By Cordell Eddings and Daniel Kruger - Apr 7, 2012
Treasuries rose, with 10-year note yields falling the most since December, as less-than-forecast job growth renewed speculation the Federal Reserve will provide more monetary stimulus to support the economic recovery.
The benchmark note gained for a third consecutive week after the Labor Department said yesterday that employers added 120,000 jobs in March and the jobless rate fell to 8.2 percent. Treasuries rallied on concern the European debt crisis is worsening as rising borrowing costs make it more difficult to finance deficits in nations such as Spain. The U.S. will sell $66 billion in three-, 10-, and 30-year debt next week.
“Things were not quite as rosy as previous numbers led us to believe, and we are seeing some payback for that,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. “One number won’t determine the Fed’s action, but it does give them more cover to remain dovish.”
The benchmark 10-year note yield fell this week 15 basis points, or 0.15 percentage point, to 2.05 percent in New York, according to Bloomberg Bond Trader prices. Thirty-year bond yields fell 12 basis points, the most since December, to 3.22 percent.
The increase in payrolls, the fewest in five months, followed a revised 240,000 gain in February that was bigger than first estimated, Labor Department figures showed in Washington. The March increase was less than the most pessimistic forecast in a Bloomberg News survey, in which the median estimate called for a 205,000 rise.
Additional Stimulus
Unemployment fell to the lowest since January 2009, from 8.3 percent. The data also showed Americans worked fewer hours and earned less on average per week.
Investors continue to price in some probability that the Fed may initiate a third round of asset purchases, or quantitative easing, amid signs that the pace of the recovery remains subject to risks, including rising oil prices and continued turmoil in Europe.
“A couple of members” of the Federal Open Market Committee indicated that additional stimulus could become necessary if the economy lost momentum or if inflation stayed below 2 percent, according to minutes of its March 13 meeting released April 3. Fed Chairman Ben S. Bernanke said last week that, while he’s encouraged by the unemployment rate’s decline, continued accommodative monetary policy will be needed to make further progress.
‘On the Table’
“QE3 is firmly on the table again,” said Alan De Rose, head of Treasury trading at Oppenheimer & Co. Inc. “In terms of the economic backdrop, it’s not as strong as many people thought.”
After buying $2.3 trillion of assets to support the economy in two rounds of quantitative easing from December 2008 to June, the central bank has been replacing shorter maturities in its holdings with longer-term debt to cap borrowing costs without increasing holdings on its balance sheet. The $400 billion program, known as Operation Twist, is due to end in June.
The 10-year yield rose 10 basis points to 1.92 percent Feb. 3 after Labor Department data showed the economy added 200,000 jobs, 60,000 more than the consensus forecast. The yield fell 14 basis points to 1.99 percent on Sept. 2 after the government said there had been no job growth in August, compared with a forecast for a gain of 68,000 positions.
‘In Play’
“It keeps the Fed in play,” said Jason Brady, who manages bonds in Santa Fe, New Mexico, at Thornburg Investment Management, which oversees $72 billion. “We had bought into a story, as a market, that was about continuous improvements in the employment situation. This definitely puts that into question.”
The Treasury Department will sell $32 billion in three-year notes, $21 billion in 10-year notes, and $13 billion 30-year bonds from April 10 to April 12.
Yields fell earlier in the week after Spain’s borrowing costs climbed as the yield on the country’s 10-year bonds gained 13 basis points to 5.82 percent. The yield difference, or spread, between Spanish 10-year securities and similar-maturity German bunds rose to more than 400 basis points for the first time since Dec. 12.
Spain, the euro region’s fourth-largest economy, is in “extreme difficulty,” Prime Minister Mariano Rajoy said April 4, raising the likelihood of a bailout for the second time this week. ECB President Mario Draghi said April 4 that the economic outlook remained subject to “downside risks.”
Ten-year yields will increase to 2.51 percent by year-end, according to the average forecast in a Bloomberg survey of banks and securities companies, with the most recent projections given the heaviest weightings.
To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Daniel Kruger in New York at dkruger1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Saturday, April 7, 2012
Friday, April 6, 2012
Jewelers in India End Three-Week Strike on Minister Assurance
By Prabhudatta Mishra - Apr 6, 2012
Jewelers in India, the biggest bullion buyer, suspended the longest nationwide strike after the government assured them it will consider their concerns on a tax on non-branded gold ornaments.
The 21-day strike ended after their meeting with Finance Minister Pranab Mukherjee, who imposed a 1 percent levy for non- branded jewelery for the first time and doubled import duties on gold bars, coins and platinum in his March 16 budget speech, according to an e-mailed statement from the All India Gems & Jewellery Trade Federation.
“The minister assured that he would consider the demand for the rollback of excise duty favorably,” Bachhraj Bamalwa, chairman of the trade body, told reporters in New Delhi after meeting with Mukherjee. The strike cost the industry about 200 billion rupees ($4 billion) in lost revenue, he said.
The end to the shutdown may boost Indian imports, helping sustain this year’s 4.5 percent rally in gold prices. Bullion is rising for a 12th year as Europe’s debt crisis and concerns that global economic growth may slow fueled demand for a protection of wealth.
Mukherjee raised the import tax on gold for a second time this year as part of steps to curb the current account-deficit, partly stoked by record bullion purchases. He raised the import duty on gold bars and coins and platinum to 4 percent from 2 percent, after doubling the tax in January.
A levy on gold ore, concentrate and so-called dore bars for refining will be doubled to 2 percent and an excise tax on refined gold will climb to 3 percent from 1.5 percent, he said.
India’s current-account deficit widened to $19.6 billion in the three months to Dec. 31 from a revised $18.4 billion in the prior quarter, the central bank said in a report on March 30. That’s the widest quarterly gap since at least 1949, data compiled by Bloomberg show, threatening to revive pressure on the rupee. The currency fell 16 percent last year.
Gold for immediate delivery rose 0.2 percent to $1,633.85 an ounce today.
To contact the reporter on this story: Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net
To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Jewelers in India, the biggest bullion buyer, suspended the longest nationwide strike after the government assured them it will consider their concerns on a tax on non-branded gold ornaments.
The 21-day strike ended after their meeting with Finance Minister Pranab Mukherjee, who imposed a 1 percent levy for non- branded jewelery for the first time and doubled import duties on gold bars, coins and platinum in his March 16 budget speech, according to an e-mailed statement from the All India Gems & Jewellery Trade Federation.
“The minister assured that he would consider the demand for the rollback of excise duty favorably,” Bachhraj Bamalwa, chairman of the trade body, told reporters in New Delhi after meeting with Mukherjee. The strike cost the industry about 200 billion rupees ($4 billion) in lost revenue, he said.
The end to the shutdown may boost Indian imports, helping sustain this year’s 4.5 percent rally in gold prices. Bullion is rising for a 12th year as Europe’s debt crisis and concerns that global economic growth may slow fueled demand for a protection of wealth.
Mukherjee raised the import tax on gold for a second time this year as part of steps to curb the current account-deficit, partly stoked by record bullion purchases. He raised the import duty on gold bars and coins and platinum to 4 percent from 2 percent, after doubling the tax in January.
A levy on gold ore, concentrate and so-called dore bars for refining will be doubled to 2 percent and an excise tax on refined gold will climb to 3 percent from 1.5 percent, he said.
India’s current-account deficit widened to $19.6 billion in the three months to Dec. 31 from a revised $18.4 billion in the prior quarter, the central bank said in a report on March 30. That’s the widest quarterly gap since at least 1949, data compiled by Bloomberg show, threatening to revive pressure on the rupee. The currency fell 16 percent last year.
Gold for immediate delivery rose 0.2 percent to $1,633.85 an ounce today.
To contact the reporter on this story: Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net
To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Wednesday, April 4, 2012
Indian Court Accepts State Appeal on Phone-Permit Cancellation
By Pratap Patnaik and Andrew MacAskill - Apr 4, 2012
India’s Supreme Court accepted the government’s appeal against a judgment that scrapped mobile- phone licenses awarded in an allegedly corrupt sale, a move that may allow companies to operate till a final decision.
The government in its review petition questioned the court’s jurisdiction over policy matters and also sought time till March next year for conducting fresh phone-license sales. Judges G.S. Singhvi and K.S. Radhakrishnan will hear the government’s argument on April 13, according to the order on the court’s website yesterday.
The acceptance of the appeal may throw a lifeline to companies such as Emirates Telecommunications Corp. (ETISALAT) and Russia’s AFK Sistema (AFKS), said Madhu Narayan, a Supreme Court lawyer not connected with the case. The companies’ permits were among the 122 canceled two months ago after the Supreme Court said the sale was “flawed” and had been influenced by those with “money power.” The cut-price permit sale in 2008 may have lowered government revenue by $31 billion, according to a report by India’s chief auditor.
Allowing the government’s appeal “is good for companies that want to continue their operations in India,” said Narayan. “If the court grants time till March 2013, it will help them to participate in the auction and tie up with new partners.”
The cancellations meant operators had to close their businesses within four months, which would affect 69 million users. The court yesterday rejected appeals by seven individual companies that had their permits rescinded, including Telenor ASA’s (TEL) local partner Unitech Ltd. (UT)
‘Curative Petition’
“By entertaining the review petition and hearing the case again, the Supreme Court would have been able to appreciate arguments and evidence that challenges the very basis of its order,” according to an e-mailed statement by Uninor, the joint venture between Telenor and Unitech. “We are disappointed that the court has declined to do so.”
The company said it will file a curative petition and ask the court to keep its order in abeyance until a new bench hears the case afresh.
The mobile-phone license scandal contributed to an 18-month slowdown in policy making by Prime Minister Manmohan Singh’s government. In local elections last month, Singh’s ruling Congress party suffered heavy defeats as it was punished for alleged corruption two years before a national election.
Former Telecommunications Minister Andimuthu Raja, officials and business executives are charged with conspiring to award permits to ineligible companies in the 2008 sale. All of the accused have denied the charges.
To contact the reporters on this story: Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net; Andrew Macaskill in New Delhi at amacaskill@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
India’s Supreme Court accepted the government’s appeal against a judgment that scrapped mobile- phone licenses awarded in an allegedly corrupt sale, a move that may allow companies to operate till a final decision.
The government in its review petition questioned the court’s jurisdiction over policy matters and also sought time till March next year for conducting fresh phone-license sales. Judges G.S. Singhvi and K.S. Radhakrishnan will hear the government’s argument on April 13, according to the order on the court’s website yesterday.
The acceptance of the appeal may throw a lifeline to companies such as Emirates Telecommunications Corp. (ETISALAT) and Russia’s AFK Sistema (AFKS), said Madhu Narayan, a Supreme Court lawyer not connected with the case. The companies’ permits were among the 122 canceled two months ago after the Supreme Court said the sale was “flawed” and had been influenced by those with “money power.” The cut-price permit sale in 2008 may have lowered government revenue by $31 billion, according to a report by India’s chief auditor.
Allowing the government’s appeal “is good for companies that want to continue their operations in India,” said Narayan. “If the court grants time till March 2013, it will help them to participate in the auction and tie up with new partners.”
The cancellations meant operators had to close their businesses within four months, which would affect 69 million users. The court yesterday rejected appeals by seven individual companies that had their permits rescinded, including Telenor ASA’s (TEL) local partner Unitech Ltd. (UT)
‘Curative Petition’
“By entertaining the review petition and hearing the case again, the Supreme Court would have been able to appreciate arguments and evidence that challenges the very basis of its order,” according to an e-mailed statement by Uninor, the joint venture between Telenor and Unitech. “We are disappointed that the court has declined to do so.”
The company said it will file a curative petition and ask the court to keep its order in abeyance until a new bench hears the case afresh.
The mobile-phone license scandal contributed to an 18-month slowdown in policy making by Prime Minister Manmohan Singh’s government. In local elections last month, Singh’s ruling Congress party suffered heavy defeats as it was punished for alleged corruption two years before a national election.
Former Telecommunications Minister Andimuthu Raja, officials and business executives are charged with conspiring to award permits to ineligible companies in the 2008 sale. All of the accused have denied the charges.
To contact the reporters on this story: Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net; Andrew Macaskill in New Delhi at amacaskill@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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