It's the night before the Federal Reserve meeting, there's some relief for commodities, and only junk bonds are junk (so far). Here are some of the things people in markets are talking about today.
'Twas the night before rate rise, and all through the bourse,
Not a bond yield was stirring, except junk, of course;
The economists were predicting doom, saying beware,
In the hope that Janet would help the bull, not the bear;
The investors all vested in markets seen dead;
While visions of '08 danced in their heads.
Oil is gaining after yesterday's drop below $35, with WTI for January delivery at $37.06 a barrel on the New York Mercantile Exchange at 10:30 a.m. London time. In the wider commodity market, Sam Walsh, chief executive officer of Rio Tinto Group warned that the collapse in iron ore prices has some producers "hanging on by their fingernails,” in an interview with Bloomberg television.
Junk rout just junk
Regulators from the U.S. Securities and Exchange Commission are poring over Third Avenue Management's books following the recent closure of its $788 million credit mutual fund, and checking up on high-yield mutual funds with similar holdings. Such funds are seeking to distance themselves from the events of last week, saying their investments are more diversified and easier to sell. Warnings of a high-yield bust have been plentiful, and now that lots of people wants their money back at once, the predictable liquidity squeeze is underway. For the moment, at least, worries that the junk bond rout will spread to the wider market seem contained.
Inflation in the U.K. rose above zero for the first time in four months in November, rising 0.1 percent, the Office for National Statistics said this morning. With inflation still far below target, futures show that rate traders do not expect the Bank of England to follow the Fed in rising rates, with the first hike now not seen until 2017. U.S. CPI will be coming out later in the day, with economists expecting a 2.0 percent year-over-year gain in the core reading. Meanwhile, the betting firm Ladbrokes Plc, meanwhile, has raised the odds of the U.K. leaving the E.U. to a record high 40 percent.
German investor confidence
German investor confidence improved for a second consecutive month with the ZEW index of investor and analyst expectations rising to 16.1 in December from 10.4 in November. Volkswagen AG, still suffering the after effects of the emissions scandal, managed to grow its European sales, but was not able to maintain its market share. The DAX Index was 2.1 percent higher at 11:10 a.m. London time, recovering some of yesterday's losses.
What we've been reading
This is what's caught our eye over the last 24 hours.
- A pessimist's guide to the world in 2016.
- Why foreign inflation matters to Janet Yellen.
- The Fed's new chapter will be written in dollar-denominated oil.
- Opec history shows it can deal even bigger blows to the oil price.
- While crude under $35 is a final blow to Greenland's oil dreams.
- Apple opened a secret lab in Taiwan to develop screens.
- Bondholders see a grim future in the political brawl over Venezuela.
- A fund collapse! Rising junk bond yields! Falling oil prices! Is it 1998 all over again?
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