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Market Update

Bond Market Suffers a Huge Sell-Off Into Fed Speak

“All eyes are on the release of the Federal Reserve’s monetary policy statement from its latest FOMC meeting at 2 PM ET and Fed Chairman Ben Bernanke’s subsequent press conference and Q&A, which begins at 2:30.

Stocks are flat and trading sideways today, heading into the big event this afternoon.

However, the bond market is selling off…”

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Market Update

“The FX and precious metals markets are swinging wildly around this morning (amid no news) as US equities remain anchored to hope (and VWAP) ahead of the FOMC tomorrow. Copper is also sliding quickly but WTI is back above $98 as the USD gets back to unchanged on the week. Treasury yields spiked early but have reverted to unchanged now. Credit markets have done nothing but widen (worsen) from the open this morning – also ignoring equity’s stability – but hedgers are active as VIX remains higher on the day…”

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Market Update

[youtube://http://www.youtube.com/watch?v=8WQVb_nuKvs 450 300]

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Financial Times Writer Dominates Market

U.S. equities got off to a strong start. Hope is running high as the Fed meets this week.

By 2 p.m. a Financial Times article said the markets may not be ready for more tapering talk. The market abruptly went down to pare 75% of its rally. Then the journalist made a tweet about an hour later which turned the market around to bounce from up 50 to up 109 by the close.

Such b.s. shows how on edge the markets are in a low volume environment.

Today technology, cyclicals, and home builders led the rally.



Market stats

[youtube://http://www.youtube.com/watch?v=PHRIvssIfHo 450 300]

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M&A Keeps European Markets From Falling for a Third Day

“European stocks advanced, snapping a two-day decline, as merger and acquisition activity outweighed concern that central banks will taper stimulus measures. U.S. futures climbed while Asian shares were little changed.

Kabel Deutschland Holding AG jumped 8.4 percent after Vodafone Group Plc confirmed that it approached the German company about a takeover. British Sky Broadcasting Group Plc rose 1.9 percent as analysts said News Corp. may make another offer for the company. Severn Trent Plc (SVT) tumbled the most since July 2009 after a consortium of investors dropped their bid for the water utility.

The benchmark Stoxx Europe 600 Index (SXXP) gained 0.5 percent to 293.26 at 11:45 a.m. in London. The gauge has still lost 5.6 percent since May 22 amid speculation the Federal Reserve will taper its bond-buying program that helped drive the measure to its highest level since June 2008.

“I’ve been waiting for M&A for so long; companies have strong balance sheets so that they have the wherewithal to do it, but it’s whether they have the confidence,” Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about $6.1 billion, said in a telephone interview. “I would expect to see more activity in the coming months.”

The MSCI Asia Pacific Index rose 0.1 percent today, after a rout that wiped out about $400 billion from the value of global equities yesterday. Contracts on the Standard & Poor’s 500 Index futures advanced 0.5 percent after the equity gauge fell for a second day.

German Hearing

Germany’s top court continues its two-day hearing to address the European Central Bank’s Outright Monetary Transactions program and the European Stability Mechanism. The ECB’s top two German officials yesterday gave opposing evidence at the Federal Constitutional Court in Karlsruhe as judges consider the legality of the OMT bond-buying program….”

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Asian Markets Fall on Fears That Stimulus is Over, Europe Trying Desperately to Avoid Carnage

“Asian stocks fell, extending a rout that wiped out about $400 billion from the value of global equities yesterday, amid concern that central banks from Tokyo to Washington are increasingly reluctant to add stimulus.

Toyota Motor Corp., the world’s largest carmaker, retreated 1.8 percent in Tokyo after the yen yesterday gained the most in three years. Hyundai Merchant Marine Co. (011200) plunged 15 percent in Seoul after North Korea called off talks yesterday on a joint industrial zone. Nomura Real Estate Master Fund Inc. (3285), Japan’s largest initial public offering this year, fell 6.2 percent in its debut.

The MSCI Asia Pacific Index was little changed at 131.65 as of 8:44 p.m. in Tokyo, with about two shares falling for each that advanced. Markets in China, Hong Kong, Taiwan and the Philippines were shut for holidays.

“There’s lots of confusion around the world at present about what central bank policy means for the outlook of the global economy, earnings and valuations,” Matthew Sherwood, Sydney-based head of market research at Perpetual Ltd., which manages about $25 billion, said by e-mail. “The Fed is likely to continue to be ambiguous about its next step, probably because it’s not sure. This will see markets continue to be volatile.”

The MSCI gauge fell 8.9 percent through yesterday from this year’s high on May 20 on speculation that an improving U.S. economy will lead the Federal Reserve to scale back record stimulus. In May, Fed Chairman Ben S. Bernanke said policy makers could reduce the pace of bond buying should there be sustained improvement in the U.S. economy….”

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Market Update

U.S. equities found a pitfall that got underway in Asia and then spread to Europe after the Bank of Japan failed to pour more gasoline on the stimulus fire.

We did have an amazing paring of losses over the past hour briefly going positive for a tick or two.

Financials lead the negativity putting in the worst performance, while commodities also remain weak due to a slowdown in China.

The markets seem to have a problem breaking out above 1640 S&P, but seem to hold the 1620 level for now. Soon come,  longer term direction will be had once the markets decide how to deal with tapering possibilities.

Market update

2 4 2sday

[youtube://http://www.youtube.com/watch?v=XJoZe5vkxws 450 300] [youtube://http://www.youtube.com/watch?v=oZdiXvDU4P0 450 300]


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European Stocks Fall as No New Stimulus is Announced in Japan

“European stocks slid to a seven-week low as the Bank of Japan refrained from expanding stimulus and Treasury yields climbed. U.S. index futures and Asian shares also declined.

Legrand SA retreated 4 percent after Wendel sold the remaining 14.4 million shares it holds in the world’s largest maker of switches, plugs and lighting controls. ICAP Plc dropped 3.6 percent after Credit Suisse Group AG recommended selling the shares. A gauge of European commodity producers retreated to the lowest since July 2009 as copper dropped for a fourth day in London trading.

The Stoxx Europe 600 Index fell 1.6 percent to 290.5 at 10:48 a.m. in London, the lowest since April 23. The gauge has retreated 6.4 percent since May 22 amid speculation the Federal Reserve will taper its bond-buying program as the U.S. economy strengthens. Standard & Poor’s 500 Index futures lost 0.8 percent, while the MSCI Asia Pacific Index dropped 0.2 percent.

“Uncertainty weighs on markets today,” said Eric Bernhardt, chief investment officer at Umblin AG in Zurich. “Investors are disappointed by the BOJ’s unchanged policy as they had hoped they would do more to solve the problems on the Japanese bond market.”

The benchmark 10-year U.S. Treasury yield climbed as much as five basis points to 2.26 percent, the highest level since April 2012.

The BOJ today refrained from expanding its tools to rekindle inflation and stoke growth, sticking with an April pledge to increase the monetary base by 60 trillion yen ($620 billion) to 70 trillion yen a year. Markets in China were closed for the Dragon Boat Festival.

Japan Focus…”

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Japan Leaves Stimulus Unchanged, The Yen Strengthens While the Nikkei Drops

“Stocks, bonds and commodities fell around the world and the yen strengthened after Bank of Japan Governor Haruhiko Kuroda left his stimulus efforts unchanged, stoking speculation central banks will fail to keep the global recovery on track.

The MSCI All-Country World Index dropped 0.2 percent to 365.26 at 10:10 a.m. in London. The Standard & Poor’s 500 Index futures lost 0.4 percent. The S&P GSCI gauge of 24 raw materials retreated 0.4 percent. Japan’s currency strengthened at least 1 percent against all its 16 major peers. The Australian dollar sank to the lowest level in almost three years and Asian currencies declined. Greek, Portuguese and Irish bonds tumbled.

The BOJ left unaltered the one-year fixed-rate loan facility the bank has tapped seven times amid a surge in bond yields. At a press briefing in Tokyo, Kuroda said that the central bank will discuss longer funding operations if they become necessary. While global stocks have dropped 3.8 percent from this year’s peak on May 21 on speculation the Federal Reserve will taper bond purchases, they are still 7.5 percent higher in 2013.

“Investors are realizing that very low funding rates aren’t set in stone,” said Michael Leister, an interest-rate strategist at Commerzbank AG in London. “We are seeing a lot of volatility and the jury remains out on exactly what the BOJ will achieve.”

ICAP Downgrade

The Stoxx Europe 600 Index slid 1 percent, with more than six shares declining for every one that advanced. ICAP Plc slipped 4.1 percent, the most in two months, after Credit Suisse Group AG downgraded the world’s largest broker of transactions…”

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The Greenback Rises, Yields Fall as S&P Drops Negative Rating on U.S.

“NEW YORK (Reuters) – The dollar rose again the yen and U.S. bond yields neared 14-month highs on Monday on improved sentiment toward the U.S. economy after rating agency Standard & Poor’s dropped its negative credit outlook for U.S. government debt.

S&P upgraded the U.S. credit outlook to “stable” from “negative,” saying the chances of a downgrade of the country’s rating is “less than one in three.

The dollar extended gains versus the yen to hit a session high, while prices for long-dated Treasury debt slipped, continuing a selloff sparked by uncertainty over when the Federal Reserve would begin scaling back bond purchases.

The 30-year bond’s yield rose to its highest since April 2012 after the S&P revision, while the 10-year note’s yield touched 2.20 percent for just the second time since then.

German Bund futures fell to a three-month low with the September Bund futures contract settling down 54 ticks at 142.85, its lowest since mid-March.

Analysts and investors said the S&P news was unlikely to spur a sharp rally or impact speculation about when the Fed might ease back on its bond buying, but added to generally upbeat sentiment about the outlook for the U.S. economy….”

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The Nikkei Pops 5.2% as the Yen Weakens

“Asian stocks rose, with the regional benchmark index heading for the biggest rally in more than a week, after a report showed the U.S. added more workers than expected. Japanese shares surged after a three-week, $600 billion rout.

Japan’s Topix index jumped 5.2 percent, the most since March 2011, after the Government Pension Investment Fund, the world’s biggest manager of retirement savings, said on June 7 it will sell bonds to buy more equities. Toyota Motor Corp., the No. 1 global carmaker, gained 8.6 percent. Yue Yuen Industrial Holdings Ltd. (551), a shoemaker that gets 29 percent of its revenue in the U.S., rose 2.7 percent in Hong Kong. Sharp Corp. (6753) jumped 15 percent after Qualcomm Inc. agreed to a second purchase of the unprofitable Japanese TV maker’s shares….”

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