- Ruble’s Plunge Surrounds Central Bank Chief With Rotten Choices. (video) Russian central bank Governor Elvira Nabiullina is running out of policy options for stabilizing the ruble without inflicting deeper damage to the economy. On one side, she wants to support the currency to slow inflation and keep Russians from abandoning the ruble. On the other, the scale of interest-rate increases required to do that would further strangle an economy on the verge of a recession, and pile pressure on companies struggling to refinance debt as sanctions cut them off from international capital markets.
- BOJ Said to Reject Adding Stimulus to Ease Blow to CPI From Oil. The Bank of Japan rejects the idea that additional monetary stimulus is needed to prevent the decline in oil prices in recent months from pulling down inflation, according to people familiar with the discussions. For now, policy makers assess that while cheaper energy costs may weigh on consumer prices for a time, they ultimately will boost the economy -- spurring inflation, the people said, asking not to be named as the talks are private. Less agreement is found on how much capacity the central bank has to expand its buying of government debt, some of the people said.
- China’s Slowdown Deepens as Factory Output Growth Wanes: Economy. (video) Bloomberg’s gross domestic product tracker came in at 6.78 percent year-on-year in November, down from 6.91 percent in October and a fourth month below 7 percent, according to a preliminary reading. Factory production rose 7.2 percent from a year earlier, retail sales gained 11.7 percent, and investment in fixed assets expanded 15.8 percent in January through November from a year earlier, official data showed.
- Greek Bonds Extend Worst Week Since Euro Crisis. The last time Greece’s bonds had this bad a week, the nation had just undergone the biggest debt restructuring in history, inconclusive elections had stoked concern it may exit the euro and Mario Draghi’s “whatever it takes” pledge was more than two months away. The yield on Greek 10-year bonds has surged about 200 basis points this week, the biggest leap since the height of the euro-area sovereign-debt crisis in May 2012. Worse still, the yield on three-year notes, issued in July as part of Greece’s emblematic return to capital markets, have jumped more than 450 basis points, climbing above the longer-dated rates in a sign that investors are increasingly concerned the nation will be unable to pay its debt.
- Euro-Area Industrial Output Grows a Less-Than-Forecast 0.1%. Industrial output in the 18-nation region rose 0.1 percent, less than the 0.2 percent increase forecast by economists in a Bloomberg News survey. The data from Luxembourg-based Eurostat also showed production was up 0.7 percent from a year earlier.
- Ibovespa Poised for Worst Week Since October as Petrobras Slumps. The Ibovespa was set for the worst week since October, approaching a bear market, as a decline in crude oil below $60 a barrel sank Petroleo Brasileiro SA. Petrobras, as the state-run company is known, extended a five-day slide to 16 percent. Itau Unibanco Holding SA, Latin America’s largest bank by market value, contributed the most to the benchmark equity index’s drop. Homebuilder Rossi Residencial SA surged 11 percent after a six-day slump. Cia. Paranaense de Energia, the utility known as Copel, jumped on a plan to invest 2.5 billion reais ($940 million) next year. The Ibovespa fell 2.6 percent to 48,580.38 at 3:31 p.m. in Sao Paulo, bringing its losses from this year’s high to 22 percent. The gauge has dropped 6.6 percent for the week.
- Europe Stocks’ Worst Week in 3 Years Eclipses U.S., Asia Drops. Tumbling oil prices and the worst rout in Greek equities since 1987 sent European shares for their biggest weekly slump in more than three years. Today’s 2.6 percent plunge in the Stoxx Europe 600 Index was the largest in almost two months and extended the week’s losses to 5.8 percent. That’s more than double the five-day drop in the MSCI Asia Pacific Index and Standard & Poor’s 500 Index. With oil tumbling to a five-year low, European energy companies slumped to their lowest level since April 2009 and commodity producers had their worst week since May 2012. In Greece, anxiety that voters will kick out leaders committed to the nation’s bailout sent the ASE Index down 20 percent, making it this year’s worst performing equity market after Russia.
- Crude Oil Extends Drop Below $60 as IEA Cuts Forecast. (video) Benchmark U.S. oil prices extended losses below $60 a barrel as the International Energy Agency cut its global demand forecast for the fourth time in five months. West Texas Intermediate crude is poised for a weekly decline of 12 percent while Brent has lost 10 percent. The IEA reduced its estimate for oil demand growth in 2015 by 230,000 barrels a day, the agency said in a report today. U.S. output, already at a three-decade high, will continue to rise in 2015, the IEA said.
- Oil Rot Spreading in Credit. Credit investors are preparing for the worst. They’re cleaning up their portfolios, selling riskier debt that’s harder to trade in bad times and hoarding longer-term government bonds that do best in souring markets. While investors have pruned energy-related holdings in particular as oil prices plunge, they’re also getting rid of other types of corporate bonds, causing yields to surge to the highest in more than a year.
- Junk-Bond Yields Poised for Biggest Jump Since August. Junk-rated companies are facing the biggest weekly jump in borrowing costs in four months as the plunge in oil prices roils the U.S. bond market. The average yield on speculative-grade bonds has surged 0.34 percentage point this week to 7.1 percent, heading for the largest increase since it rose 0.38 percentage point in the period ended Aug. 1, according to Bank of America Merrill Lynch index data. The rise in August was the biggest since yields soared 0.48 percentage point in September 2011.
- Junk-Bond Well Runs Dry as Oil Shock Quells Debt Supply. The market for new junk bonds has all but shut as plunging oil prices and borrowing costs at an 18-month high deter issuers. Even as sales of high-yield, high-risk notes in the U.S. reached a record $353.1 billion this year, offerings have stalled this month with the slowest pace for a December since 2011. Junk is on track to deliver its second straight quarterly loss, the first time that’s happened since 2008, and trimming gains for the year to 1.47 percent, according to Bank of America Merrill Lynch index data. “Momentum in high-yield is coming to a halt,” Margie Patel, a money manager who oversees $1.4 billion for Wells Capital Management in Boston, said in a telephone interview. “We are still seeing the results of oversupply, most of which comes from the sector that has been disproportionately impacted by big changes in energy prices, along with global growth worries that have caught the market wrong-footed.”
- Treasury Yields Are Crashing-er. (graph)
- The Oil Crash Is Not The Biggest Story In The Global Markets Right Now. The most talked-about story in the market is oil, but there is a more important move happening in markets: US Treasury bonds are on fire. The yield on long-dated US Treasury bonds — meaning the 10- and 30-year bonds — has been falling sharply over the past week.
ZeeNews:
- India Industrial Production Plunges to 3-Year Low; Contracts -4.2% in October. India's industrial output growth rate contracted by 4.2 percent in October, dragged down by a fall in the manufacturing and the capital goods sector.
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