such as Solomon Finance have already stopped access to their lending services to customers in Arizona. This new law, which limits the maximum APR allowable to a mere 36% (or $1.38 for $100 borrowed for 2 weeks), has many in the payday lending industry claiming that they will be “regulated out of business.” Already, many storefronts have shut their doors permanently, leaving many to speculate on the results of restricting middle class families’ already limited access to short term consumer credit.

Arizona is not the first state to enact a 36% APR cap or a flat out “ban” on payday loans, and at any given time there is usually some legislative movement under consideration against these personal short term loans. Of course much of this regulation against payday loans comes from the “bad reputation” that these lenders have somehow gathered throughout the years. Most notably of which came from a rather biased study released by the Center For Responsible Lending (CRL) that condemned payday lending as a “debt-trap” which targets their customers with expensive loans. But a 2008 staff report by the Federal Reserve Bank of New York systematically responded to nearly every claim against payday lending made by the CRL, by studying the statistics of both Georgia and North Carolina who had banned payday lending in 2004 and 2005, respectively. The report states “Most of our findings contradict the debt trap hypothesis” and that “households in Georgia bounced more checks after the ban, complained more about lenders and debt collectors, and were more likely to file for bankruptcy under Chapter 7.”

The elimination of payday lending stores does not always result in the elimination of credit options, as reported from states that have already passed restrictions on payday lending. With the current accessibility of the internet, most people who are in need of a short term loan end up turning to online payday lenders. And although many responsible direct lenders such as pay1day.com will traditionally stop lending to customers in these states that have banned payday lending, there are many others who will not. Enforcement of lending through the internet across state borders is sketchy at this time, as there are not very clear rules dictating the practice of online lending or generating payday loan leads at this time. But there have been a few court cases over this “choice of law” model, so most responsible lenders will pull out of those states leaving consumers dealing with the unregulated, online “wild-west” of lenders, resulting in more complaints than when consumers still had regulated lenders to reach out to.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

TREASURIES-Steady in Asia, bond auctions eyed

July 13, 2010 By Leave a Comment

July 12 (Reuters) – U.S. Treasuries were little changed in Asian trade on Monday as many investors retreated to the sidelines ahead of debt sales this week totalling $69 billion.

* The Treasury Department will sell $35 billion of three-year debt later in the day, $21 billion of 10-year notes on Tuesday and $13 billion in 30-year bonds on Wednesday. Traders and analysts said they expected Monday’s three-year auction to meet solid demand as the Federal Reserve is seen keeping interest rates near zero for some time.

* The Treasury cut the size of Monday’s three-year note auction by $1 billion compared to the previous offering of the same maturity. Analysts said the smaller size should also help the auction.

* September futures on the 10-year Treasury note inched up 1/32 to 121-30.5/32 TYv1, staying well below a 14-month high of 123-1/32 hit on July 1 on worries over a faltering economic recovery. Ten-year Treasury notes were unchanged in price to yield 3.057 percent US10YT=RR.

* The benchmark 10-year yield marked a 14-month trough of 2.88 percent on July 1, having dropped sharply from a 1 1/2-year high of 4.01 percent hit in early April, according to Reuters data.

* Treasuries fell on Friday, with the benchmark 10-year yield rising as high as 3.066 percent, its highest in nearly two weeks, as stock gains and greater optimism about the economy prompted investors to shift their funds to shares from safe-haven government bonds.

* The three-year yield stood at 1.019 percent US3YT=RR, little changed from levels seen in late New York trade on Friday. (Reporting by Rika Otsuka; Editing by Joseph Radford)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

COLUMN-Inflation or Deflation, why settle for just one? – Saft

July 2, 2010 By Leave a Comment

Ala, July 1 (Reuters) – If you are trying to decide whether to fret about inflation or deflation, don’t bother: you may just get both.

Yes, in the spirit of these austere times, it is a two for one offer; deflation comes first, followed by an almighty inflation after central banks press the “go nuclear” button on the quantitative easing machine.

It seems clear that, at least in the near term, the stars are aligned for deflation. Rather than lancing a massive debt bubble, policy-makers have added to it and the intense pressure to clean balance sheets has spread from corporations and households to nations.

As in 1937 in the U.S. or 1997 in Japan, a move to budget austerity has taken hold in large swaths of the global economy, adding to the intense downward pressure already being generated by very large unused economic capacity.

If neither banks nor governments are willing and able to stoke demand then prices will fall, and as we have seen, absent an outside shock this is a cycle which feeds on itself.

Consumers and businesses will pay down debts that are becoming heavier as money becomes more valuable and they will delay purchases as prices fall.

Of course in a system in which the government can create money at will, deflation should theoretically be an easy problem to solve; central banks can, in Chairman Bernanke’s famous image, simply drop money from helicopters.

That, of course, is a bit like saying that anyone can rid their house of termites, as long as they have enough gasoline and matches; it will work but there may be considerable collateral damage.

This difficulty of achieving a controlled burn, or printing just enough extra money to stop deflation but without unleashing very high inflation, is perhaps one of the reasons quantitative easing has such a chequered history. Unless you are in extremis, it is hard to commit to it wholeheartedly.

The U.S. rowed back from its efforts, at least in part because the Federal Reserve faced predictable political pressure from a policy of directing credit to the housing market, a move that usurped Congress’ check signing role and led to increased and unwelcome oversight of the central bank from the Fed’s viewpoint.

THE FIRE NEXT TIME

Adam Posen, a member of the Bank of England Monetary Policy Committee and an expert on Japan’s deflation experience, more or less nodded to the deflation first, then inflation theory in a speech on Wednesday, though he was quite confident in the banks’ ability to control the inflation genie once released.

Noting that inflation has remained above target in Britain and that inflationary expectations have risen, he concluded that this was in part the result of having had a very loose and very extreme monetary policy the face of quite dire threats.

Posen described Britain as being poised between “a recovery, which we are now in, albeit perhaps an initially weak one … and the renewal of a severe recession if not outright deflation”.

The creep of inflation expectations was then the “unsurprising result of having set monetary policy to prevent a terrible downside risk, and finding policy appears too loose if that risk thankfully does not come to pass.”

In short, the very real threat of deflation calls for policy that will, if successful, unhinge inflation expectations.

Of course, Britain is not the U.S., nor is it Japan, but even though the small island without a true reserve currency is being forced to take austerity steps that may call for extreme monetary measures, something similar could happen in the U.S. for slightly different reasons.

If political pressure for no new spending in the U.S. mounts, more quantitative easing by the Fed may be an achievable quick way to support the system.

The last time we had QE it was amid supportive fiscal policy and with a Europe that was not in a crisis of identity and form.

If European banks begin to fall, beyond the inevitable rescue it would be easy to foresee a coordinated and quite large programme of QE to fend off a generalized sovereign crisis.

This gets us back to inflation, but the question is where does it stop?

This is how we reconcile a world with U.S. 10-year bond yields below 3.0 percent and gold at $1244 per ounce. Many sensible people believe very much in the threat of deflation and a substantial minority think that contains within it the seeds of an inflation to come.

(At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. For previous columns by James Saft, click on [SAFT/])

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Fed officials see soft recovery and more uncertainty

July 2, 2010 By Leave a Comment

Louisiana (Reuters) – Jitters that financial strains may derail the U.S. economic recovery mean the Federal Reserve will be in no rush to end its ultra-low interest rates, comments by officials of the U.S. central bank suggested on Wednesday.

One senior Fed official went as far as acknowledging that falling inflation could spur the central bank to further ease financial conditions, and another policy maker would not rule out additional measures to stimulate growth.

When asked whether lower inflation would prompt the Fed to try to push borrowing costs even lower, Atlanta Federal Reserve President Dennis Lockhart told a Rotary Club audience: “It’s appropriate to think about what we would do under a deflationary scenario. At this point, no specific planning in my view is occurring but discussion in all likelihood will be on the agenda.”

The president of the Chicago Fed, Charles Evans, said the central bank had “provided a tremendous amount of accommodation,” but he also would not rule out further action to stimulate the economy.

“I’m going to be looking at the circumstances, and if we need to adjust policy in either direction, I am going to be responding,” he told business news channel CNBC.

The Fed cut interest benchmark interest rates to near zero percent in December 2008. With no room left to cut rates further, it continued efforts to boost economic activity by flooding the financial system with hundreds of billions of dollars worth of credit.

Financial market strains stemming from the European debt crisis and weak reports about U.S. housing and employment in recent weeks have led some analysts to anticipate the Fed would need to spur the tepid recovery with additional actions to promote growth. If it decided to take further action, the Fed would likely buy additional Treasury or other securities.

Lockhart and Evans are generally considered to be in the mainstream of thinking at the U.S. central bank. Neither, however, is a voter on the Fed’s interest-rate setting panel this year.

But Comments by a member of the Fed’s Board of Governors, Elizabeth Duke, suggest some trepidation at the Washington-based board about the strength of the recovery. Duke typically focuses on banking issues at and rarely comments on the outlook for the economy or policy.

Duke said the job market recovery was likely to proceed only slowly due to sluggish economic expansion. U.S. gross domestic product rose at a modest 2.7 percent annual rate in the first quarter.

“At that speed of recovery, you are not going to create jobs very quickly,” she said, in response to questions at a banking conference in Columbus, Ohio. “It is going to be, I think, a long period for jobs to recover.

Unemployment has hovered near 10 percent for several months, and analysts expect a report on Friday to show a big drop in employment, although private hiring is seen moving higher.

The Fed last week renewed its promise to hold interest rates exceptionally low for an extended period, saying the recovery is “proceeding.”

The economy has expanded for three quarters in a row, and most analysts had until recently been expecting the Fed’s next move to be a tightening of financial conditions through a combination of raising interest rates and sales of mortgage-related debt the Fed bought to stimulate lending.

The Chicago Fed’s Evans said the economic recovery is “definitely on,” with growth expected at 3.5 percent this year.

But he said he expects inflation may run below his guideline of 2 percent for the next three years or more and said unemployment would stay high for some time.

“It’s going to be a number of years before (unemployment) is going to get down to any type of rate that we might almost say is acceptable,” he said.

Taken together, low inflation and high unemployment mean that the Fed’s current accommodative monetary policy is still needed, he said.

(Additional reporting by Ann Saphir in Chicago and Jim Leckrone in Columbus, Ohio; Writing by Mark Felsenthal; Editing by Leslie Adler)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Fed Focus: With broader powers, Fed to face greater scrutiny

June 29, 2010 By Leave a Comment

(Reuters) – As officials at the Federal Reserve may soon discover, more isn’t always better.

Politics

On the face it, the results of the landmark regulatory reform bill finalized on Friday should have policymakers at the U.S. central bank running victory laps around Congress.

Despite self-professed regulatory shortcomings in the run-up to the worst financial crisis in modern history, the Fed has emerged from legislative reform efforts with its powers greatly enhanced.

But with financial markets still fragile and a debt crisis in Europe showing no sign of easing, the Fed’s beefed-up authority to oversee broad risks to the financial system could come back to haunt it.

Unlike in the recent crisis, where regulators shared the blame, any renewed market meltdown might be laid squarely at the Fed’s feet, even though it may still have to tussle with other agencies over how best to protect the financial system.

Moreover, the central bank’s decisions, which could include tough calls like whether or not to break up a firm deemed to threaten financial stability, would likely draw heavy scrutiny from politicians.

“There is a very real risk that these expanded powers will make the Fed more subject to outside political influences,” said Bob Eisenbeis, chief monetary economist at Cumberland Advisors and former research director at the Atlanta Federal Reserve Bank.

“The broader the mandates, the more potential for conflicts of regulatory goals to arise, and of course, one of the quid pro quos of the new powers will be more interaction with Congress,” Eisenbeis said.

Despite strengthening the role of the Fed, the legislation does not completely eliminate the problem of having a wealth of different regulators who at times may work at cross purposes.

At the heart of the new supervisory structure is a systemic risk council headed by the Treasury. The Fed will be only one of the agencies on the council, though arguably the most powerful one.

“I do not expect it to work well and there is a risk the Fed will wind up being blamed for a group failure,” said Anil Kashyap, a professor at the University of Chicago’s Booth School of Business.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Factbox: What U.S. financial overhaul means for the Fed

June 29, 2010 By Leave a Comment

The reforms are part of a broader regulatory overhaul meant to prevent a repeat of the 2007-09 financial crisis that tipped the economy into a deep recession and triggered massive taxpayer bailouts of big banks.

Lawmakers from the U.S. House of Representatives and Senate have melded versions of regulatory reform and are expected to send a bill to President Barack Obama to sign into law before the July 4 holiday.

Following is a look at provisions that affect the Federal Reserve:

CONSUMER PROTECTION

An independent Bureau of Consumer Financial Protection would be set up within the Fed. It would be funded by the Fed, although it could turn to Congress if it saw the need for funding. The agency would have power to write and enforce consumer protection rules. The Fed would not be able to intervene in actions of the bureau or review or delay its rules.

SYSTEMIC RISK REGULATION

The Fed would be part of an inter-agency Financial Stability Oversight Council chaired by the secretary of the Treasury to watch for dangers that could roil the wider financial system, giving the Fed some powers to take action. The Fed could be put in charge of supervising large non-bank financial firms the council deems systemically risky. It would be able to break up those firms to guard against risks.

EMERGENCY LENDING

The Fed could no longer use its emergency lending authority to help a specific company, as it did during the crisis with Bear Stearns and American International Group. Instead, it would have to create a lending facility open to firms of a certain type, as it did with Wall Street investment banks and commercial paper markets.

AUDITS AND DISCLOSURE

The Fed’s emergency lending during the 2007-09 crisis would be subject to a congressional audit, as would any future special emergency lending. The Fed would be required to make public information about borrowing at emergency facilities a year after each facility closes.

Borrowing at the Fed’s discount window and transactions at its open market desk would be made public after a two-year lag. Both of those facilities, whose operations are part of the Fed’s ongoing activities, would be subject to congressional audit.

GOVERNANCE

The president would name a Fed vice chairman for supervision. Bankers supervised by the Fed who serve on the boards of directors of the 12 regional Fed banks would lose the ability to vote for the presidents of those regional Fed banks. Lawmakers agreed to an audit of Fed system governance by the Government Accountability Office.

(For stories on Fed policy, please double-click on)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

FOREX-Dollar on defensive but euro gains limited

June 25, 2010 By Leave a Comment

LONDON, June 24 (Reuters) – The dollar struggled on Thursday after the Federal Reserve reiterated its pledge to keep rates low, though its losses against the euro were limited by persistent doubts about the euro zone economy.

The dollar’s broad weakness helped sterling to extend gains to a six-week high and underpinned the euro, yet traders remained reluctant to chase those advances with more signs of fragile recovery tempering appetite for risky positions.

“There was a little disappointment in the market from the Fed statement but the euro has struggled to rally. The market remains sceptical about problems in Europe and that feeling won’t go away soon,” said Antje Praefcke, currency analyst at Commerzbank.

At 0720 GMT, the euro EUR= was broadly unchanged on the day at $1.2315 having stalled at $1.2351 in Asia.

Versus a basket of currencies .DXY, the dollar slipped to 85.595 in Asia, bringing it closer to a five-week low hit on Monday of 85.091. It later steadied to trade broadly unchanged at 85.829.

“If the market was hoping for re-assurance from the FOMC they would soon be disappointed as the Federal Reserve signalled that growth was likely to disappoint over the course of the next 12 months, due in no small part from the problems in Europe,” said Michael Hewson, currency analyst at CMC Markets.

In a statement at the end of a two-day meeting, the Fed scaled back its assessment of the pace of recovery, taking note of pockets of weakness, and also issued a cautionary note about volatile markets in light of Europe’s debt woes. [nN22150078]

The dollar was also undermined by data showing sales of new U.S. single-family homes tumbling more than expected in May.

NEW AUSTRALIAN PM

The Aussie dollar AUD=D4 rose as high as $0.8771 after Australia’s ruling Labor Party elected a new prime minister in Julia Gillard, in a bid to avoid election defeat later this year. [ID:nSGE65M0LY]

Gillard immediately offered to end a bitter dispute over a controversial “super profits” mining tax, saying she would throw open the door for fresh negotiations. But she stressed miners should pay more tax. [ID:nSGE65M0LY]

The Aussie later trimmed gains to stand at $0.8725, steady from late U.S. trading on Wednesday.

“We expect new PM Gillard to announce a watered down version of the Resource Super Profits Tax in the coming weeks,” said RBC analysts in a note to clients.

“The Australian dollar, resources, and equities will be the likely beneficiaries and should find immediate and longer term support from today’s change of PM,” they said.

Sterling rose to $1.5001 GBP=D4, the highest since May 12, extending gains made the previous day after a hint of an early rise in interest rates in the Bank of England’s minutes. The pound subsequently eased to trade with slight losses at $1.4940.

Against the yen JPY=, the dollar stood at 89.87 yen, stuck near a one-month low of 89.73 yen hit on Wednesday on trading platform EBS.

“Price action in dollar/yen remains poor and my order board suggests some more weakness to come, with an initial target of 89.10. Option related offers above 90.30 should see us capped,” said a London-based spot trader from a U.S. bank. (Additional reporting by Satomi Noguchi, editing by Mike Peacock)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

EURO GOVT-Bunds higher as periphery pressured, stocks fall

June 25, 2010 By Leave a Comment

June 24 (Reuters) – Core German Bunds turned positive on Thursday as peripheral euro zone issuers remained under pressure and after cautious comments on the economy from the US Federal Reserve.

Bunds further extended gains as European equities .FTEU3 turned negative.

At 0727 GMT, September Bund futures FGBLc1 were 11 ticks higher at 128.73. Two-year German yields DE2YT=TWEB were 1.5 basis points lower at 0.582 percent, with ten-year yields DE10YT=TWEB down a similar amount at 2.632 percent.

European shares .FTEU3 reversed earlier gains to stand 0.24 percent lower on the day.

Peripheral yield spreads were steady in early trade, but held close to levels seen the previous session after a bout of widening.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , ,

European shares rise in early trade; miners gain

June 25, 2010 By Leave a Comment

June 24 (Reuters) – European shares rose in early trade on Thursday, with miners leading on hopes that proposals for a super tax in Australia will be diluted after a change of prime minister.

Stocks | Global Markets

At 0706 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.3 percent at 1,043.16 points, after falling 1 percent in the previous session.

Miners gained on hopes that Australia’s new leader, Julia Gillard, will compromise on proposals for increased taxes on resource companies.

Antofagasta (ANTO.L), BHP Billiton (BLT.L), Kazakhmys (KAZ.L) and Xstrata (XTA.L) rose between 0.8 and 1.2 percent.

“It seems to be more confirmation that any plans for a 40 percent resources tax have been watered down significantly,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

“The market is still in a range, and maybe it can trade towards the top of it. ”

The U.S. Federal Reserve renewed its vow to hold benchmark interest rates exceptionally low on Wednesday, but downgraded its assessment of the economic recovery. (Reporting by Brian Gorman)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

EURO GOVT-Bunds lower on post-Fed, data profit-taking

June 25, 2010 By Leave a Comment

June 24 (Reuters) – German Bunds opened lower on Thursday as investors booked profits after a rally the previous session on the back of dismal US housing data and a cautious tone on the economy from the US Federal reserve.

The Fed renewed its promise to hold benchmark interest rates exceptionally low for an extended period, as expected, but also said financial conditions had become less supportive of growth, helping underpin bonds’ recent strength [ID:nN22150078].

European equities .FTEU3 were set to open higher, also adding to pressure on Bunds.

At 0604 GMT, September Bund futures FGBLU0 were 20 ticks lower at 128.42. Two-year bond yields DE2YT=TWEB were half a basis point higher at 0.6 percent, with 10-year yields up 1.5 basis points at 2.660 percent DE10YT=TWEB.

But traders said German Bunds should remain supported.

“The periphery remains under immense pressure, especially Greece with the month-end index related selling,” said a trader. “That, and the tone from the FOMC should keep core markets underpinned.” The 10-year Greek/German government bond yield spread has widened sharply this week because of expected forced selling at the end of the month by passive indexed funds after Moody’s became the second rating agency to downgrade Greece to junk earlier this month.

In supply, Italy will issue up to 1.5 billion euros of index linked BTPs.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Hanmi Financial Corporation Announces That Woori Finance Holdings Co. Ltd. Files…

June 25, 2010 By Leave a Comment

Hanmi Financial Corporation Announces That Woori Finance Holdings Co. Ltd. Files
Applications With Federal Reserve Board and California Department of Financial
Institutions for Capital Infusion of Up to $240 Million

LOS ANGELES, June 24, 2010 (GLOBE NEWSWIRE) — As a follow-up to the
announcement made on May 26, 2010, Hanmi Financial Corporation (Nasdaq:HAFC),
the holding company for Hanmi Bank (collectively “Hanmi”), today reported that
Woori Finance Holdings Co. Ltd. (“Woori”) filed required regulatory applications
with the Korean Financial Services Commission, the U.S. Federal Reserve Board,
and the California Department of Financial Institutions in connection with its
proposed investment in Hanmi of up to $240 million pursuant to a securities
purchase agreement Hanmi and Woori entered into on May 25. 2010. Receipt of
approvals by Korean regulators, the Federal Reserve Board, and the Department of
Financial Institutions is a condition to closing of the securities purchase
agreement.

Additional Information

A proxy statement relating to certain of the matters discussed in this news
release, including a more complete summary of the terms and conditions of the
securities purchase agreement with Woori, was filed with the SEC on June 16,
2010. Hanmi is seeking approval of the issuance of securities to Woori at its
upcoming meeting of stockholders to be held on July 28, 2010. Copies of the
proxy statement and other related documents may be obtained for free from the
SEC website (www.sec.gov) or by contacting Hanmi Financial Corp., Attn: Investor
Relations, David J. Yang 213-637-4798. Hanmi’s shareholders are advised to read
the proxy statement, because it contains important information, and Hanmi notes
that the shareholder meeting on the matters discussed in the proxy statement may
occur after the closing of the registered rights and best efforts offering.
Hanmi, its directors, executive officers and certain members of management and
employees may be considered “participants in the solicitation” of proxies from
Hanmi’s shareholders in connection with certain of the matters discussed in this
news release. Information regarding such persons and their interests in Hanmi is
contained in Hanmi’s proxy statements and annual reports on Form 10-K filed with
the SEC. Hanmi has engaged the services of D.F. King & Co., Inc. to assist in
soliciting proxies. Shareholders and investors may obtain additional information
regarding the interests of Hanmi, its directors and executive officers and D.F.
King & Co., Inc. in the matters discussed in this news release by reading the
proxy statement and other relevant documents regarding the matters discussed in
this news release.

Cautionary Statements

The issuance of the securities to Woori described in this news release have not
been and will not be registered under the Securities Act of 1933, as amended, or
any state securities laws, and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirements of the Securities Act and applicable state securities laws. This
press release shall not constitute an offer to sell or the solicitation of an
offer to buy any of the securities described herein, nor shall there be any sale
of the securities in any jurisdiction or state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction or state.

Forward-Looking Statements

This release contains forward-looking statements, which are included in
accordance with the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “expects,”
“plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” or “continue,” or the negative of such terms and other comparable
terminology. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. These statements involve known
and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to differ from those
expressed or implied by the forward-looking statement. These factors include the
following: inability to consummate the proposed transactions with Woori on the
terms contemplated in the agreement with Woori; failure to receive regulatory or
stockholder approval for the transactions contemplated with Woori; inability to
continue as a going concern; inability to raise additional capital on acceptable
terms or at all; failure to maintain adequate levels of capital and liquidity to
support our operations; the effect of regulatory orders we have entered into and
potential future supervisory action against us or Hanmi Bank; general economic
and business conditions internationally, nationally and in those areas in which
we operate; volatility and deterioration in the credit and equity markets;
changes in consumer spending, borrowing and savings habits; availability of
capital from private and government sources; demographic changes; competition
for loans and deposits and failure to attract or retain loans and deposits;
fluctuations in interest rates and a decline in the level of our interest rate
spread; risks of natural disasters related to our real estate portfolio; risks
associated with Small Business Administration (“SBA”) loans; failure to attract
or retain key employees; changes in governmental regulation, including, but not
limited to, any increase in FDIC insurance premiums; ability to receive
regulatory approval for Hanmi Bank to declare dividends to Hanmi Financial;
adequacy of our allowance for loan losses, credit quality and the effect of
credit quality on our provision for credit losses and allowance for loan losses;
changes in the financial performance and/or condition of our borrowers and the
ability of our borrowers to perform under the terms of their loans and other
terms of credit agreements; our ability to successfully integrate acquisitions
we may make; our ability to control expenses; and changes in securities markets.
In addition, we set forth certain risks in our reports filed with the Securities
and Exchange Commission, including our Annual Report on Form 10-K for the fiscal
year ended December 31, 2009 and current and periodic reports filed with the
Securities and Exchange Commission thereafter, which could cause actual results
to differ from those projected. We undertake no obligation to update such
forward-looking statements except as required by law.

Sources: http://www.laedc.org/reports/Forecast-2010-02.pdf

CONTACT: Hanmi Financial Corporation
BRIAN E. CHO, Chief Financial Officer
(213) 368-3200
DAVID YANG, Investor Relations and Corporate Planning
(213) 637-4798

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

E-Readers Feel Heat From iPad and Slash Prices

June 23, 2010 By Leave a Comment

The iPad’s starting price is $499, and yet Barnes & Noble (BKS) and Amazon (AMZN) felt like their cheaper e-readers were threatened enough to warrant price cuts, reports the Wall Street Journal. Barnes & Noble not only cut the price of its Nook to $199, but the company also “introduced a Wi-Fi-only model for $149.” Neither the Nook nor Amazon’s Kindle have some of the capabilities of Apple’s (AAPL) iPad, and so the price cut is more of a bid to “further drive e-readers into the mainstream.” In fact, one analyst doesn’t think this will be the last price cut of the year and predicts e-readers without wireless Internet may drop to $99. The low price for the e-reader forces the companies to rely on profits from e-books.

House and Senate Democrats have been hard at work trying to iron out wrinkles in the financial regulation bill in an attempt to have it finished by July 4. According to the New York Times, a tentative agreement has been reached on debit card fees. Congress’ agreement makes it the Federal Reserve’s job “to limit the fees that banks collect from merchants when customers swipe debit cards.” Banks received more than $15 billion in debit card transaction fees last year, which was 80 percent of the almost $20 billion paid to Visa and Mastercard. Congress still has a long week ahead with some issues, like regulations for derivatives trading, remaining to be discussed.

Congress may have given the Fed some new responsibility, but at the same time House and Senate Democrats agreed to place a watchdog inside the Federal Reserve, according to Reuters. The new consumer watchdog proposal follows the Senate’s version, as opposed to the House’s support “for setting up a powerful new stand-alone agency.” Although the watchdog won’t be separate, it will be “independent in many respects, with the power to both write rules and enforce them.” The agency’s purpose is to oversee any consumer financial products that were “poorly supervised.”

For a company with the slogan “Don’t Be Evil,” Google has been doing a lot of evil lately. For three years, Google (GOOG) inadvertently collected personal information while trying to amass data for its Street View, reports the Los Angeles Times. In response to this information, more than 30 states want to investigate Google’s information-gathering and why the data was kept. In order to collect information for Street View, Google sent out “cars equipped with panoramic cameras” and “radio receivers meant to gather information about home and business Wi-Fi networks.” The networks were helping to triangulate locations, but in the process the company collected data, such as e-mails, from networks that weren’t password-protected. The 600 gigabytes of data hasn’t been used or analyzed, according to Google. Germany and Australia have begun formal investigations, and some countries requested Google that destroy the data, which the company has begun to do.

For some time, MGM has been in limbo, unable to start movies because of a $4 billion in debt; but now Spyglass Entertainment seems to be the leading candidate to run the company, reports the Wall Street Journal. There is no set deal, since Summit Entertainment is also still in talks. Besides, for a large debt, the winning contender will gain MGM’s library, which has “more than 4,000 films, including the James Bond franchise.” As things currently stand, the popular Bond franchise is in danger, with the next movie put on indefinite hold. MGM’s troubles have also cost it Guillermo del Toro as the director of the two Hobbit movies. With such large films sitting on the backburner, it’s understandable that MGM wants a pre-packaged bankruptcy, which would require lining up “approval from many creditors in advance, with an eye toward spending less than two months in court proceedings.”

Finally, changes in China are begetting many others. Bloomberg reports that some companies are moving toward automaton assembly lines in Chinese factories to offset rising costs from “new minimum wage laws, a looser yuan and worker strikes.” VTech Holdings is one company that wants to reduce labor reliance by installing machines to do some of the work. Other companies that want to move toward machines are Foxconn Technology and Nissan.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

NY Fed’s Sack says non-banks need liquidity access

June 10, 2010 By Leave a Comment

June 9 (Reuters) – The U.S. financial system’s reliance on non-bank lenders means non-banks should be able to benefit from liquidity facilities in the event of another crisis, an official from the New York Federal Reserve said on Wednesday.

Bonds | Global Markets

Speaking at a luncheon for the New York Association for Business Economics, Brian Sack, executive vice president at the New York Fed, said that if non-banks benefitted from the U.S. central bank’s liquidity measures, they might also need to be more closely regulated.

“Measures may be warranted for nonbank financial institutions if they expect Federal Reserve credit to be made available to them during times of stress,” he said. (Reporting by Emily Flitter and Steven C. Johnson, Editing by Chizu Nomiyama)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,
« Older Posts