Government Bonds Quotes

Government Bonds
                                                                                         Price           Yield
                                                                                        Change           %

U.S. 5 Year			-1/32	1.386
U.S. 10 Year			-2/32	2.583
U.S. 30 Year			-1/32	3.643
Germany 2 Year			0/32	0.155
Germany 10 Year			0/32	1.676
Italy 2 Year			0/32	1.978
Italy 10 Year			0/32	4.390
Japan 2 Year			0/32	0.134
Japan 10 Year			3/32	0.792
Spain 2 Year			0/32	1.868
Spain 10 Year			0/32	4.632
U.K. 2 Year			0/32	0.326
U.K. 10 Year			0/32	2.381

  Source: WSJ

Japanese Investors buying Foreign Bonds

Japanese investors snapped up foreign bonds for a third straight week last week and analysts say that the long-awaited trend may be finally under way, signaling the next leg lower for the yen.

Data released on Thursday showed Japanese investors bought a net 549.3 billion yen ($5.48 billion) of foreign bonds in the week to July 20. That followed net buying worth about 1.106 trillion yen in the previous week, the largest amount since September 2012.July looks set to be the first month of net foreign bond buying in six months, Reuters reported.

Some Board members of BOJ doubt success of Abenomics

Some Bank of Japan policymakers are becoming more vocal in expressing concerns about the economic outlook, threatening to pick away at what has been a unified public position of optimism key to the central bank's reflationary message.

The three policymakers on the nine-member board see more risks than their colleagues from Japan's planned increase in a domestic sales tax in April, a contentious issue Prime Minister Shinzo Abe must deal with after his resounding election victory on Sunday.They are also more concerned than the others about a slowdown in China's economic growth, which has become more apparent in recent months.
With the economy responding well to the Abenomics phenomenon of aggressive monetary policy, fiscal spending and the promise of economic reform, the pessimists see no imminent need for additional growth stimulus.
But their doubts may gain more traction next year once Japan feels the pinch of the sales tax hike and China's slowdown, and so undermine the BOJ's relatively upbeat message. The BOJ's economic forecasts project a stronger recovery than private analysts by some margin as the central bank targets turning years of deflation into 2 percent inflation in two years.
"Still, the pessimists have a point. Even the optimists aren't convinced that everything is on track. There's still a long way ahead to achieving 2 percent inflation."

The pessimists' concerns may also win over the board into taking stronger money market measures if government bond yields spike again, unlike in recent months when the central bank refused to be drawn into taking stronger measures as 10-year returns jumped to 1 percent from just 0.3 percent

Source: NewsonJapan

China's Central Bank liberalize interest rates for loans

China's central bank announced interest rate reforms on Friday that are a milestone in China's financial marketization. It removed the floor on lending rates, allowing banks to cut rates as much as they like to attract customers, scrapped the controls on bill discount rates and lifted the ceiling on lending for rural banks. However, it did not remove the ceiling on deposit rates.
The long-term benefits of lifting controls on lending rates cannot be underestimated as it is the start of China's market-oriented reform of its financial market. Before the latest reforms the interest rates for both loans and deposits had controls relating to the benchmark rate and were strictly regulated by government.

Meanwhile, the central bank's relaxation on bill discount rates means that banks can set their own prices. This change is good for guiding the market to use the Shanghai Interbank Offered Rate in the interest rate pricing process, which is a market-oriented practice, rather than using the benchmark interest rate as before.

Moreover, such a change will help promote interest rate liberalization. The central bank, instead of relying on the open market, can widely use the short-term interbank offered rate to regulate market liquidity as developed countries do.

The reforms mean banks will now give risk pricing to different borrowers based on their credit situation. However, this means banks will need to improve their risk pricing ability, which requires the establishment of an effective credit appraisal system as well. This will allow banks to compete on price.

Interest rate liberalization in China is being carried out gradually, and to some extent, that is why many problems in financial market exist.

The key is freeing deposit rates. A liberation of deposit rates would force banks to carry out effective risk pricing considering the floating costs and make them more cautious and rational in their commercial activities. Therefore, after removing the control on the interest rates for lending, China should seek to liberate the deposit rates in a timely manner.

Source: Xinhua

Precious Metals Prices

Gold Price Futures     3 months          US$  1,338.69

Silver Price Futures   3 months           US$     20.26

EIA report Present and Future of Energy demand Part I

The IEA in its latest report International Energy 2013 Outlook projects that "total world energy
use rises from 524 quadrillion British thermal units(Btu) in 2010 to 630 quadrillion Btu in 2020
and to quadrillion Btu in 2040".
   Much of the growth in energy consumption occurs in the BRIC economies Brazil,Russia,India and China.
   "Energy use in non-OECD countries increases by 90 percent; in OECD countries, the increase is 17 percent".
   Renewable energy and nuclear power are the world's fastest-growing energy source.However, fossil fuels continue to supply almost 80 percent of world energy use through 2040. Natural gas is the fastest-growing fossil fuel in the outlook. Global natural gas consumption increases by 1.7 percent per year. Increasing supplies of tight gas, shale gas, and coalbed methane support growth in projected worldwide natural gas use. Coal use grows faster than petroleum and other liquid fuel use until after 2030, mostly because of increases in China's consumption of coal and tepid growth in liquids demand attributed to slow growth in the OECD regions and high sustained oil prices.
  The industrial sector continues to account for the largest share of delivered energy consumption; the world industrial sector still consumes over half of global delivered energy in 2040. Given current policies and regulations limiting fossil fuel use, worldwide energy-related carbon dioxide emissions rise from about 31 billion metric tons in 2010 to 36 billion metric tons in 2020 and then to 45 billion metric tons in 2040, a 46% increase.
 Because of the uncertainty of the present world economic conditions it is difficult to project growth rates of the developed 
countries,and economic unions and those of the emerging markets.
The report assumes world's real GDP rises by an average of 3.6 % per year from 2010 to 2040. The fastest rates of growth are projected for the emerging economies, where combined GDP increases by 4.7% per year. In the OECD  GDP grows at a much slower rate of 2.1% per yeart. The strong growth in non- OECD GDP drives the fast-paced growth in future energy consumption projected for these nations.
In the long term, the IEO2013Reference case projects increased world consumption of marketed energy from all fuel sources through 2040 . Although liquid fuels—mostly petroleum-based—remain the largest source of energy, the liquids share of world marketed energy consumption falls from 34 percent in 2010 to 28 percent in 2040, as projected high world oil prices lead many energy users to switch away from liquid fuels when feasible. The fastest growing sources of world energy in the Reference case are renewables and nuclear power. In the Reference case, the renewables share of total energy use rises from 11 percent in 2010 to 15 percent in 2040, and the nuclear share grows from 5 percent to 7 percent.

U.S. Energy Secretary small but continued growth of electric vehicle sales.

U.S. Energy Secretary Ernest Moniz today "highlighted the continued growth of electric vehicle sales – doubling in the first 6 months of 2013 compared to the same period in 2012" – as the Energy Department released its most recent pricing data showing the low cost of fueling on electricity.  The eGallon, a quick and simple way for consumers to compare the costs of fueling electric vehicles vs. driving on gasoline, rose slightly to $1.18 from $1.14 in the latest monthly numbers, but remains far below the $3.49 cost of a gallon of gasoline. 

Plug-in electric vehicle (PEV) sales tripled from about 17,000 in 2011 to about 52,000 in 2012.  During the first six months of 2013, Americans bought over 40,000 plug-in electric vehicles (PEV), more than twice as many sold during the same period in 2012. 

The latest numbers also show how the early years of the PEV market have seen much faster growth than the early years of the hybrid vehicle market.  Thirty months after the first hybrid was introduced, monthly sales figures were under 3,000.

Fed would refine forward guidance monetary policy

According to the Wall Street Journal "The Federal Reserve is on track to keep its $85 billion-a-month bond-buying program in place at its policy meeting next week, but officials likely will debate changes to the way the central bank describes its plans for the program and for short-term interest rates"
.At their July 30-31 meeting, Fed officials are likely to discuss whether to refine or revise "forward guidance," the words they use to describe their intentions for the next few years.
US Central Bank Chairman has said that it intends to keep short-term interest rates near zero at least until the jobless rate drops to 6.5% or unless inflation rises to a 2.5% annualized rate. 
Some Fed officials argue it would be too soon to raise short-terrm rates even after joblessness drops below 6.5%. In part, they see inflation as unthreatening, which means rates can stay low longer. They fear the jobless rate, now 7.6%, doesn't reflect other weaknesses in the labor market, such as people leaving the workforce or working part time when they want full-time work.
Futures markets suggest investors are back to believing a series of rate increases aren't likely until 2015. As a result, officials might decide to avoid any change in their message and leave well enough alone for now.

Source: WSJ

Precious Metals Prices

Gold Price Futures    3months      US$ 1,331.97

Silver Price Futures   3months      US$     20.23

China´s job market grows. But employment pressure remains

Ministry of Human Resources and Social Security spokesman Yin Chengji said at a press conference that China created more jobs in the first half compared with the same period last year.

igures from the ministry showed that China added 7.25 million jobs in the first six months of the year, an increase of 310,000 year on year. The registered urban unemployment rate stood at 4.1 percent at the end of the second quarter.

The government has set a goal of creating no less than 9 million jobs this year, with the full-year unemployment rate set to reach less than 4.6 percent.

Yin said the service sector, particularly Internet-related businesses, has helped absorb new labor.

He said the employment situation in east China has improved in the last two months, with a rebound in monthly figures. The number of newly-added jobs increased rapidly in underdeveloped west China, while that of central China remained stable in the first six months.

Source Xinhua

China´s textile industry facing challenges.

China's cotton textile industry is facing difficult challenges, as sales have been poor amid the weak recovery of the international market, as well as domestic factors.

The Fujian Hongyuan Group, located in southeast China's Fujian Province, is the largest cotton textile enterprise in the province, with an annual output value of 1 billion yuan (163 million U.S. dollars).

Statistics released by the National Bureau of Statistics showed that the added value of the textile industry from January to June was greater than that of the same period last year. However, exports to Europe, Japan and other major overseas markets have plunged.

Statistics released by the National Bureau of Statistics showed that the added value of the textile industry from January to June was greater than that of the same period last year. However, exports to Europe, Japan and other major overseas markets have plunged.

"Although a rebound in textile product exports has been seen in the past six months, things do not look optimistic for the second half. It may be worse than the first half and could plunge even further in the future," said Chen Cangsong, vice president of Hongyuan. 

The Chinese government started purchasing cotton for temporary state reserve in 2011 in order to protect cotton farmers' interests. As a result, domestic cotton prices became higher than those of the global market.

Domestic cotton prices stood at about 19,000 yuan per tonne this year, 3,500 to 4,000 yuan higher than the price of imported cotton.

However, imported cotton has been hit with high tariffs and enterprises who want imported cotton must abide by a strict quota system.

Since southeast Asian nations like Vietnam, Bangladesh, India and Cambodia can freely purchase cotton at a price of about 13,000 yuan per tonne and have lower labor costs, those countries are seeing an increasing number of orders from European markets that used to order from China.

Source Xinhua

Initial jobless claims rose 7,000.

Initial jobless claims rose 7,000 in the July 20 week to 343,000 with the 4-week average down slightly to 345,250. The trend for the data are flat, pointing to no discernible improvement underway in the jobs market.

Once in a while continuing claims, which are reported with a 1-week delay, get some attention and that may be the case to a degree for today's report as the reporting period, the week ending July 13, is also the sample week for the monthly employment report. And the data for the week show big improvement with a 119,000 decline to 2.997 million. But the decline only partially reverses big increases of 93,000 and 70,000 in the prior two weeks and leaves the 4-week average at 3.022 million which is still more than 40,000 higher than the month-ago comparison. The unemployment rate for insured workers dipped back 1 tenth to 2.3 percent but is unchanged compared to a month ago.

July is the time that automakers shut down their factories for retooling and put their workers on leave, which brings into play major adjustment issues and substantially clouds the data. Don't expect today's report to have much influence at all on the jobs outlook or the markets. 

Durable Good Orders surged 4.2% in June.Nondefense aircraft gained 31.4%.Excluding Transportation,Durable oders were unchanged in June

Durables orders sharply beat expectations at the headline level but it was almost entirely due to aircraft orders at Boeing. Elsewhere, durables orders were mixed, ending net at flat for June. New factory orders for durables in June surged 4.2 percent, following an upward revised 5.2 percent (originally 3.7 percent) for May. Market expectations were for a 1.5 percent boost for June. The transportation component spiked 12.8 percent after a 14.8 percent jump in May. Excluding transportation, durables orders were unchanged in June, following a 1.0 percent rise in May. The consensus expected a 0.6 percent decrease in orders excluding transportation.

Unfilled orders, however suggest some overall continuing momentum for manufacturing. Overall unfilled orders jumped 2.1 percent in June, following a 1.1 percent increase in May. This was mostly aircraft but non-transportation was still respectable. Unfilled durables excluding transportation increased 0.9 percent in June, matching the May pace.

Turning back to new orders data, within transportation, motor vehicles gained 1.3 percent, nondefense aircraft jumped 31.4 percent, and defense aircraft increased 18.7 percent. Outside of transportation, components were mixed but net zero. Gains were seen in fabricated metals, machinery, and "other." Declines were seen in primary metals, computers & electronics, and electrical equipment.

Precious Metals Quotes

Gold Price        3months Futures        US$ 1,322.48

Silver Price       3months Futures        US$     20.13