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April 9, 2014

Greek Bond Auction Welcomes 4 Year Low Yields

Greece is set to return to the bond markets for the first time in four years, a key signal that its crisis-hit economy is welcomed once more by investors.

“Greece is back,” analysts at Credit Suisse proclaimed. After a grueling austerity program under the terms of its two bailouts international lenders, and possibly more importantly European Central Bank President Mario Draghi’s pledge to do “whatever it takes” to save the euro, Greece is no longer talked of as the first country likely to leave the single currency.

The Greek finance ministry confirmed in a news release on Wednesday that it would launch a five-year bond in the “near future”. It is seen auctioning around 2 billion euro ($2.78 billion) worth of debt.

The yield is expected to be around the 5.4 percent mark, a better investment return than the current 4.79 percent, as authorities want to offer a little sweetener to investors, according to CNBC sources in Athens.

Ahead of the auction, yields for 10-year Greek bonds fell to 5.951 percent on Wednesday–their first time below 6 percent in four years.

In comparison, Portuguese 10-year bonds were yielding 5.889 percent. 10-year German bunds yielded 1.583 percent and U.S. Treasurys yielded 2.7134 percent.

via CNBC

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April 4, 2014

Long Way To Go For Euro Zone Recovery

Filed under: OANDA News — Tags: , , , , , , , — admin @ 8:08 am

A recovery in the euro zone economy is in full flow, but the region still has a long way to go in addressing some of its imbalances, says Silvercrest Asset Management.

“The recovery in Europe is real, and will likely continue and strengthen. But it is also fragile, and that fragility may give rise to new episodes of uncertainty, like the mini-shock that resulted from last year’s Cyprus bailout,” said Patrick Chovanec, Silvercrest’s managing director and chief strategist, in a note titled ‘Is Europe’s Crisis Over?’ published Thursday.

“More importantly, the internal imbalances that gave rise to the euro zone crisis have yet to be resolved, which places a serious limit on the contribution that Europe can be expected to make to global growth,” he added.

Optimism towards the euro zone has picked up over the past year as the region showed signs of emerging from a financial crisis that started with the collapse of Iceland’s banking system in 2008 and spread to Greece, Ireland and Portugal during 2009.


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April 2, 2014

IMF Sees Signs of Stability for Cyprus Banks

Cyprus’s economy is adjusting following the 2013 recession, which was “not as severe as anticipated”, the International Monetary Fund (IMF) has said.

“Signs of stabilisation are emerging in the banking sector,” said the IMF in a report.

Cyprus agreed to a 10bn-euro ($13.8bn; £8.3bn) bailout with the European Union and the IMF last year.

Cyprus’s second-largest lender – Laiki Bank – was closed down.

Although the recession was not as severe as expected, there may be more pain to come, warned the IMF.

“The outlook remains challenging, with rising unemployment, falling credit, and increasing non-performing loans,” it said.

At Cyprus’s banks, non-performing loans – ones where payments have been missed – reached 50% of all loans, worth 22bn euros.

Ukraine crisis
Cyprus had to seize money from big savers, many of them Russian, as a condition of its bailout and capital controls are still in force.

The current crisis in Ukraine may also add to the country’s woes, the IMF said.

“The Ukraine crisis may lead to capital flight from non-resident depositors of foreign banks in Cyprus, which may affect the business service sector.”

Cyprus was nearly bankrupted after Greece’s financial crisis in 2010.

The country’s banks were hit heavily but its government did not have the funds to issue a bailout.

via BBC

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April 1, 2014

European Manufacturing Expands in March

Factory activity in the euro zone expanded for the ninth straight month in March, albeit at a slower pace than seen last month as the peripheral nations balanced out the slowing core nations, as unemployment remained close to its record high.

Unemployment in the euro area remained stuck at 11.9 percent in February, hardly moving from this time last year, when the figure was 12 percent, according to the European Statistics Office, Eurostat.

Joblessness in the region has been stable since October 2013 following downward revisions of the last few months. Manufacturing and unemployment saw divergence, as growth picked up factory activity in France and Italy while joblessness increased slightly.

Eurostat estimates that 18.965 million men and 25.920 million women were unemployed in the euro area in February. The lowest unemployment rates were recorded in Austria, with 4.8 percent, followed by Germany at 5.1 percent and Luxembourg (6.1 percent). The highest was recorded in Greece and Spain with 27.5 and 25.6 percent respectively.

Bill Adams, senior international economist for PNC Financial Services Group said the decline in the reported unemployment rate in February from January’s original release is “methodological noise”.

via CNBC

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Greece To Receive Next Bailout Tranche

Greece is fully financed for the next 12 months and does not want to ask the euro zone for a third bailout,although it is too early to say if it can fulfill that ambition, the chairman of euro zone finance ministers Jeroen Dijsselbloem said on Tuesday.

“We had assurance from the Troika institutions that Greece is fully financed for the coming 12 months,” Dijsselbloem told a news conference after a meeting of finance ministers.

The Troika are international inspectors from the International Monetary Fund, the European Central Bank and the European Commission.Full funding one year ahead is a condition for the IMF to disburse its part of the existing bailout.

Dijsselbloem said Greece was also keen not to ask for any more money from the euro zone, above the 240 billion euros under the first to bailout programmes, although whether this would be possible was not yet clear.

“I have taken note of the optimism or let’s say the ambition of the Greek government not to have another programme. Of course I would like to share that ambition, yet I think it’s too early to say,” Dijsselbloem said.

via CNBC

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March 28, 2014

Greek Economy Starts Showing Signs of Recovery

Businesses say they have started to see a few, still tender green shoots rising out of the economy’s ruins – raising hopes that Greece’s freefall has finally hit bottom, though few are willing to bet on a full recovery.

A raft of positive economic data in recent weeks has lent credence to Prime Minister Antonis Samaras’s declaration that Greece has turned a corner, and evidence on the ground suggests Europe’s most troubled economy might be enjoying more than a statistical bounce.

As Athens gears up to host an informal meeting of EU finance ministers next week, the mood in Antonopoulos’s Tzortzis SA Jaguar-Land Rover showroom is brightening.

“It has been psychologically tough, going to work to face a sales drought. The phones started ringing again, but it’s too early to say we have turned the corner,” Antonopoulos said.

“Much will depend on whether growth returns. Our clients are mostly business people and they are still quite reserved.”

Elsewhere in Athens, cranes are busy building a new opera house and national library centre near the capital’s coast, a regeneration project funded by the foundation of late shipping tycoon Stavros Niarchos and designed by Italian architect Renzo Piano.

Some stalled motorway projects have resumed, helped by the unblocking of EU funds.

Drilling machines are also working on a new subway line that will link the city’s centre with the main port Piraeus.

On the corporate front, the country’s biggest cement maker Titan (TTNr.AT), last month said resuming such state-funded projects would boost demand for cement in Greece this year for the first time since 2006.

via Reuters

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March 19, 2014

Greece Reaches Deal for Next Bailout Tranche

Greece and its international lenders struck a deal to unlock the next tranche of loans under its rescue package on Tuesday, ending six months of negotiations that Athens called its “toughest” review since being bailed out.

The deal paves the way for Greece to repay nearly 10 billion euros of bonds due in May and bolsters expectations it could soon return to the bond markets for the first time since its debt crisis escalated four years ago.

Athens and its European Union and IMF lenders had been haggling over the bailout review since September, making it the longest inspection of the country’s finances since Greece was first rescued from bankruptcy by the creditors in 2010.

“This review was the toughest we’ve had so far,” Finance Minister Yannis Stournaras told reporters after a week of marathon talks that ended in the early hours of Tuesday.

via CNBC

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UK Chancellor Says Economy Growing Faster than Expected

Britain’s Chancellor George Osborne revealed that the growth forecasts for the U.K.’s economy had been upped for this year and next, as he presented his budget to parliament on Wednesday.

The independent Office for Budget Responsibility (OBR) said the economy looked set to grow by 2.7 percent in 2014 – an increase from its December forecast of 2.4 percent – and by 2.3 percent in 2015, up from 2.2 percent. For 2016, the growth forecast remained at 2.6 percent.

But despite these upgrades, Osborne said he was sticking to an austerity agenda.

“I have never shied away from telling the British people about the difficult decisions we face – and just because things are getting better, I don’t intend to do so today,” the chancellor said in his annual speech.

Osborne added that the OBR had revised down the U.K.’s deficit for every year of its forecast. In 2013/2014, the country is now expected to have a budget deficit of 6.6 percent of gross domestic product (GDP), down from 6.8 percent, with that percentage decreasing until it hits 2.4 percent in in 2016/2017 – down from 2.7 percent.

via CNBC

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Russia Holds $132 Billion of US Debt

Russia and the United States have levers to pull in their diplomatic showdown over Ukraine, but the amount of U.S. debt held by Russia won’t be one of them.
For one, Russia owns a fairly modest amount of U.S. Treasuries — and that figure is shrinking. So even if Russia dumped its holdings, it wouldn’t have much of an impact.

Figures released Tuesday by the U.S. Treasury Department show Russia owned $132 billion worth of Treasuries at the end of January, down 5% from December.
That might seem like a lot, but it’s just a little more than 10% of what China or Japan hold — more than $1 trillion each. And it places it just behind tiny Luxembourg, which owns $135 billion.

via CNN

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March 4, 2014

Asian Equities Mixed

Asian equities recovered modestly on Tuesday from an acute selloff in the previous session fueled by brewing instability in Ukraine. Shares in Tokyo and Sydney clawed back losses after sinking to new lows on Monday.

Commenting on Monday’s risk aversion in financial markets, Patrick Chovanec, Chief Strategist at Silvercrest Asset Management told CNBC’s Asia Squawk Box, “The geopolitical significance of (Ukraine) is huge. The economic (impact), not so much. I think it is important to put into perspective that Ukraine’s gross domestic product (GDP) is only about 7 percent of Greece, and it is not part of any global supply chain… So i think markets are a little over reacting to the economic impact, even if things get worse in Ukraine.”

Russia on Monday cemented its control over Ukraine’s Crimean peninsula after Russian President Vladimir Putin declared he had the right to invade his neighbor. As the crisis deepened, the United States has suspended all military engagements with Russia, including military exercises and port visits, as part of Washington’s response.


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