19 July 2012: Stocks firm up, Mizuho to pay CDO charges

Markets– Stocks firmer, Commodities mixed: Strong housing data from US, as well as higher than expected earnings has given some impetus to the stocks, as risk appetite slowly builds.
•    Stocks: FTSE All World is up 0.6%, as FTSE Eurofirst adds 1%; In Asia mood is mildly bearish as FTSE Asia Pacific lost 0.5% but Tokyo’s Nikkei adeed 0.95%; S&P 500 closed with a gain of 0.7%; FTSE 100 added 1% to 5685
•    Currencies: Euro is lower 0.1% at $1.2280; Sterling against dollar is up to $1.5658
•    Debt: The German Bunds have lost 3bp to sit at 1.21% while US 10-years lose 2bp owing to demand for safe havens at 1.49%
•    Commodities: Brent Crude is up 0.6% to $105.88/barrel; Copper is up 0.6% to sit at $3.47/pound; Gold falls to $1570/ounce

Global Economy
•    Greek leaders identify 2/3rds of spending cuts: Leaders of the coalition party in Greece gave the go-ahead to measures worth about €8bn out of the €11bn, but warned about the country’s rising poverty, and the 5-year recession. These cuts include cuts of government’s operating costs, ceiling on pensions, and wages and benefits in the public sector. Athens needs to implement these measures and achieve a budget deficit target of 6.7% (of national output) before it can seek any concessions from international lenders on its loans.

Companies

•    Rate probe turns to four major banks: 4 major European banks are being probed for rigging interest rates with Barclays traders. The names include HSBC, Deutsche, Societe Generale and Credit Agricole. Barclays has recently paid $290 million in settlements after being charged with rigging the LIBOR (read here about different interest rates).

•    Mizuho to pay CDS damages: Mizuho securities will be required to pay $127 million in compensation of charges that they misled investors by packaging CDO’s with a phoney security which allowed them to obtain a higher credit rating on their structured product.

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