Bridges
Crumble as Muni Rates at Least Since ’60s Ignored - (www.bloomberg.com) No
state is needier than West
Virginia when
it comes to fixing crumbling highways, airports and water works, with annual
repair needs of $1,035 per resident that’s three times the national average. Yet
even with borrowing costs hovering close to four-decadelows,
lawmakers rejected a January proposal to sell $1 billion of bonds to repair
roads that run through the Appalachian Mountains. Budget cuts were a more
immediate concern, they said. Across the U.S., localities are refraining from
raising new funds in the $3.7 trillion municipal-bond market after the worst
financial crisis since the Great Depression left them with unprecedented
deficits. Rather than take advantage of Federal Reserve (FDTR)policy that’s held benchmark interest
rates at
historic lows since December 2008, they’re repaying obligations by the most on
record.
Bond
Market Has $900 Billion Mom-and-Pop Problem When Rates Rise - (www.bloomberg.com) It’s
never been easier for individuals to enter some of the most esoteric debt
markets. Wall Street’s biggest firms are worried that it’ll be just as simple for
them to leave. Investors have piled more than $900 billion into taxablebond funds
since the 2008 financial crisis, buying stock-like shares of mutual and
exchange-traded funds to gain access to infrequently-traded markets. This flood
of cash has helped cause prices to surge and yields to plunge. Now, as the
Federal Reserve discusses ending its easy-money policies, concern is mounting
that the withdrawal of stimulus will lead to an exodus that’ll cause credit
markets to freeze up. While new regulations have forced banks to reduce their
balance-sheet risk, analysts at JPMorgan Chase & Co. (JPM) are focusing on the problems that
individual investors could cause by yanking money from funds. There’s a bigger
risk “that when the the Fed starts hiking in earnest, outflows from
high-yielding and less-liquid debt will lead to a free fall in prices,”
JPMorgan strategists led by Jan Loeys wrote in a June 20 report. “In extremis,
this could force a closing of the primary market and have serious economic
impact.”
Americans
Still Aren't Saving for a Rainy Day - (www.time.com) Lesson
from the recession not learned. Families in the U.S. still don’t have a substantial amount of cash tucked away
for a rainy day despite the beating the economy took in the Great Recession,
according to a new survey. The Financial Security Index from Bankrate.com shows half of American families have no
savings or less than three month’s worth of expenses saved for emergencies. The
survey’s findings, analysts note, haven’t changed since 2011, when the company first began
inquiring about the saving habits of American families. “Americans continue to
show a stunning lack of progress in accumulating sufficient emergency savings,”
said Greg McBride, Bankrate’s chief financial analyst.
Sovereign debt the 'ultimate bubble': Wilbur
Ross - (www.cnbc.com) A
bubble currently brewing in sovereign debt will likely burst in the next couple
of years, U.S. billionaire Wilbur Ross warned on Monday. "I've felt for
some time that the ultimate bubble, when we look back a few years from now, is
going to be sovereign debt, both U.S. and other, because it's way below any
sort of reversion to the mean of interest rates," the distressed debt
investor told CNBC. "If you look at where the U.S. 10-year had averaged
over the 10 preceding years, it's around 4 percent. If it reverts back to that
level at some point there will be terrible losses in the long-term Treasury
market and those will probably be accentuated in other areas of fixed
income." Ross argued that slowing issuance of assets like mortgage-backed
securities and long-term Treasurys post-credit crisis, had helped to insulate
the market from the full impact of the Federal Reserve's gradual slowdown of
quantitative easing - a process known as tapering.
After
port fraud, China's vast warehouse sector under scrutiny - (www.reuters.com) Shaken
by a fraud investigation into metal financing in the world's seventh-busiest
port, banks and trading houses have been made painfully aware of the risks they
face storing commodities in
China's sprawling warehouse sector. The probe at Qingdao port centers around a
private metals trading firm suspected of duplicating warehouse certificates in
order to use a metal cargo multiple times to raise financing. Some banks have
asked clients to shift metal, used as collateral for loans, to more regulated
London Metal Exchange (LME) warehouses outside China or those owned and
operated by a single warehouse firm to limit their exposure. "The banks
still haven't looked under the hood," said an executive at a bank involved
in commodity financing
in China, referring to China's warehousing sector. At the heart of the issue is
China's roaring commodity financing
business, which has helped drive up stockpiles of commodities at
ports to record levels, stored in warehouses not always regulated to the same
extent as elsewhere. Though many global firms are involved in the warehouse
industry in China, there has been outsourcing to local firms to cut overheads
and avoid dealing with complex local regulations.
SouFun
Leads June Drop on Sales Concern as Housing Slow - (www.bloomberg.com)
Kerry presses Maliki as Iraq loses control of Jordanian border - (www.reuters.com)
Kerry presses Maliki as Iraq loses control of Jordanian border - (www.reuters.com)
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