The BIS came out with their annual report, and called central banks to end their massive liquidity creation - and other participants to start doing their share of the work for the recovery. China's interbank markets remain stressed, and the only data point of note today is the German Ifo business survey. A hawkish Fed member speaks in the afternoon, and only weeks ago he compared the QE to monetary cocaine. Sounds like a bearish day.
Previously on MoreLiver’s:
Roundups
News roundup – Between The
Hedges
The 6am Cut London – alphaville
/ FT
Emerging Markets
Headlines – beyondbrics
/ FT
MORNING BRIEFINGS
Germany's Ifo business conditions index is the day's main macro release. The
level of stress in the Chinese interbank markets and later today the speech
from the Federal Reserve's Richard W. Fisher should set the tone for the early
part of the week.
Market Preview: German Ifo sentiment indices in
focus – TradingFloor
European markets are
expected to open marginally higher on Monday. Investors await today's German
Ifo sentiment data which is likely to show an uptick in business confidence for
June. Also, regional manufacturing data in the US will be keenly eyed.
Danske Daily –
Danske Bank (pdf)
Aamukatsaus – Nordea
Jenkkitalous ei
liikoja lomaile * USA:n 10-v. korko korkeimmilleen lähes kahteen vuoteen
EUROPE
Dutch review attacks
'creeping' EU powers – euobserver
Austerity is a
Four-Letter French Word – John
Mauldin / The Big Picture
June 20 the French called a Grand Summit of businesses, unions, and
government officials to address the needed reforms to make France more
competitive and its national budget more sustainable.
UNITED STATES
Mortgage rates spike
to two-year high – Sober
Look
The refinancing gravy train has ended.
Steepening yield
curve benefits banks, but major headwinds remain – Sober
Look
The Recent Surge in Yields: How Does It Compare
with the Past? – dshort
From rotation to panic - a turning point? – Sober
Look
The "End Of Easing" Or "The
Start Of Tightening" In 12 Charts – ZH
The average time
distance between the last rate cut and the first rate hike has been around 15
months.
(fun) Bernankespeak, Translated
– Bloomberg
QE myths and the
Expectations Fairy – Coppola
Comment
Myths: QE raises inflation, QE stimulates the economy by forcing banks
to lend, QE stimulates the economy by persuading corporates to invest, QE
encourages households to increase spending, QE debases the currency
A Wall Street
regulator’s race against time – Wonkblog
/ WP
The rumor is that Gary Gensler, the Goldman Sachs trader turned Wall
Street regulator, may see his time atop the Commodities Futures Trading
Commission end in July. The question is whether he can finish perhaps the most
important piece of financial reform before he’s out – or whether the House will
manage to stop him.
ASIA
China Shitshow:
Lending Rate Spikes and Apartment Bubbles – The
Reformed Broker
Shocking corrective
crises may not always be the worst-case scenario.
The BIS Chart That Abe And Kuroda Would Rather
You Didn't See – ZH
Japanese government
debt-to-GDP projections
BIS ANNUAL REPORT
Since 2007, actions by
central banks have prevented financial collapse. Further accommodation is
borrowing time for others to act. But the time must be used wisely. The
focus of action must be on balance sheet repair, fiscal sustainability and,
most of all, the economic and financial reforms needed to return economies to
the real growth paths authorities and the public both want and expect (Chapter
I). After reviewing the past year's economic developments (Chapter II), the
remaining economic chapters of the 83rd Annual Report cover the critical policy
challenges in detail: reforming labour and product markets to restore
productivity growth (Chapter III), ensuring the sustainability of public
finances (Chapter IV), adapting financial regulation to ensure resilience of
the increasingly complex global system (Chapter V), and re-emphasising the
stabilisation objectives of central banks (Chapter VI).
*Five
years in the tower – BIS (pdf)
Remarks by Mr Stephen G Cecchetti, Economic Adviser and Head of Monetary
and Economic Department of the BIS, prepared for the 12th BIS Annual
Conference, Lucerne, Switzerland, 20-21 June 2013: I'd like to focus on what I have learned
during my five years at the BIS and offer some insights in three broad areas:
economic research, policy and, lastly, the work of the BIS itself: 1) Quantities
matter more than we thought 2) Moral hazard is worse than we thought.
Making the most of
borrowed time: repair and reform the only way to growth – BIS
The 83rd Annual
General Meeting – BIS
Overview of documents issued at the 83rd Annual General Meeting of the
BIS, 23 June 2013.
I'm a central banker,
get me out of here – Free
exchange / The Economist
At the core of the bank’s analysis is an insistence on the limits to
what monetary policy can achieve. What is holding back a healthy recovery is
not lack of monetary stimulus, it argues; rather it is underlying flaws in the
way that many economies operate whose effects are particularly pernicious after
a financial crisis.
BIS Warns The
Monetary Kool-Aid Party Is Over – ZH
Central banks told to
head for exit – FT
Central banks must head for the exit and stop trying to spur a global
economic recovery, the Bank for International Settlements has said
‘Window-Dressing’ Undermines Bank Risk-Weight
Trust: BIS – BB
Global banks have
improved their capital ratios in part by understating the riskiness of their
assets, not by raising their ability to stem losses, the BIS said. Regulators
need to monitor the use of internal risk models in determining the capital
lenders hold against losses and complement them with gauges that don’t use risk
weightings,
BIS tells central banks not to fear markets
when withdrawing crisis cash –
Reuters
Exit more challenging
the longer expansive policy stays, size and scope of exit will be unprecedented.
BIS: Bondholders would lose more than $1
trillion if yields spike – Reuters
Bondholders in the U.S. alone would lose more than $1 trillion if
yields leap, showing how urgent it is for governments to put their finances in
order
OTHER
FX Comment: TIPSy – Nordea
Fed’s Bernanke left us with the impression that “this time is
different”. And if there is anything the spike in US Treasury yields and USD
last week prove, is that it got too crowded on the “Fed will taper the
tapering” bench ahead of the FOMC meeting.
A correction, not a
bear
– Humble
Student
Let's survey the technical damage that was done on Thursday and carried
through to Friday. First and foremost, emerging market bonds continued to
crater. Never mind the spread between EM bonds and Treasuries, look at the
relative performance of EM bonds against US high yield, which broke an
important relative support line.
How Resilient Is EM
To The End Of QE – A Vulnerability Heatmap – ZH
Barclays: QE was a policy reaction to pressures at the core of the
global financial system and the very high DM debt levels that threatened to
push major advanced economies into a recession-deflation cycle. Although
deflation threats may have abated, public debt levels in DMs have adjusted
little. Hence, the fundamental vulnerability to an end of QE may still reside
with many DMs (eg, euro area periphery), rather than EMs. However, QE pushed
large capital flows into EM economies.
On Researching
Industries – The
Aleph Blog
FINNISH
Kiristystä ja pakkoveroja vaiko elvytystä? – Raimo
Ilaskivi / IL
Voisiko Perussuomalaiset "kaataa
euron"? – Henri
Myllyniemi / US Puheenvuoro
BIS keskuspankeille: on aika lähteä – Henri
Myllyniemi / piksu
Ruotsissa ja Tanskassa EU:n ja euron kannatus
jyrkkenevässä alamäessä
– Martti
Issakainen / US Puheenvuoro
Luottamus vai sijoittajavastuu? – Henri
Myllyniemi / US Puheenvuoro