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Monday, August 27

27th Aug - US Close

Most interesting development of the otherwise dull day: comments noticing that the fall in European crisis countries' bond yields has stopped - and actually slightly reversed, and CDS prices are moving up (see my chart page). The ECB's game changer is thus almost priced in, and the statement mill is bound to disappoint. Some of you have been following the "renationalization" of monetary policy within the eurozone. You might find bruegel's dataset interesting, as it shows who actually holds the bonds - and when the trends in ownership data have reversed.

Previously on MoreLiver’s:

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Roundups & Commentary
Markets – Between The Hedges
The Closer – alphaville / FT
Tyler’s European Summary – ZH
  European Stocks Close Green With Credit 'Reality-Check' On Vacation
Tyler’s US Summary – ZH
  Stocks Stumble Despite AAPL's Best Efforts

TV: Bloomberg, BBC
Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices
Introducing the Bruegel dataset of sovereign bonds holdings (and more)bruegel
To our knowledge, this is the first cross-country database on sectorial bond holdings that covers almost all the sovereign issuer of the euro area and we believe that it could therefore add a significant value to the existing sources. (Data in Excel format)

Draghi: Call Me MaybeMarc to Market
While Spanish and Italian bonds remain firm, though without any more upside momentum, we note that the price of insurance is beginning to rise.  The 5-year credit-default swap in Spain is just below 500 bp and is at its highest level in two weeks.  Italy's 5-year CDS is near 455 bp, which is approaching a 3-week high. 

Summer’s Over: Spain and Italy CDS SurgeMarketBeat / WSJ

Greece's Fate to Be Decided at October EU SummitSpiegel
European leaders are unconvinced that the Greek government's austerity efforts will produce quick results. Greece's fate is now likely to be decided at the EU summit in October. The country's European partners will have to choose among a number of equally unattractive alternatives.

Judgment Day for the EurozoneProject Syndicate
Hans-Werner Sinn: Nobody knows how the Constitutional Court will rule on these objections. Most observers believe that the Court is unlikely to oppose the ESM treaty, though many expect the judges to demand certain amendments, or to ask Germany’s president to make his signature subject to certain qualifications.

German Central Bank Opposes Euro StrategySpiegel
The ECB plans to resume buying the bonds of crisis-hit countries on a large scale. Jens Weidmann, head of the German central bank, is firmly opposed to the idea, arguing that it will lead to inflation and lessen pressure on governments to carry out reforms. But he is becoming increasingly isolated within the ECB and in the political world.

Merkel Pushes for Convention to Draft New EU TreatySpiegel
Chancellor Angela Merkel's plans for a new treaty governing the European Union are becoming more concrete. SPIEGEL has learned that the German leader wants the EU to begin working on a draft this year, with the aim of providing Brussels with greater power to monitor budgets. But many countries are deeply opposed to the idea.

Merkel Pushes Convention to Draft New EU Treaty; United States of Merkel?Mish’s
If the treaty is a simple majority rule treaty, Germany would be at risk of being overruled by the club-med states. If the treaty is by percentages, the club-med states would be at risk of being dominated by what is good for Germany and France (assuming of course Germany and France can agree). No matter how a treaty is structured, some countries are guaranteed not to like it.

China's industrial profits decline; market skeptical on stimulusSober Look
It is no wonder that Wen Jiabao said recently that China needs measures to promote export growth. But so far the domestic market remains skeptical that any meaningful measures will actually be implemented.

China in the Eye of the BeholderProject Syndicate
One of the most glaring, if unremarked, oddities concerning China nowadays is how perceptions of its leaders diverge depending on the observer. In the eyes of the Chinese public, government officials are venal, incompetent, and interested solely in getting lucrative appointments. But Western executives invariably describe Chinese officials as smart, decisive, knowledgeable, and far-sighted

The US housing market is not "a chicken-and-egg problem"Sober Look
The housing market and the US economy are now far less coupled together than in the past, when strong housing markets generated construction based growth. And just as demographics more than the economy now drive improved demand for homes, a better housing market will not have the same positive impact on the economy as it did before the financial crisis.

What's Priced In?ZH
Citi: traders 'expect' the US, Europe, and Canada all to be tightening (raising rates) within 18 months, while expectations are for Australia (and the rest of the China-reliant nations across Asia) to see notable easing in that period - and already priced in.

Bernanke-Draghi: Jackson Hole vs. Leen’s LodgeKotok / The Big Picture
Foreign markets are watching China’s weakness. The second largest economy in the world is struggling with serious questions about its regrowth. In Europe, growth rates are not expected to improve even if the ECB liquidity infusion occurs. In the US, the slow-growth approach and fiscal-cliff uncertainties of an unclear election outcome impede an economy that is struggling under the burden of a large negative output gap…

Suomi pulitti ennätyspotin EU:lle – ”Salattiin”US

Ennätysmaksun syy paljastui: Suomi maksaa muiden helpotuksiaUS

Soini: Rahamarkkinoille pitäisi palauttaa oikeus epäonnistuaTE

Kuluttajista talouskasvun vetureita – turha toivoTalSa

Teollisuuden ja kuluttajien luottamus ei horjunut elokuussaeuroetana