KeNo's Housing and Economic Portal: Friday April 10 Housing and Economic stories

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'Corrupted' bond market giving investors headache - (www.cnbc.com) Things were supposed to be a whole lot different this year when it came to the bond market. With economic recovery taking flight and inflation accelerating, the Federal Reserve would start to raise interest rates, government bond yields, naturally, would start drifting higher and the 10-year benchmark note would end the year somewhere north of 3 percent. That, though, was pure theory, which has had a rather uncomfortable clash with reality. Instead, the U.S. economy hobbled through the first quarter, inflation is still well short of the Fed's target, short-term rates are anchored near zero, and the 10-year has started the second quarter nestled comfortably below 2 percent, with the next 100 basis points seemingly miles away. Oh, the Fed still is likely to do some type of pro forma rate hike before the year closes. But the climate in the bond market looks nothing like the picture Wall Street experts painted just a few months ago.

One of America's top universities is accused of helping infect hundreds of people with STDs - (www.businessinsider.com) Baltimore's Johns Hopkins University was sued Wednesday for allegedly playing a role in a horrific research study in the 1940s and 1950s that intentionally infected people in Guatemala with various diseases, including syphilis. The US has previously apologized for the so-called US Public Health Service Sexually Transmitted Diseases (STD) Inoculation Study. The complaint, which lists 773 individual plaintiffs, claims doctors and scientists affiliated with Johns Hopkins participated in, and encouraged, the human experiments in Guatemala on children, prison inmates, prostitutes, and psychiatric hospital patients.

Chaos In Yemen: Chinese Troops Arrive As US-Armed Rebels Set Sights On Central Bank - (www.zerohedge.com) Iranian-backed Houthi rebels are now in control of the central Crater district in the key Yemeni port city of Aden despite a seventh consecutive day of bombing raids by the Saudi-led coalition which is keen on preventing the city from falling. Aden is the second largest city in the country with a population of some 800,000 and as noted by The Guardian, is “the last major holdout of fighters loyal to the Saudi-backed President Abd Rabbu Mansour Hadi.” Residents have reported the presence of tanks, sniper fire, and patrolling Houthi fighters as the militia moves closer to exerting complete control over the city. Via The Guardian: Residents of Aden’s central Crater district said Houthi fighters and their allies were in control of the neighbourhood by midday on Thursday, deploying tanks and foot patrols through its otherwise empty streets after heavy fighting in the morning. It was the first time fighting on the ground had reached so deeply into central Aden. Crater is home to the local branch of Yemen’s central bank and many commercial businesses. “People are afraid and terrified by the bombardment,” one resident, Farouq Abdu, told Reuters by telephone from Crater. “No one is on the streets - it’s like a curfew“.

Brazil’s Petrobras Obtains $3.5 Billion in Financing From China Development Bank - (online.wsj.com) Brazil’s state-run Petroleo Brasileiro SA said on Wednesday it signed a $3.5 billion financing deal with the China Development Bank, highlighting the oil giant’s deteriorating financial condition in the wake of a vast corruption scandal as well as China’s growing ties to Latin America.

Petrobras didn’t provide any details of the deal, which is part of a cooperation agreement to be implemented this year and in 2016. But the transaction deepens the Brazilian government’s relationship with its largest trading partner and fellow BRIC country. The Chinese money comes as Petrobras is scrambling for financing to continue its costly oil exploration and production activities. The kickback-and-bribery scandal has effectively cut the oil giant off from global capital and debt markets. Moody’s Investors Service in February downgraded the company’s debt rating to junk, and its bonds are trading near record lows.

ECB Makes QE Bonds Available for Lending to Ease Liquidity Woes - (www.bloomberg.com) The European Central Bank began a bond-lending program to help unclog markets snarled up by its own debt-purchase plans introduced last month to boost growth and stave off deflation. The move is important because it reduces the risk for traders that the region’s bond market becomes dysfunctional after the cost of borrowing securities in the repurchase market climbed due to a shortage of collateral, threatening to reduce liquidity. Bonds purchased under the ECB’s quantitative-easing program will be made available for lending from Thursday, the Frankfurt-based central bank said on its website. “The aim of securities lending is to support bond and repo-market liquidity without unduly curtailing normal repo-market activity,” the ECB said in its statement. “The Eurosystem is primarily targeting market participants with market-making obligations.”

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