Tuesday May 3 2016 Housing and Economic stories

TOP STORIES:

New York Luxury-Apartment Glut Hits Landlord Equity Residential - (www.bloomberg.com) A cool-down in Manhattan’s apartment-rental market is hitting the bottom line of Equity Residential as the landlord is forced to offer concessions to tenants who suddenly have a lot of competition to choose from. “New York City just turned very quickly and more deeply than we expected,” Chief Operating Officer David Santee said on a conference call Wednesday to discuss first-quarter earnings. With the city accounting for about 20 percent of the firm’s revenue, “if you can’t achieve 3 or 4 percent rate growth there, then it’s going to impact your full-year growth.” Equity Residential is among the landlords having to work harder to secure tenants in Manhattan as a glut of new apartments gives residents more bargaining power. 

China's $1 Trillion Bond Leverage Unwinds as Pimco Senses Panic - (www.bloomberg.com) China’s bond traders are getting a painful lesson on the dangers of leverage. After years of racking up profits by borrowing cheaply and plowing the proceeds into higher-yielding debt, investors are now rushing to unwind those wagers amid the deepest selloff in 13 months. The bets are getting squeezed from both sides as bond prices sink and borrowing costs rise to one-year highs in the 8 trillion yuan ($1.2 trillion) market for repurchase agreements, used by traders to amplify their buying power. While a reduction in leveraged wagers is arguably good for China’s long-term financial stability, it risks fueling a downward spiral in a market that Pacific Investment Management Co. says already shows signs of panic amid mounting default concerns. The pullback challenges government efforts to revive economic growth with cheap credit and could hardly come at a worse time for Chinese companies on the hook for a record 547 billion yuan of maturing onshore notes in May.

Currency Trading's 20% Drop Raises Specter of Flash-Crash Future - (www.bloomberg.com) The world’s biggest financial market has shrunk by 20 percent during the past year and a half. Currency trading via CME Group Inc., ICAP Plc and Thomson Reuters Corp. -- three of the largest trading platforms -- fell to $538 billion per day last month, from more than $669 billion in September 2014, according to data compiled by Bloomberg. The figures show the extent of the slump in a market that this month saw some banks report less client activity, just as the Bank of International Settlements prepares its definitive triennial survey of global volumes. All of this is making bouts of extreme volatility more commonplace as traders find it harder to enter or exit positions without affecting prices. As recently as January, the South African rand tumbled 9 percent in 15 minutes before rebounding; New Zealand’s dollar had its own flash crash in August; while the Reserve Bank of Australia concluded that illiquidity caused exchange-rate jolts before three interest-rate decisions last year.

Asia's Market Giants Turn Into $11 Trillion Headache for Traders - (www.bloomberg.com) Asia’s two biggest stock markets are jostling for an ignominious prize. Japan’s Topix index and China’s Shanghai Composite Index have tumbled more than 13 percent in 2016 to rank along Nigerian and Mongolian shares as the world’s worst performers. In the two years through the end of December, the Asian gauges outperformed MSCI’s global measure by at least 20 percentage points. The Bank of Japan stood pat on monetary policy Thursday, sending Tokyo stocks tumbling, while the Shanghai measure fell to a one-month low. The benchmark gauges in two of the world’s largest stock markets, which have a combined value of almost $11 trillion, are declining as investors detect a reduced appetite from policy makers to boost monetary stimulus. Thursday’s BOJ decision was the first under Governor Haruhiko Kuroda where a majority of economists expected easing that didn’t materialize, while strategists now see China’s central bank keeping its main interest rate on hold until the fourth quarter.

OTHER STORIES:

Yen soars, stocks slump as BOJ holds policy, pushes back inflation target - (www.reuters.com)
U.S. Economy Expands to 0.5% Pace, Weakest in Two Years - (www.bloomberg.com)
Markets Get the Worst Kind of Kuroda Surprise as BOJ Stands Pat - (www.bloomberg.com)
Bank of Japan Stuns Market by Holding Off on More Stimulus - (www.bloomberg.com)

Nikkei falls 2.5%, dollar/yen drops 1.9% after Bank of Japan keeps policy steady - (www.cnbc.com)
After $261 Billion Binge, Chinese Commodity Speculators Drop Out - (www.bloomberg.com)
Puerto Rico Risks Historic Default as Congress Chooses Inaction - (www.bloomberg.com)