KeNo's Housing and Economic Portal: Friday December 3 Housing and Economic stories

Thursday, December 2, 2010

Friday December 3 Housing and Economic stories

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TOP STORIES:

Spain and Portugal under fire as bond spreads hit record - (www.telegraph.co.uk) Borrowing costs for Portugal and Spain have surged to danger levels on fears that Europe's leaders are losing political control of the Irish crisis and have yet to agree on a coherent plan to tackle the eurozone's deeper debt woes. Yields on 10-year Portuguese bonds jumped to 6.9pc, replicating the pattern seen in Greece and Ireland just before they capitulated and turned to the EU and the International Monetary Fund. Spreads on 10-year Spanish bonds rose to a post-EMU record of 233 basis points over Bunds, pushing the yield to 4.87pc. Spain's central bank governor, Miguel Angel Fenrandez Ordonez, said the contagion had spread rapidly to the eurozone periphery and "made itself felt" in the Spanish debt markets. He called on Madrid to accelerate fiscal reforms to persuade the markets the country really means to put its house in order. "Spain is a bit too big to be bailed out," said Antonia Garcia Pascual, of Barclays Capital. "The size of rescue required would use up all the funds available and then you have Italy with contagion as well."

Corporate Issuers Freeze Up (online.wsj.com) Worries about Europe's debt troubles and growing tensions in Korea froze corporate credit markets on Tuesday. No investment-grade company sold debt, while Performance Food Group became the latest high-yield issuer to cancel a sale. The week is on track to be the slowest for high-grade sales since Lehman Brothers filed for bankruptcy in 2008. That's unexpectedly slow, even taking the Thanksgiving holiday into account. Corporations have sold $1.24 billion of bonds so far this week, the lowest total since the week of Sept. 15, 2008, when just $536.6 million was sold, according to data provider Dealogic.

Muni Tumult Ends Fund-Inflow Streak (online.wsj.com) Investors pulled an estimated $4.78 billion out of municipal-bond mutual funds last week, according to the Investment Company Institute, as oversupply and other concerns shook the muni market. That figure represents the biggest estimated withdrawal since the fund industry trade association began tracking weekly muni-fund outflows in January 2007. The second greatest estimated outflow was $4.2 billion in October 2008 during the heat of the financial crisis. The outflow for the week ended Nov. 17 ends a roughly three-month run of inflows into long-term U.S. mutual funds and comes amid a weeks-long slump in muni-bond prices, triggered by a surge in issuance ahead of uncertainty about the extension of a popular federal program that provides subsidies for taxable bonds issued by state and local governments. That spike in issuance caused yields, which move inversely to a bond's price, to surge.

'Shadow inventory' of 2.1 million homes may loom in U.S. market - (www.latimes.com) The number of properties in foreclosure, with loans 90 days past due or taken back by lenders and not yet listed for sale stood at an eight-month supply at the end of August, three months more than a year earlier. A supply of 2.1 million homes poised for foreclosure or delinquency potentially looms over the nation's housing market, according to data released Monday. This "shadow inventory" of residential real estate — property that is in foreclosure, has a loan 90 days past due or has been taken back by a lender and is not yet listed for sale — stood at an eight-month supply at the end of August, according to Santa Ana mortgage research firm CoreLogic, which released the data. That was an increase from 1.9 million, a five-month supply, a year earlier. The total number of U.S. properties listed for sale at the end of August plus the unlisted shadow inventory was 6.3 million, representing a 23-month supply of homes, according to CoreLogic, more than three times the amount considered healthy by economists. A year earlier, the total was 6.1 million, or a 17-month supply.

Swaps Soar on ‘Sacrosanct’ Senior Europe Debt: Credit Markets - (www.bloomberg.com) The cost of protecting against defaults on senior notes of European banks is soaring on speculation bondholders will be forced to take losses as governments try to share the burden of taxpayer-funded bailouts. The Markit iTraxx Financial Index of credit-default swaps on senior debt rose 6.5 basis points, or 0.065 percentage point, to 157.5. basis points. Contracts on Portugal’s Banco Espirito Santo SA are at a record, and Spain’s Banco Santander SA are at the highest level in five months. Europe’s debt crisis has spread to Ireland from Greece, and bond investors bet that Portugal and Spain will be next in line for a bailout from the European Union and International Monetary Fund. The EU estimates a rescue for Ireland, downgraded yesterday by Standard & Poor’s, may total 85 billion euros ($113 billion).