| Global News Coverage for Investment Professionals |  |
| Top Stories |  |  |
|
- Fitch warns of downgrades for Greece and U.S.
Fitch Ratings said it would treat a voluntary rollover of Greek debt as a default and downgrade the nation's credit rating. Andrew Colquhoun, head of Asian-Pacific sovereign ratings at Fitch, said U.S. debt will be placed on "negative" watch if Congress fails to raise the debt limit by Aug. 2. If the Treasury Department misses its Aug. 15 coupon payment, U.S. debt will be rated as restricted default, Colquhoun said. Reuters
(20 Jun.), The Korea Times (Seoul)
(19 Jun.)     
- Woes in eurozone and China concern investors, BarCap says
Barclays Capital released results of a survey showing that investors have become increasingly concerned about the eurozone's financial woes as well as slow economic growth in China and the U.S. "It is easy to understand the lack of confidence in growth or very widespread views, given the many risks facing the global economy at present," according to BarCap's report. "This uncertainty is reflected in the amount of risk being taken this quarter: 40 percent of clients are running a light or very light amount of risk relative to capacity, up from 31 percent last quarter." Reuters
(21 Jun.)
 | Free CFA Institute Webinar, 30 June 2011, 10:00 a.m. EDT (3:00 p.m. BST)—
SEC's Release on Incorporating IFRS Into the U.S. Financial Reporting System: Investor Considerations. Click here to register and learn more. |
| Market Activity | | |
|
- Asian-Pacific markets advance amid choppy trading
Share markets gained Tuesday in Asia-Pacific as traders became less concerned about Greece's debt crisis. In Sydney, Foster's Group's share price shot up after the beer company rejected a takeover offer from SABMiller. Japan's Nikkei 225 rose 1%, Australia's S&P/ASX 200 climbed 1.2% and South Korea's Kospi Composite advanced 1.4%. Hong Kong's Hang Seng Index edged up 0.3%, China's Shanghai Composite gained 0.5% and Taiwan's Taiex added 0.8%. New Zealand's NZX 50 slipped 0.2%. In afternoon trading, Singapore's Straits Times Index went up 0.6%, Malaysia's Kuala Lumpur Composite was unchanged, Thailand's SET tacked on 0.9%, and Indonesian shares and India's Sensex climbed 0.8%. The Wall Street Journal (tiered subscription model)
(21 Jun.), The Age (Melbourne, Australia)/Reuters/Australian Associated Press/Bloomberg
(21 Jun.)
- China raises yuan to highest value ever against U.S. dollar
China's central bank set the value of the yuan against the U.S. dollar at its highest level on record. The People's Bank of China set the parity at 6.4690 yuan to the dollar. The trading band adopted by the bank allows the daily exchange rate to fluctuate up to 0.5% above and below the parity rate. iMarketNews.com
(20 Jun.)
| Economics | | |
|
- Consumer spending becomes a key concern in U.S. recovery
Consumer spending is taking on unusual importance in the U.S. recovery and is likely to have a major effect on the economy in the second half of the year. Adjusted for inflation, household spending slowed from September to April, but it still increased three times the pace of household wealth. To maintain spending in the face of rising gasoline prices, consumers drew $149 billion from savings. TheFiscalTimes.com
(20 Jun.)
- Analysis: Unnoticed, pent-up demand for housing grows
The U.S. has 2 million fewer households than population growth would normally produce, according to The Economist. Families that have doubled or tripled up to get through hard times will look for homes of their own as the economy improves. "That should spark a period of catch-up household growth, which should in turn spark a large rise in rents and new construction," the magazine noted. The Economist/Free Exchange blog
(20 Jun.)
- Countries that default often return to growth quickly
While countries that default on their debt are locked out of the bond markets for a time, their economies often bounce back strongly, as illustrated by The Economist's Daily Chart. After Argentina defaulted in December 2001, its economy contracted by 10.9% in the first year but subsequently rebounded and grew for years. The Economist/Daily Chart blog
(20 Jun.)
- Survey: Most investors don't understand fiduciary duty
The debate in Washington over a universal fiduciary standard hasn't attracted much attention among the clients of financial advisers. Eighty-five percent of the investors surveyed by J.D. Power and Associates didn't understand the difference between the fiduciary and suitability standards, or hadn't even heard of them. InvestmentNews (free registration)
(19 Jun.)
| Geopolitical/Regulatory | | |
|
- EU's Rehn says default isn't included in banks' stress tests
Olli Rehn, the EU's economic and monetary affairs commissioner, said banks' stress tests will include tougher capital standards but not assumptions about a sovereign-debt default. "In the agreed methodology of the stress tests, the capital requirements were in fact tightened, and many other improvements were made," Rehn said. "In this context, it was a deliberate choice that we will not assume a default of any euro-area or any EU member state and, of course, that's linked to our policy, because we do not believe restructuring is good for Greece or other countries." Reuters
(20 Jun.)
- Bair backs capital surcharge of 3% or more for SIFIs
Sheila Bair, chairman of the U.S. Federal Deposit Insurance Corp., said systemically important financial institutions should be subject to capital surcharges of at least 3%. "If you factor in the additional risk taken on by large, highly leveraged institutions, and the systemic risk posed by the failure of a SIFI, we believe the market will demand a higher level of capital for these players," Bair said. Risk.net/Risk magazine (subscription required)
(21 Jun.)
| Financial Products | | |
|
- BlackRock iShares launches floating-rate bond ETF
BlackRock iShares introduced an exchange-traded fund that invests in investment-grade, floating-rate bonds with maturities of five years or less. The iShares Floating Rate Note Fund is linked to the Barclays Capital U.S. Floating Rate Note <5 Years Index. The ETF has a 0.2% expense ratio and trades on NYSE Arca. IndexUniverse.com
(17 Jun.), AdvisorOne.com
(20 Jun.)
| |
|
