Market information

Friday, January 22, 2010

Wall Street investors reacted reluctantly on Obama’s plans to prohibit banks invest in speculative investment funds such as hedge funds and private equity funds. Also trading on own account, the so-called "proprietary trading", is restricted. Goldman Sachs reported an unexpectedly high fourth quarter result yesterday. This could not prevent sharp price decreases in stocks of companies in financial services industry and a 2% decline of the Dow Jones index.

The ABP announced its new investment strategy yesterday. In the upcoming years the largest pension fund in the Netherlands will further withdraw its positions in listed shares and expand in bonds and alternative investments. With its new strategy ABP expects a higher return without increasing the risk profile. ABP also announced that it is below the minimum required coverage of 105%. However, the fund decided to increase the pension benefits in 2010 with 0.45%. If the coverage is below 105% the fund may not actually increase the benefits, but the decision was based on the status of October 31st, when the coverage was just above the minimum buffer requirements.

In the below attachment, today’s market data on money and capital market rates as well as other rates are presented. For history of these rates or other rates feel free to ask: .(JavaScript must be enabled to view this email address).

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Thursday, January 21, 2010

The Chinese economy has grown considerably in the forth quarter. This had led to a growth of 8.7% on a yearly basis. This is higher than the 8.5% analists have expected and higher than the target of 8.0% of the Chinese government. The Chinese CPI was 1.9% in December. Analists expecter 1.7%. The Chinese government declared that it in light of the strong recovery of the economy it will strive to keep fast price increases from occurring.

The Dutch Bank (DNB) had announced yesterday that savers have found their way back to the stock market. For some months in a row, Dutchmen have withdrawn savings from their accounts. DNB declared that at least some of this money has found it's way to the stock exchange. Dutch households have bought 750 million worth of shares in the months of October and November.

In the US the number of new houses on which construction has started has decreased by 4.0%. Analists expected a drop of 0.2%. The number of building permits increased with 10.9% in December whilst analists expected a rise of 0.2%. Mortgage applications rose 9.1% and refinancing of mortgages rose with 10.7%. These numbers give analists confidence that housing will sustain recovery during the first quarter of 2010.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: .(JavaScript must be enabled to view this email address)

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Wednesday, January 20, 2010

A committee, led by Jaén Frijns, former director of ABP, has concluded that pension funds in recent years have had little control over the execution of the investment policy. As main cause, is mentioned that the boards of pension funds mainly consist of representatives of employers and empoyees who have little knowledge of the financial markets. This has caused that investors had did not have strict enough mandates and risk limits. Next to that, there was no good view on the liquidity risk in alternatives investments.

In the advisory report, that the Basel Committee issued last month, the committee calls for higher capital requirements for banks. The main part of the advise consists of an increase in required capital for trading for on own account; a fixed leverage ratio (which is the ratio between debt and equity); and higher capital requirements for derivatives on the balance sheet. The expectation is that, if these rules proceed, there will be great pressure on the share price of banks. The bond market is expected to respond positively, because the creditworthiness of the banks will increase. An example of this is the increase of over 12% of hybrid loans ING, since the publication of the advisory. These loans are subordinated and count as capital.

In December, inflation in the UK increased from 1.9% to 2.9% (YoY). This is the biggest rise since the start of the publication of this figure in 1997.

The 6M Euribor has dropped 1 basis point to 0.97%. The 10Y Swap remained unchanged at 3.45%.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: .(JavaScript must be enabled to view this email address)

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Tuesday, January 19, 2010

Since November last year, the difference in return of corporate bonds over government bonds has been declining. According to some analysts, the decline will continue and the spread will further tighten. A given explanation is that a high supply is compensated by a even larger demand. Businesses and households have heavily saved during the crisis and that now flows into the bond market. The best days experienced corporate bonds in March last year. At that time, the risk of corporate bonds were considered very high and investors demand a substantial interest rate premium. The return on debt of financial institutions has also decreased considerably. In March 2009 it was still 8.88%, while last week it was 4.33%.

After a difficult start and a quiet trading day the AEX index closed at 339 points, a small gain of 0.3%. The rest of the week will be more exiting, when the major U.S. financial institutions will publish their quarterly results.

The 6M Euribor remained unchanged at 0.98% and the 10Y Swap decreased with 2 basis points to 3.45%.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: .(JavaScript must be enabled to view this email address)

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Monday, January 18, 2010

Data of Eurostat shows a less then expected trade surplus of the Euro zone in November 2009. In November the trade surplus was Euro 2,8 billion, against a deficit of Euro 7.0 billion in November 2008. Surveyed economists expected a surplus of 7.0 billion.

Data published last Friday shows that the American consumer confidence increased slightly in January. The index increased from 72.5 in December to 72.8 in January, surveyed economists expected an increase to 74.0. Moreover ,the inflation expectation figure for the next 12 months was published. The inflation expectation among American consumers was 2.8% in January, the inflation expectation in December was 2.5%.

Bloomberg conclude, based on their database, that the market for high-yield corporate bonds has the strongest start over 20 years. Last week ,companies spend at least USD 4.95 billion, compared to USD 3,19 billion previous week. Mid last year began heavy issuing of high-yields corporate bonds. Since last summer the outlook for high returns on high-yield corporate bonds attracks investors, after a very calm period during the crisis.

The 6M Euribor equals 0.98% and the 10Y Swap decreased with 2 bp to 3.47%.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: .(JavaScript must be enabled to view this email address)

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