Thursday December 15 2016 Housing and Economic stories

TOP STORIES:

Government Bond & Mortgage “Carnage” Enters Sixth Week - (www.wolfstreet.com) Traders got even more nervous on Friday, after having been twitchy all Thursday, and they alleviated this condition by selling government bonds. In July, government bonds were sitting ducks with their low yields, and perfectly ripe for a good plucking. This plucking has now proceeded relentlessly and has entered its sixth week in a row, after an already rough four months. The price of the 10-year Treasury note swooned on Friday. The 10-year yield, which moves in the opposite direction, rose 6 basis points to 2.47%, the highest yield since June 2015. Since early July, the 10-year yield has jumped by 1.08 percentage points! That’s a 77% move (via StockCharts.com). The 30-year Treasury yield jumped 7 basis points on Friday to 3.15%, the highest yield since June 2015, which elegantly crowns a 50% move in six month (via StockCharts.com):

Monte dei Paschi to press ahead with last-ditch private capital increase - (www.reuters.com) Italy's third biggest lender Monte dei Paschi di Siena said on Sunday it would press ahead with a last-ditch plan to raise 5 billion euros on the market by year-end after the European Central Bank refused to give it more time to recapitalize. The decision by the ECB's supervisory board piles pressure on the Italian government to inject money into the bank but the Tuscan lender on Friday said it would carry on with its own private sector scheme, despite signs of scant investor interest. Rome is ready to intervene with an emergency decree to rescue the bank if needed, a government source said on Friday. The crisis at the world's oldest bank is playing out against a backdrop of political instability in Italy after Prime Minister Matteo Renzi's resignation last week following a heavy defeat in a referendum on constitutional reform.

The Dow Is The Most Overbought In Over 20 Years (And Options Traders Have Never Been More Bullish) - (www.zerohedge.com) The Dow Jones Industrial Average has only been more overbought than it is today four times in the last one hundred years...And options traders have never, ever been more bullish on the S&P 500. Having risen for 21 of the last 25 days, The Dow is the most overbought since 1996. With Dow 20,000 one good algo ramp away, it is perhaps worth noting that the index - dominated by Goldman Sachs' performance - has been overbought for 22 straight days.

Trump packs trade team with veterans of steel wars with China - (www.reuters.com) President-elect Donald Trump is stacking his trade transition team with veterans of the U.S. steel industry's battles with China, signaling a potentially more aggressive approach to U.S. complaints of unfair Chinese subsidies for its exports and barriers to imports. Led by Wilbur Ross, a billionaire steel investor and Trump's nominee for commerce secretary, Dan DiMicco, the former CEO of steelmaker Nucor Corp, and three veteran steel trade lawyers, the team is expected to help shift the U.S. trade focus more heavily toward enforcement actions aimed at bringing down a chronic U.S. trade deficit, Washington trade experts said.

Hong Kong’s Squeezed Money Market Sends a Sell Signal on Stocks - (www.bloomberg.com) As pressure in Hong Kong’s money market builds, the risks to the city’s equities and currency are mounting. Funding costs surged for a 10th day on Monday to a 2009 high as the Federal Reserve prepares to tighten monetary policy, making it more expensive to borrow to buy stocks. With the squeeze starting to spill over into other markets, Australia & New Zealand Banking Group Ltd.’s Raymond Yeung says it’s signaling concern about a cash exodus. “Higher U.S. bond yields will cause outflows from emerging markets and Hong Kong," said Yeung, chief greater China economist at ANZ in Hong Kong. “The influx of investment flows from the mainland into Hong Kong motivated by currency hedging can offset some pressure. Yet, the interbank market has started to price in potential outflows."

OTHER STORIES:

Italy’s Gentiloni Heads for Prime Minister Job After Renzi Quits - (www.bloomberg.com)
Dollar debt issuance soars as central banks take a back seat: BIS report - (www.cnbc.com)
Shrinking FX market could pose stability risk: BIS - (www.reuters.com)

OPEC Doomed to Repeat History - (www.bloomberg.com)
China: Renminbi stalls on road to being a global currency - (www.ft.com)
Large investors pull $350bn from active equity funds - (www.ft.com)