“The fate of billions of dollars in investments in Turkish bonds hangs in the balance as Moody’s… prepares to reveal whether it’s handing the country a second junk rating on its debt. Moody’s, which put Turkey on review for a downgrade immediately after a failed military plot to oust the government last month, currently ranks the nation’s debt at Baa3, its lowest rung within investment grade. A rating review is scheduled for Friday and derivatives traders are already treating it as speculative, with the score implied by credit default swaps at Ba3, three steps into high-yield territory…”
Bloomberg (Sofia Horta E Costa and Justin Villamil): “Europe’s banking shares are back in the limelight for all the wrong reasons. On Tuesday, the second day of trading since stress tests showed almost all euro-area lenders would have sufficient capital to cope with a crisis, Germany’s Commerzbank AG and Deutsche Bank AG tumbled to fresh record lows, dragging a Stoxx Europe 600 Index gauge of their peers towards its biggest two-day loss in almost four weeks. ‘I don’t want to say it, but it’s Armageddon for the banks,’ if the index drops any further, said Joe Tracy, head of continental European equities at Svenska Handelsbanken… As recently as July last year, shares of European banks were worth the most since 2008. They’ve lost about 40% of their value since then, or more than half a trillion euros ($560bn)…”
La super bulle des bonds Corporate qui gonfle, qui gonfle , cela coutera tres cher …
Bloomberg (Sally Bakewell): “Foreign buyers are poised to push their record 40% share of the U.S. corporate-bond market even higher as they seek to escape negative yields that have swept the globe. While Europe is the biggest overseas owner of the debt with 80% of the foreign holdings, investors from Asia were the fastest-growing buyers, according to Nathaniel Rosenbaum at Wells Fargo… Bond buyers are pouring into U.S. corporate securities as European Central Bank policies aimed at stimulating growth push yields on more and more sovereign and company debt below zero. The declines were extended in June after the ECB expanded asset purchasing to include corporate bonds, a move that helped drive yields on a record 496 billion euros ($554bn) of highly rated corporate bonds into negative territory…”
“Central banks have a new favorite tool for boosting lackluster growth: corporate-debt purchases. Two months after the European Central Bank started buying corporate bonds, the Bank of England said Thursday that it would adopt a similar strategy. It will buy as much as £10 billion ($13.33bn) of U.K. corporate debt starting in September as part of a larger package of stimulus measures, including £60 billion of additional government-bond purchases… But the decision again raises concerns about possible side effects of unconventional monetary policies, including excessive risk taking by investors… In the U.S., the average yield of investment-grade corporate bonds was 2.85% Wednesday, compared with 3.67% at the end of 2015… The average spread to Treasury yields also has shrunk, to 1.48 percentage points from 1.72. Companies have issued $519.2 billion of investment-grade corporate bonds this year, just below their pace at this time last year when issuance ultimately reached a record $794.6 billion…”
La qualité pourrit de plus en plus
“US banks have ramped up lending to consumers through credit cards and overdrafts at the fastest pace since 2007, triggering concerns that they are taking on too much risk in a slowing economy. The industry has piled on about $18bn of card loans and other types of revolving credit within just three months, as consumers borrow more and banks battle for customers with air miles, cashback deals and other offers.”
Financial Times (James de Bunsen): “Investor positioning is as extreme as it has been since the dotcom bubble. In a neat bit of symmetry, it is some of the assets that were so detested at that time that now look most overinflated. Low volatility, high quality and defensive, with a yield, please — nothing else will do.
Investors are continually having to convince themselves that these lofty valuations and record-low yields are merited because growth is anaemic, deflationary forces abound and rate rises are years away.
Nevertheless, we believe that changing perceptions over monetary and fiscal policy could overwhelm these factors and cause a meaningful and painful rotation within markets.”
[Reuters] China’s July Forex Reserves Fall to $3.20 Trillion
[Reuters] Italian banks may face rising funding costs after DBRS review
brunobertez 