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Title: Stocks, Commodities Tumble on Fed Outlook
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2011- ... bank-downgrades-won-sinks.html
Published: Sep 22, 2011
Author: Stephen Kirkland and Shiyin Chen
Post Date: 2011-09-22 10:33:56 by Brian S
Keywords: None
Views: 2024
Comments: 3
Stocks and commodities tumbled, Treasury 30-year yields dropped to a record and the Dollar Index climbed to a seven-month high amid concern central banks are running out of tools to prevent another recession. The MSCI All-Country World Index sank 4 percent at 9:36 a.m. in New York, extending declines from its May peak to more than 22 percent. The Standard & Poor’s 500 Index lost 2.7 percent as the U.K.’s FTSE 100 Index (UKX), France’s CAC-40 Index (CAC) and Germany’s DAX slid at least 4.2 percent. Thirty-year Treasury yields fell as low as 2.8177 percent, with German 30-year yields also reaching an all-time low. The Dollar Index rose 1.4 percent, while the euro lost 1 percent against the U.S. currency. Commodities erased their gains for the year. The Federal Reserve said yesterday it saw “significant downside risks” in the U.S. economy and it will replace $400 billion of short-term debt with longer-term Treasuries to spur growth as the recovery falters two years after the biggest slump since the Great Depression. China’s manufacturing may shrink for a third month in September, a preliminary index of purchasing managers from HSBC Holdings Plc and Markit Economics showed today, and American jobless claims topped forecasts. “The storyline is that global growth is decelerating,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $774 billion. “Financial stresses are rising and policymakers are finding few viable options to stabilize the real economy.” The S&P 500 extended losses following a three-day, 4.1 percent decline. The index slumped 2.9 percent yesterday after the Fed’s statement and as Moody’s Investors Service cut its long-term credit ratings on Bank of America Corp. and Wells Fargo & Co., saying U.S. support has become less likely if lenders get into financial trouble. Citigroup Inc.’s short-term rating also was downgraded by Moody’s. Futures maintained losses before the open of exchanges in New York this morning after applications for jobless benefits decreased 9,000 in the week ended Sept. 17 to 423,000, the Labor Department said. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. A close at this level for the MSCI’s index of developed and emerging-market stocks will mean the gauge has entered a bear market. The Stoxx Europe 600 sank 4.1 percent today as all 19 industry groups declined at least 2.3 percent. Mining companies and automakers led the retreat. Logitech International SA dropped 10 percent after the world’s biggest maker of computer mice cut its profit forecast. The cost of insuring European corporate debt surged to the highest in 2 1/2 years, with the Markit iTraxx Crossover Index of default swaps on 50 companies with mostly high-yield credit ratings rising 56.5 basis points to 861.5, according to JPMorgan Chase & Co. The biggest risk to the euro area is a run on southern European banks, said Kenneth Rogoff, a former chief economist at the International Monetary Fund, Handelsblatt reported. “We have negative headwinds that are absolutely massive,” Patrick Legland, the Paris-based head of research at Societe Generale SA, said in a Bloomberg Television interview with Francine Lacqua in London. “There’s a very powerful slowdown and maybe a recession for Europe and the U.S.’ The Dollar Index, which tracks the U.S. currency against those of six trading partners, advanced to 78.443, the highest level since February. The 17-nation euro depreciated as much as 1.5 percent against the yen to the lowest level since June 2001, and reached the weakest level since January versus the dollar. ‘‘The euro zone is in meltdown and investors are bailing out of risk wherever they can,” said Steven Barrow, head of research for Group of 10 currencies at Standard Bank Plc in London, referring to yesterday’s statements by the Fed and the Bank of England. “The fact that the Fed delivered no more than the market expected was probably seen as a disappointment.” The Australian dollar slid below parity with its U.S. peer for the first time in more than six weeks, falling as much as 2.7 percent. New Zealand’s dollar sank 2.8 percent against the U.S. currency as a report showed the economy almost stalled in the second quarter, reinforcing the case for central bank Governor Alan Bollard to maintain record-low interest rates until 2012. Gross domestic product rose 0.1 percent in the period from the first quarter, a Statistics New Zealand report showed today in Wellington. The median estimate was for a 0.5 percent gain. The yield on the 10-year Treasury note declined as much as 11 basis points to 1.7519, the lowest on record. The difference in yield between two- and 30-year debt was as little as 264 basis points, the least since March 2009. The German 30-year yield dropped as much as 17 basis points to 2.43 percent, with the 10-year bund yield sliding to as low as 1.648 percent, the least on record. The extra yield investors demand to hold Italian 10-year bonds instead of bunds was 4.08 percentage points, approaching a euro-era record 4.16 percentage points, even as the European Central Bank bought Italian government bonds today, according to four people with knowledge of the transactions. A spokesman for the Frankfurt-based central bank declined to comment. Greek two- year notes rose for the first time in four days, sending the yield down 23 basis points to 66.28 percent. The S&P GSCI index of 24 commodities fell 3.9 percent, bringing the drop this year to 2.9 percent. Copper declined 6 percent in London, and crude oil in New York retreated 5.2 percent to $81.47 a barrel. The MSCI Emerging Markets Index sank 5.1 percent, headed for the biggest plunge on a closing basis since 2009. Indonesia’s Jakarta Composite Index (JCI) slumped 8.9 percent, the biggest loss since October 2008, and benchmark indexes fell more than 4 percent in Russia, India, Poland and Hungary. The Shanghai Composite Index slid 2.8 percent after the manufacturing gauge declined and the government said it will broaden taxes levied on resources. South Korea’s won led currencies lower, depreciating 2.5 percent against the dollar.
Losses Extended
Bear Market
‘Bailing Out’
Yield Spreads
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#1. To: Brian S (#0)
When stocks go red, it's a Tumble. Like a gymnast, bouncing right back. When stocks go green, its a Soar. Like the Eagle that it is....8D And the Fed 'Outlook'? We have been told for TWO Months In No UnCertain Terms, that this FMOC would be the And All Be All. The Market was Rallying(when it did so;) because the Rumor was ....FED in CHARGE..or some such shite. But now? It's an OUTLOOK? 8D Emperor's Clothes and the sheeple desperately wanted the Lie.
Glad I got out when I did. Honestly feel sorry for those that didn't, including those that delighted in the rise in the market after I bailed. Even Soro's is saying today we are now in a double dip recession.
Proxy IP's are amusing.....lmao
Impossible. The last recession ended and we recovered and have even expanded. A double dip is a recession that ends and resumes with very little receovery. Nope. This recession is a brand spanking new one and it started in late Spring.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." "THE MILITIA IS COMING!!! THE MILITIA IS COMING!!!" I lurk to see if someone other than Myst or Pookie posts anything...
#2. To: All (#0)
#3. To: Badeye (#2)
Even Soro's is saying today we are now in a double dip recession.
--GW Bush
--Sarah Palin's version of "The Midnight Ride of Paul revere"
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