KeNo's Housing and Economic Portal: Tuesday June 23 Housing and Economic stories

TOP STORIES:

Global Bond Crash: Inflation Trade Goes Horribly Wrong ... - (www.bloomberg.com) The global deflation trade is unwinding with a vengeance. Yields on 10-year Bunds blew through 1pc today, spearheading a violent repricing of credit across the world. The scale is starting to match the 'taper tantrum' of mid-2013 when the US Federal Reserve issued its first gentle warning that quantitative easing would not last forever, and that the long-feared inflexion point was nearing in the international monetary cycle. Paper losses over the last three months have reached $1.2 trillion. Yields have jumped by 175 basis points in Indonesia, 160 in South Africa, 150 in Turkey, 130 in Mexico, and 80 in Australia. The epicentre is in the eurozone as the "QE" bet goes horribly wrong. Bund yields hit 1.05pc this morning before falling back in wild trading, up 100 basis points since March. French, Italian, and Spanish yields have moved in lockstep.

Banks annihilating 'zombie'foreclosures - (www.cnbc.com) They are a blight on neighborhoods and bank balance sheets: homes in the foreclosure process, some in limbo for several years, their former owners gone but the home still not repossessed by the bank. They were dubbed "zombies" because their empty state was seen as a danger to both the neighborhood and the overall health of the housing market. Banks had let these homes sit because they were of so little value and because of endless foreclosure processing issues. Most are in disrepair, some occupied by squatters or drug dealers. But now, things are changing. The legal process has been largely streamlined, and as home prices rise nationwide, so too do the values of these zombie homes; banks are now pushing them through the foreclosure process and out to auction far more quickly. There are now about 127,000 zombie foreclosures, down 10 percent from a year ago, according to RealtyTrac, a foreclosure listing and analytics company. That means that one in five homes that are in the foreclosure process, that is the legal process has started but the bank has not yet repossessed the home, are vacant.

German Bonds Drop With 10-Year Yield Reaching 1% - (www.bloomberg.com) Germany’s 10-year bonds slumped, with the yield breaching 1 percent for the first time since September, on a combination of new supply and a brightening economic outlook. The yield on Europe’s benchmark sovereign securities, which was approaching zero only two months ago, continued upward as the nation allotted 4.05 billion euros ($4.6 billion) of notes due in June 2017. Italy, Spain and Ireland are scheduled to sell debt on Thursday. Data on June 12 will show industrial output in the currency bloc rebounded in April, according to a Bloomberg survey of analysts. “Everyone is aware of the avalanche of issuance tomorrow,” said Martin van Vliet, a senior interest-rate strategist at ING Groep NV in Amsterdam. “If you look at the more fundamental drivers, there has been a reassessment on the part of many investors. Indeed, inflation is building in the euro zone, growth is picking up and strengthening.”

A $3 Trillion Traffic Jam Is Seen Looming in Credit by Citigroup - (www.bloomberg.com) For all the concern that Wall Street’s shrinking balance sheets will fuel a liquidity crisis when investors flee credit markets, Citigroup Inc. strategist Stephen Antczak says investors may be overlooking an even bigger catalyst. The size of the U.S. corporate-bond market has ballooned by $3.7 trillion during the past decade, yet almost all of that growth is concentrated in the hands of three types of buyers: mutual funds, foreign investors and insurance companies, according to Citigroup. That combination could lead to more selling than the market can absorb when the Federal Reserve raises interest rates for the first time since 2006, Antczak said. “All the money is going to the same place, and when something adversely impacts one, chances are the same factor adversely impacts everyone else, and there’s nobody there to take the other side,” Antczak said in a telephone interview. “We used to have 23 types of investors in the market. Now we have three. In my mind, that’s the key driver.”

TTIP vote postponed as European Parliament descends into panic over trade deal (UK) - (www.independent.co.uk) An historic vote on the biggest trade deal ever negotiated between the EU and the US has had to be postponed after the European Parliament descended into chaos. European MPs were due to vote on the Transatlantic Trade and Investment Partnership on Wednesday. But the vote had to be delayed because there were too many proposed amendments. "It's panic in parliament," Yannick Jadot, a Green MEP from France, told AFP. Ministers have disagreed over a controversial dispute mechanism that some fear would allow big companies to bypass national courts to resolve disputes with investors. Socialist groups in the European Parliament reportedly blocked the dispute mechanism on Tuesday, which resulted in the vote being postponed. Brussels had suggested a separate investment court to resolve disputes but lawmakers in the US have insisted that this is unnecessary. David Cameron has claimed that signing the deal would add £2 billion to the UK economy every year.

OTHER STORIES:

Leveraged Loans Tumble as Buyers Feel Impact of Shrinking Yields - (www.bloomberg.com)

S&P downgrades Greece after IMF repayment delayed - (www.reuters.com)
The Three Seismic Shifts That Are Shaking Up the World of Energy - (www.bloomberg.com)

Yen Sharply Strengthens After BOJ Kuroda Remarks - (www.nasdaq.com)
Greek Focus Shifts Back to Merkel-Hollande in Quest for Deal - (www.bloomberg.com)