Who's Afraid Of Sovereign Bonds?

pc_2012_02:Policy Contribution.qxd



A debt security issued by a national government within a given country and denominated in a foreign currency. The foreign currency used will most likely be a hard currency, and may represent significantly more risk to the bondholder. The government of a country with an unstable economy will tend to denominate its bonds in the currency of a country with a stable economy. Because of default risk, sovereign bonds tend to be offered at a discount. Brady bonds, which are issued by governments in developing countries, are a popular example of sovereign debt securities.

Paulson Sells as Soros Buys

Paulson, Vinik Sell SPDR Gold Shares as Soros Buys - Bloomberg

Paulson & Co., the hedge fund founded by billionaire John Paulson, cut its stake in the SPDR Gold Trust for the second straight quarter, while billionaire investor George Soros increased his holdings. Paulson held 17.3 million shares in the exchange-traded fund backed by bullion as of Dec. 31, 15 percent less than the 20.3 million on Sept. 30, Securities and Exchange Commission filings showed yesterday. He is still the biggest stakeholder. Vinik Asset Management LP, Tudor Investment Corp. and SAC Capital Advisors LP also sold shares. Lone Pine Capital LLC added holdings.

Treasuries Fizzle

Treasury Bond Rally Fizzles - WSJ.com

NEW YORK—After flying high for most of Wednesday's session, Treasury bonds were pulled down by a Federal Reserve report and comments from a top European Union official that allayed fears about the Greek debt crisis. Investors had flocked to Treasury bonds for safety earlier, jolted by news reports that a bailout deal for Greece could be delayed until after the nation's April elections. Even as the reports suggested a bridge loan could be extended to avoid a default by Greece next month, the latest development added a new layer of uncertainty, showing the difficulty in addressing the euro zone's sovereign-debt crisis.

China's Pledge Lifts Gold

Gold Rises as China’s Pledge to Aid Europe Boosts Commodities - Businessweek

Feb. 15 (Bloomberg) -- Gold futures rose, ending the longest slump this year, as China’s pledge to help resolve Europe’s debt crisis boosted demand for commodities. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose to a six-month high. Zhou Xiaochuan, China’s central bank governor, indicated the nation will invest in Europe’s bailout funds. Paulson & Co., the $23 billion hedge fund run by John Paulson, said that “now is the time” to buy gold as an inflation hedge. Paulson is the biggest holder in the SPDR Gold Trust, the largest exchange-traded fund backed by the metal.

Happy Valentine's Day Big Oil. With Love from the GOP

How the HR7 Bill will "trash the environment"

If you're not a policy wonk, you might not have heard much about HR7, the transportation bill that's currently under consideration in the House of Representatives. It was supposed to be a straightforward, nonpartisan bill that authorized funding for the nation's transportation system. But, of course, it ended up a highly politicized boondoggle after the GOP worked to stuff it full of conservative pet projects.

Never let 'em see you panic!

Managing trading errors - Education - Futures Magazine

One of the first decisions a trader needs to make is whether to open a separate error account. While every effort should be made to have check and double-check entries before hitting the trade button, at some point you will have an error. When that happens, just remember the opening words of The Hitchhiker’s Guide to the Galaxy — “Don’t panic.”

EU Playing With Fire? Its all Greek to me

Greek Talks Hit Snag as EU Seeks Assurances - Bloomberg

Greece said that Europe’s wealthier countries are “playing with fire” by toying with the idea of expelling it from the 17-nation euro area as talks over a second aid program ran into new obstacles. Finance Minister Evangelos Venizelos leveled the accusation after a decision slated for tonight on aid totaling 130 billion euros ($171 billion) was postponed until at least Feb. 20 and possibly until after a full-time Greek government emerges from elections later in the year.

Critical Gann levels for stock indexes

Stocks and indexes at critical Gann levels - Financials - Futures Magazine

Will Apple take a bite out of the market? AAPL is now up 161 weeks to this rally off its 2009 bottom. Last week, it violated bigger Gann symmetry but it is still at risk for a drop which helped the market because the kind of Gann symmetry violated was a price and time relationship that took 9 years to develop. It’s the same thing with the rest of the market. We had a lot of longer term price and time squaring going on not only in Apple but elsewhere. Those relationships are now violated. What that means is we were at risk for a major longer term top but markets elected not in turn in those windows. But now we are at the back end of an 89/90 day time window off the October low and if we do get the pullback based on this calculation the higher probability is a turn of smaller degree.

Mortgage Bond Buying From China May Signal QE3

China’s U.S. Mortgage-Bond Buying May Be Bet on a Coming QE3, Nomura Says - Bloomberg

Chinese investors added U.S. government-backed mortgage securities and so-called agency debentures in December, signaling the country may be anticipating further purchases of housing debt by the Federal Reserve, according to Nomura Securities International analysts. The $9.5 billion rise reported today in China’s holdings in the debt came as the nation dumped $33 billion of long-term Treasuries, according to New York-based analysts at the Japanese bank. The category includes home-loan bonds guaranteed by Ginnie Mae and the Federal Home Loan Bank system’s unsecured notes.

Electronic Trading: Guide to Products and Services

Futures Magazine - Guide to Electronic Trading 2011 - Page S1

Futures Magazine's Guide To Electronic Trading

Deere Forecasts Lower Grain Prices

Deere Forecasts Lower Corn, Wheat, Soybean Prices in 2012-2013 - Businessweek

Feb. 15 (Bloomberg) -- Deere & Co., the world’s largest maker of agriculture equipment, forecast lower prices for corn, wheat and soybeans during the 2012-2013 marketing year. Corn will drop to $5.30 a bushel on average in the year that starts Sept. 1, after the U.S. harvest, compared with $6.40 a year earlier, Moline, Illinois-based Deere said today in an earnings presentation. The estimate was unchanged from a forecast Nov. 23.

New study on the merits of options-based strategy using benchmark indexes to construct a diversified portfolio

Options study benchmarks strategies to indexes - Financials - Futures Magazine

CHICAGO, Feb. 14, 2012 /PRNewswire/ -- The merits of using options-based strategy benchmark indexes to construct a diversified portfolio is the subject of a new study -- "An Analysis of Index Option Writing for Liquid Enhanced Risk-Adjusted Returns" — released today by investment-advisory firm Asset Consulting Group. The study, commissioned by Chicago Board Options Exchange (CBOE), evaluates the performance of four key options strategy benchmark indexes: the CBOE S&P 500 BuyWrite Index (BXM), CBOE S&P 500 PutWrite Index (PUT), CBOE S&P 500 2% OTM BuyWrite Index (BXY) and CBOE S&P 500 95-110 Collar Index (CLL) against more "traditional" stock and bond indexes.

Greenback posted its largest daily advance since January 5th

Dollar posts largest one-day gain in five weeks - Financials - Futures Magazine

The greenback posted its largest daily advance since January 5th Tuesday with the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) advancing 0.72% on the session. Headline risk continues to weigh heavily on broader market sentiment with officials postponing Wednesday's scheduled EU Finance Ministers meeting citing incomplete Greek paperwork as the cause. The move comes on the back of yet another round of sovereign debt downgrades, this time from Moody’s Investor Services. Equity markets tumbled throughout the session with stocks deep in the red before a rumor from Greek officials saw markets rebound sharply. Greek conservative leader Antonis Samaras vowed to back their commitment to the steep austerity measures required by the Troika in order to receive the next tranche of bailout funds to the tune of €130 billion ahead of next month’s deadline where the nation faces some €14 billion in bond redemptions and paybacks. Equities were mixed at the close with the Dow and NASDAQ eking out a gain of just 0.03% and 0.02%, while the S&P ended off 0.09%.

Natural gas: Looking a gift horse in the mouth

Natural gas price has Fitch warning on investments - Commodities - Futures Magazine

Low natural gas prices and the rising concern about oppressive regulation is putting one of the greatest things that the US economy has going for it in danger. Directional drilling and the miracle of shale gas should be heralded as an economic and techhnological miracle but instead is being attacked by environmentalist and the most militant Environmental Protection Agencies in history, possibly squandering jobs and opportunity because of what really amounts to an environmental witch-hunt.

Paulson cuts gold holdings

Paulson cuts gold ETF more in Q4, upbeat view stays | Reuters

(Reuters) - Hedge fund manager and long-time gold bull John Paulson cut his gold ETF bullion holdings by about $600 million (382 million pounds) in the fourth quarter, a second straight reduction that was likely driven by client redemption needs as he remained upbeat on the metal.