Rick Rieder, Business Insider, There’s a good reason to assume that interest rates will stay low for a long time, here.
It’s important to note, though, that I see a moderate jobs growth slowdown ahead, rather than an aggressive one. But given that strong labor markets have been one of the hallmarks of the past few years of U.S. expansion, any persistent slowing in this area would certainly make raising rates much more difficult for the Fed. Ultimately, I believe interest rates should be normalized at a measured pace. It’s clear to me that the economic effectiveness of excessively low rates in stimulating economic growth has been significantly diminished in recent years.
European Central Bank, Euro area yield curve, here. Negative rates out to 12 years. About 33% of existing government issuance has negative yield.
- 4 August 2016
- AAA rated bondsAll bonds
- Spot rateInstantaneous forwardPar yield
- Maturity 4 August 2016
- 3 months -0.659290
- 6 months -0.645733
- 9 months -0.639727
- 1 year -0.638646
- 2 years -0.649664
- 3 years -0.644813
- 4 years -0.608782
- 5 years -0.546576
- 6 years -0.468104
- 7 years -0.382410
- 8 years -0.296077
- 9 years -0.213268
- 10 years -0.136261
- 11 years -0.066035
- 12 years -0.002758
- 13 years 0.053874
- 14 years 0.104400
- 15 years 0.149452
- 16 years 0.189670
- 17 years 0.225656
- 18 years 0.257956
- 19 years 0.287050
- 20 years 0.313354
- 21 years 0.337227
- 22 years 0.358975
- 23 years 0.378859
- 24 years 0.397104
- 25 years 0.413899
- 26 years 0.429409
- 27 years 0.443774
- 28 years 0.457114
- 29 years 0.469537
- 30 years 0.481132
Goodman and Chappatta, Bloomberg, Morgan Stanley Says Year of the Bull Will Push U.S. Yield to 1%, here.
Morgan Stanley’s Matthew Hornbach called this year’s Treasury market rally. Now he’s revising his forecasts and is more bullish than just about anyone else.
Ten-year U.S. yields will fall more than 50 basis points, or 0.5 percentage point, to 1 percent in the first quarter of 2017, according to Hornbach, the firm’s head of global interest-rate strategy in New York. None of the 61 economists surveyed by Bloomberg are predicting such a rally. The lowest forecast in the group is for 1.2 percent.
“The year of the bull for rates markets is set to continue with support from politics, productivity and policy,” according to a Morgan Stanley report Hornbach sent by e-mail Monday. “We expect growth to come in increasingly below consensus over the coming 12 months.”
Ben Moshinsky, Business Insider, Leaving London, here.
London is likely to lose its financial services passport, and investment banks that shift operations abroad quickly will benefit from a “first-mover advantage,” according to a confidential Deutsche Bank briefing seen by Business Insider.
The internal note, titled “Brexit Briefing” and prepared for a July 5 board meeting, said the bank’s competitors would most likely ramp up non-London operations in Ireland, France, Germany, and Luxembourg, where they have existing subsidiaries. A spokesman for Deutsche Bank declined to comment.
Barclays and Bank of America Merrill Lynch could shift their markets business to Dublin, while Goldman Sachs has subsidiaries in Paris and Frankfurt, Germany, that it could use to keep its access to the 27-member single market once the UK officially leaves the European Union, according to the note. JPMorgan could shift resources to Luxembourg, where it has a subsidiary.
Tyler Durden, Zerohedge, Did “China” Just Buy The Most Important Company In The World? here. Yeah it is Zerohedge – but there is the Chinese ISA they were looking for wo royalties to Intel.
In the aftermath of last night stunning announcement that Japan’s Internet giant SoftBank would acquire UK-based ARM Holdings, a company which makes chips present in virtually every mobile and “connected” device, for $32 billion, sending the semiconductor sector surging, questions emerged why the company is doing this.
On one hand, even the founder of ARM Holdings himself, Hermann Hauser said, told the BBC he believes its imminent sale to Japanese technology giant Softbank is “a sad day for technology in Britain”. Hauser said the result of the Softbank deal meant the “determination of what comes next for technology will not be decided in Britain any more, but in Japan”.
Larry Tabb, Tabb Forum, Latency Arbitrage and the Problem With the SIP, here.
Latency arbitrage is based on exploiting time disparities between different trading platforms and/or data sources. This occurs when a party receives/processes/reacts to information faster than another, putting the slower party at a disadvantage. While latency arbitrage is difficult to accomplish through displayed orders on traditional exchanges (because of the real-time nature of displayed markets), it occurs more frequently with non-displayed orders, or when exchanges or ATSs (dark pools) need to calculate a synthetic transaction price, such as on a mid-point fill.
Latency arbitrage can be exacerbated by using slower market data feeds. The fastest feeds are provided by exchanges as information is disseminated directly from their matching/processing engines. This data is called direct data and is provided through direct feeds.