EurAnalysis

I totally agree. There is no real reason for them to agree. And its also the question of participation from the other European central banks that hold Greek bonds. Why should I as a private bond holder participate if they don't?

Guess we just have to wait till Thursday...
Wednesday - ipad 3 (yes!)
Thursday - bond swaps (yes!)

Holding the TL , for how long let see

First, never invest real money in forex trading before traders are really experienced. It is never too easy to be an experienced or professional trader, so don’t be overconfident in your ratio of getting profit in such a fluctuating market.

Well, I think you are going a bit too far in this one mate. 1st Sure there are some high risk bets (like in the subprime crisis) around. There will always be risk takers in these scenarios as the payoff if you hit the jackpot is immense (ask Paulson ...).

However, most of the key money is already "insured" especially via hedges. If there is somebody still holding naked, with all the time they had to "clear" they will be fired on spot for ineptitude and stupidity.

50% (is actually 73% in real terms) plus a massive cut on interest is a loss and big loss here or anywhere. There is no one single option that a holder made money (until now) on the deal....

sisse

Maybe the ECB will

Ok, thanks for clearing that up.

How do you hedge a bond? Only CDS or are there other ways?

When you say 73% instead of 50% is that because of lesser coupons?

Yet another boring London session

London nowdays truly boring,NY more horny
Swing or Scalp PT?

Looks like a bit of retracing as I friday predicted. My Crystal ball seems to be functioning again

Anyways, It should turn down again once USA wakes up. If not today, but tomorrow latest - today there is not much events, unless US PMI has something tragic or someone pops another "Jack from the Box".

I'll let my robots take care today - no manual trading.

Daily Forex Brief
London: Monday 5th March 2012

The immovable Greek hurdle
For all the compromises and delays on Greece, nothing can stand in the way of the upcoming bond redemption on 20th March which will force events this week on the private sector participation negotiations which started over four months ago. Thursday evening is the deadline for responses, but reports suggest that take-up has been sluggish. Greece needs to see at least 66% participation, at which point so-called collective action clauses could be activated, imposing the deal on the remainder. If this is level is not achieved, then the whole deal would be off and Greece will face default. We're likely to get ongoing reports and rumours on this during the week, keeping markets nervous. Furthermore, there are some reports that the troika (ECB, EU, IMF) believes that a third Greek bail-out may be necessary by 2015, because the country will be unable to return to market financing at this point.
http://www.fxpro.com/sites/default/f...0perf%207d.png
As of now Asset Classes are being sold and uncertainty about Greece and news about China slowdown is the focus.

The Yield on the 2 Year US Bonds is now .27% and the 10 Year US Bonds Yield 1.97% for a spread of 170 Basis Points.

We can see funds are being parked in the 2 Year in a large way since the Yield has moved from .30% to .27%.

USD/JPY is off its top at 81.19 from 81.87

The Yen had been used as a Carry Trade currency for years as it was sold to get better Yield in other currencies. That has reversed from 1.2000 all the way to the 75.00 level. Then it became a safe haven currency once Yields in all currencies went down because of Tarp, QE and now LTRO.

Safety of capital regardless of Yield is now the focus.

http://www.actionforex.com/action-in...0120305160711/

Snippet:

Daily Report: Yen Recovers on Risk Aversion as China Lowered GDP Target

The Japanese yen recovers broadly on profit taking and risk aversion today. Meanwhile, dollar is also mildly firmer against other major currencies. Asian equities are broadly lower today as China lowered GDP target for 2012. At the annual meeting of the National People's Congress in Beijing, China's Premier Wen Jiabao announced the country's economic growth target is reduced to 7.5% this year while inflation target will stay at 4%. The Chinese government also reiterated to maintain a 'proactive' fiscal policy and a 'prudent' monetary policy. This is the first time that China forecasts its growth at below 8% since 2005. While this may disappoint some investors, the goal is a signal that the government policy has shifted the composition of growth to consumption from exports and investment.

Meanwhile, there are fresh concerns on Greece PSI participation A German weekly Magazine Der Spiegel reported over the week end that an ECB source said the bank expects participation rate of Greece's PSI debt swap deal would be too low. And, the bank expects collective-action clauses to be activated. The board of the Institute of International Finance strongly endorsed the PSI deal but said the decision to participate "lies exclusively with individual investors". The window will close this weekend. And it should be noted that, successful PSI is a important condition for getting the second EU bailout. Also, CAC activation will likely be deemed a credit event by the relevant ISDA commission and trigger CDS payments.

At the EU summit held over the weekend, finance ministers agreed to pay capital into the ESM by 2015, a year ahead of schedule. It was also revealed that around half of the 130B euro funding for Greece would be delayed until finance ministers received a 'detailed assessment' by the EU/IMF of the implementation of 38 specific reform measures by next week.

On the data front, Australia TD securities inflation rose 0.1% mom in February. Swiss retail sales, Eurozone PMI services, retial sales and Sentix investor confidence will be released in European session. But main focus will be on UK PMI services which is expected to drop back to 54.9 in February. In US, ISM non-manufacturing is expected to drop slightly to 56.1 in February.

thank you very much.

http://www.ekathimerini.com/4dcgi/_w...03/2012_431165


ECB still obstacle to Greek deal




http://sup.kathimerini.gr/kath/engs/...s_390_0708.jpg http://wwk.kathimerini.gr/kathnews/images/dot_clear.gif
By Christopher Spink
Greece will still have to find about EUR4.6bn by the end of March to repay the European Central Bank, even if next week's EUR206bn bond exchange goes ahead without a hitch.

The swap, which Greece has said will only definitely happen if it is accepted by 90% of eligible bondholders by value, has been timetabled so that the bulk of it settles before a EUR14.4bn bond comes due for repayment on March 20.

The deadline for accepting the offer is 9pm CET this Thursday. The result is likely to be released on Friday and the exchange of the Greek law bonds, accounting for EUR177bn, will settle on Monday March 12. Foreign law issues require bondholder meetings to approve the swap. These will be held later in March with final settlement by April 11.

However, last month in a separate deal the ECB agreed to swap its holdings of Greek bonds bought through the securities market programme for new bonds not eligible for the bond swap. All terms and conditions of the new bonds remained the same. On Friday, the ECB confirmed to IFR that this was the case but declined to go into further details of the transaction.

Together with its national central banks, the ECB was estimated to hold Greek bonds with a par value of EUR55bn. The offer documents for the private sector exchange reveal that most of these bonds had relatively short maturities.

For example, only EUR9.77bn of the bond maturing on March 20 is now outstanding of the original EUR14.4bn issue. The remaining EUR4.63bn was presumably held by the ECB and retired by Greece after the ECB swapped it for new bonds, ineligible for the swap but still maturing on March 20.

To raise that sum Greece might have to issue short-term treasury bills, many of which are also excluded from the swap.

This Thursday, a EUR1.45bn six-month bill matures and on March 23 a EUR1.6bn three-month issue must be repaid. If Greece attempts to roll these over, and meet its obligations to the ECB, it will have EUR7.63bn to issue through this route this month.

The problem has been exacerbated after the Eurogroup of finance ministers said last week that only EUR63bn of the EUR130bn second bailout initially would be released: enough just to implement the private sector bond swap. The money to repay the ECB could come from a EUR35bn eurosystem liquidity facility to allow Greek banks to keep functioning despite their Greek bonds being excluded as collateral for lending during the exchange period.

This money could be loaned on by the domestic banks to the Greek government to meet its obligations. Alternatively, the ECB may relent and agree to extend the maturity of its new bonds. The ECB declined to comment on that point. The ECB also holds EUR3.39bn, or 42%, of the EUR8.06bn 10-year bond that matures on May 18 and EUR3.25bn, or 41%, of the EUR7.85bn five-year bond maturing on August 20.
So far, few institutions are understood to have committed to the offer since it was launched at the start of last week. One source close to the situation said there had been some trading of the bonds, with certain hedge funds reportedly keen to buy bonds in order to tender them, rather than with a view to hold out.

Another informed source said that smaller foreign law bond issues were likely to be targeted. «It is absolutely possible for foreign law bonds to hold out,» the source said.
While Greece could impose the deal with as little as a third of the Greek law bonds, or EUR60bn, voting in favour of imposing the terms on other bondholders, it is thought that the take-up will be above 75% but might not quite hit the 90% level at which the deal will definitely go ahead.
If that is the case, Greece will consult official sector creditors before deciding to implement collective action clauses to impose the terms, giving a 53.5% nominal haircut, on all bondholders. «The case for sweeping up is highly compelling,» said the first source. Chiara Cremonesi, an analyst at UniCredit, pointed out that some investors might vote to impose CACs without tendering the bonds. «Holders of CDS have the incentive to consent to the CACs without tendering their bonds,» she said.

The private creditors' investment committee, which agreed the deal, is believed to represent investors with about EUR100bn of bonds, indicating that the deal will proceed. Depressing Investors will receive two-year bonds issued by the EFSF, which will account for 15% of the old par value. US holders will get cash instead. The remaining 31.5% consists of a series of 20 new Greek bonds that will mature over 20 years from 2023. As well as coupons with an average weighted coupon of 3.65%, investors will also be offered strips of securities linked to Greece's GDP growth that could enhance yields by one percentage point.

However, one sovereign restructuring adviser said that the situation remained unattractive for bondholders since Greece would remain in such a tough economic position with a heavy debt burden even after the deal cuts out EUR100bn of liabilities.

"Normally, people tender into an improving situation because they see the debt burden will be reduced and the economy will recover,» he said. «But with Greece it's very depressing. People tendering here have no option. And I can't see a significant upside soon.» [Reuters]
ekathimerini.com , Monday March 5, 2012 (13:30)

Hey guys,

Remember we had LTRO last week, which has a positive effect on currency in delay. In becoming weeks we should see money flowing to the market, which may cause a EURUSD to start climbing.

Take a look at last LTRO effect.

Markets fall as China cuts GDP target. China has lowered its GDP target to 7.5% from the 8% goal that's been in place since 2005. Speaking at the annual meeting of the National People’s Congress, Premier Wen Jiabao added that the nation needs to shift to a more sustainable and efficient economic model, indicating China will cut its reliance on exports and capital spending in favor of increased consumption. The announcement sent global equity markets lower and came as figures showed that China's services PMI contracted in February.
India bans cotton exports. India, the world's number two producer of cotton, has banned all exports of the commodity, effective immediately. No explanation of the embargo was immediately offered. Cotton futures jumped 4.5% to $92.23 a pound premarket.
BP could face $17B in fines after reaching deal with plaintiffs. BP (BP) has agreed to an uncapped settlement with thousands of plaintiffs in the Deepwater Horizon oil spill trial, estimating its costs will come to $7.8B. The announcement came ahead of a delayed trial, which was set to begin today. However, the focus is now shifting to the criminal and civil fines BP faces, with the latter potentially reaching $17.6B.
Greek default looking increasingly likely. Greece is on course to default, as it looks set to fall short of the 95% agreement it needs from private creditors to secure its bond swap, The Daily Telegraph reports. Athens is ready to use collective action clauses (CAC) to impose the deal if it receives 66% approval, which is likely to prompt ratings agencies and the ISDA to declare default.
Russian shares rise after Putin's victory. Russia's blue-chip Micex index was +0.7% midday in Europe after Vladimir Putin claimed an unsurprisingly overwhelming victory in the presidential election. While the opposition plans another mass rally in Moscow today and the poll drew charges of vote-rigging - Putin won a dictator-style 99.7% of the vote in Chechnya - the "market will now focus on whether Putin will deliver on his economic and political promises," says Renaissance economist Ivan Tchakarov.
North Korea may have tested nuclear bomb for Iran. Western intelligence agencies detected two nuclear weapons tests in North Korea during 2010, Welt Online reports, with one or both of them possibly being conducted for Iran. The news comes ahead of a crucial meeting between President Obama and Israeli Prime Minister Binyamin Netanyahu today, when the two will reportedly try to resolve their differences over where their "red line" should be.
Fed becoming more optimistic. Not only is further stimulus off the table, but the Fed is likely to emerge from next week's policy meeting with a slightly more upbeat view of the economy, The Wall Street Journal reports. The fast decline in unemployment has taken Fed officials by surprise, and it could mean more underlying strength in the economy than other data would indicate.
AIG to sell $6B of AIA shares. AIG (AIG) is selling around $6B of AIA shares to help repay its government bailout. AIG will hold about 19% of AIA after the stock sale.
Credit Suisse to buy back $4.4B in securities. Credit Suisse (CS) plans to repurchase up to 4B Swiss francs ($4.4B) in outstanding public tier 1 and tier 2 securities. The buyback is part of the bank's efforts to conform to the new Swiss and Basel III global capital adequacy rules.
AMD to take $703M charge on deal amendment. AMD (AMD) has amended its wafer-supply agreement with Globalfoundries and will take a one-time charge of $703M in Q1. AMD's Q1 2012 non-GAAP gross margin guidance of around 45% and the 2012 non-GAAP gross margin guidance of 44%-48% remain unchanged.
Apple store passes 25B downloads. More than 25B apps have been downloaded from Apple's (AAPL) store since it was first launched four years ago, the company said yesterday. Apple, which has paid out $4B to developers after taking its 30% cut, said last week that its app economy had created 210,000 U.S. jobs. Meanwhile, Senator Charles Schumer has asked the FTC to investigate claims that apps downloaded to Apple (AAPL) and Android (GOOG) devices steal private contacts and photos, and post them online without consent.
Wells Fargo looks to expand overseas. While other banks consolidate their bases and exit international positions, Wells Fargo (WFC) has drafted plans to expand its overseas operations and wants to move into 20 markets worldwide. Wells sees scope to grow significantly as mid-market U.S. companies eye expansion opportunities abroad, said Richard Yorke, the bank's global chief.
Glencore unlikely to strengthen Xstrata offer. Glencore (GLCNF.PK) has said its $37B takeover of Xstrata (XSRAY.PK) is "fair" for all shareholders at current levels, dashing hopes of a sweeter offer.
By Yigal Grayeff and the Market Currents team

Today's Markets:
In Asia, Japan -0.8% to 9699. Hong Kong -1.4% to 21265. China -0.6% to 2445. India -1.6% to 17363.
In Europe, at midday, London -0.5%. Paris -0.7%. Frankfurt -1.1%.
Futures at 7:00: Dow -0.4%. S&P -0.4%. Nasdaq -0.4%. Crude -0.45% to $106.22. Gold -0.6% to $1699.20.


Monday's economic calendar:
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
1:20 PM Fed's Fisher: 'The State of the Economy'

The delayed LTRO effect last time was a short squeeze. However, this time there are not as many shorts to squeeze. To have the same effect this time, we have to see some actual buying and not covering of sells.
As you said last week, and I continue to say until we have some major structural changes as well as some mediocre growth in the Euro Zone, the sentiment will remain negative.

I suspect that today we will test the 1.3250 resistance. Beyond that is anybody's guess but I'm leaning towards 1.2970 this week.

Long @ 1.3205 SL 1.3155 Risk 2% TP : Open

European morning wrap: Helter skelter….NOT. Is it Monday?

Spanish regions balk at new 2012 deficit targets – El Pais

Spanish services PMI 41.9 in February, demonstrably lower than 46.1 in January and Reuter’s median forecast of 45.9. Eighth month of contraction and lowest read since November

Venizelos: Greece’s debt stands at about 170% of GDP – Bloomberg

Euro zone final composite PMI falls to 49.3 in February, down from 50.4 in January and down from flash 49.7

Euro zone March sentix index -8.2 from -11.1 in February, slightly worse than median forecast of -6

Euro zone January retail sales +0.3% m/m, flat y/y, stronger than Reuter’s median forecasts -0.1%, -1.6% respectively

Swiss January retail sales up +4.4% y/y in real terms, compared with revised +1.7% in December

UK services PMI 53.8 in February, down from 56.0 in January and below Reuter’s median forecast of 54.9. Pretty much in line with morning rumour of 53.9 though.

Germany has run out of patience – The Guardian

Plateau oil meets 125m Chinese cars – AEP at The Telegraph

EUR/USD sits at 1.3182, precisely 8 pips south of where it was when I parked my bum first thing. We did see an early-ish test of the downside, with sell stops tripped through 1.3180 and 1.3170 on the way to session low 1.3158 (Reuters) or 1.3160 (EBS)

Everyman and his dog was aware of trendline support circa 1.3156 and we duly ran into good buying interest just infront of said level.

Sell stops now seen through 1.3150. On topside buy stops gathered through 1.3220.

USD/JPY was on it’s way lower as European traders entered the fray, but it’s been pretty quiet since the early fun and games. USD/JPY down at 81.20 from 81.45 when I started. Macro fund selling noted.

Buy orders now seen clustered 81.00/10, sell stops through 81.00 and 80.70.

USD/CHF very marginally firmer at .9150 from early .9135. Large US custodial notable buyer this morning, but they haven’t really gained too much traction.

Cable sits at 1.5810, off about 10 pips. Release of weaker than expected services PMI didn’t really help matters.

AUD/USD down at 1.0675 from early 1.0705. Talk of ACB buy orders now lined up down in 10650/60 area. We’ve been as low as 1.0667 so far.

SL 1.3155