09 Aug 07: 20:03GMT
Losses in equities accelerated into the close, hit earlier by the WSJ story suggesting Goldman Sachs was trying to offload positions in a second hedge fund suffering from losses. Fed's Stern was on the wires pointing out that the addition of reserves to the banking system today was large but not exceptional while downplaying the sub-prime sector.
09 Aug 07: 21:28GMT
AUD and NZD were hit by new horror stories in the global credit markets, jump started by the BNP's suspension of two hedge funds, followed by rumours of an emergency ECB meeting (denied) and later on talk of large position sales by a GS hedge fund. ECB, the Fed and BoC were actively injecting liquidity today while the stock markets ended firmly in the red, S&P down near 3.0%.
09 Aug 07: 23:23GMT
Remarkably calm Aussie (and Kiwi) FX markets this morning. Liquidity looks to be more plentiful in the NZ money market than the Aussie market (where a reluctance to quote is more evident). We here certain European names that have been the subject of rumours or admitted sub-prime related losses this week are paying over the top in the depo market. One comment we find interesting is that it was not until the ECB started injecting liquidity yesterday (EUR90bn of it) than any sort of panic in the equity markets was evident! PM Howard is out with a 'Don't panic' message (he clearly is) but as long as the RBA doesn't, the local market shouldn't either.
10 Aug 07: 00:29GMT
Market nervous and Central Banks, Monetary Authorities no doubt watching the financial markets closely to see if any liquidity injection or FX intervention to calm markets needed. BoJ to add Y1trln of funds to the banking systems - seen calming markets overnight call rate up above BoJ's target of 0.50%, last 0.53/0.54%, and Nikkei down 2.3%, JGBs up on flight to safety, and US Treasuries up, with market players all nervous and jittery on credit crunch, subprime woes, Global Banks and Hedge funds exposure to subprimes losses.
10 Aug 07: 00:59GMT
Very nervous still as heard overnight USD Depo was last taken at 6.25% from 5.45/5.50% last traded (though some talks high of 5.95%), and best offer at 6.50%, and hearing 6.50% was also bidded, reflecting the very tight liquidity and nervous market conditions.
10 Aug 07: 01:20GMT
Money markets are very nervous as well, with overnight rates/ depo rates all going up, and monetary authorities - BoJ, RBA today, all injecting funds into the banking system to cool the overheating rates.
10 Aug 07: 02:17GMT
More calming comments from Japanese officials to soothe the markets. MoF Koji Omi says world economy and Japanese economy are in sound condition. Wants BoJ to support the economy through monetary policy and up to BoJ to decide on specific interest rates. Not concerned about US subprime problems as world central banks are dealing with it. Econs Min Prof Hiroko Ota says she is closely watching US subprime mortgage woes impact on financial markets. BoJ to decide on rates based on its assessment of domestic economy and prices. On FX, USD/JPY edging a touch firmer above the 118 handle after choppy session, while on money markets, seem odds on BoJ rate hike on August 23 is down to 30% from 70% given the current market turmoil and liquidity crunch.
10 Aug 07: 02:33GMT
Japan government spokesman Yasuhisa Shiozaki says that the government is closely watching stock markets development and the economy. Sees no change in US economic recovery trend. Expects BoJ and central banks to deal with markets appropriately. BoJ to decide monetary policy by looking at the economy and markets moves.
10 Aug 07: 03:32GMT
WSJ: Countrywide Financial and other mortgage companies are facing "unprecedented disruptions" in debt and mortgage-finance markets that could hurt earnings and the company's financial condition, it said in a regulatory filing. The statement was a supplement to the standard "risk factors" listed in Countrywide's 2006 annual report.The company, the largest U.S. home mortgage lender in terms of loan volume, said reduced demand from investors is prompting it to retain more of its loans rather than selling them.
10 Aug 07: 04:56GMT
FT: Investment funds on both sides of the Atlantic were affected by recent market turmoil on Thursday. BNP Paribas shocked European markets by freezing three funds exposed to the stumbling US subprime mortgage market. Goldman Sachs and Renaissance Technologies were also affected as performance at quantitative hedge funds reflected volatile markets. Goldman Sachs’ North American Equity Opportunities fund saw falls of 12% in July and a further 12% this month. People close to the firm said no decision had been made about its future. Goldman stocks were down 5.72% at 182.25 yest.
10 Aug 07: 05:14GMT
JPY carry trades remain vulnerable to more unwinding should there be more news of losses - US SEC seen looking at books of US banks. WSJ: Securities regulators are checking the books at top Wall Street brokerage firms and banks to make sure they aren't hiding losses in the subprime-mortgage meltdown, said people familiar with the inquiry. The SEC is looking into whether Wall Street brokers are using consistent methods to calculate the value of subprime-mortgage assets in their own inventory, as well as assets held for customers such as hedge funds, the same people said. The concern: that the firms may not be marking down their inventory as aggressively as assets held by clients. More on next update.
10 Aug 07: 05:32GMT
More on talks of SEC checks : WSJ: The SEC checks are expected to include the top five Wall Street firms and the securities units of major commercial banks. Among the first firms to be looked at are Goldman Sachs Group Inc. and Merrill Lynch & Co., according to people familiar with the inquiry. Some analysts and investors have raised questions about whether firms have experienced as-yet-unreported losses in markets such as subprime mortgages and collateralized-debt obligations. On FX, stocks, market cautious of any more news of big losses suffered by large US global banks + houses.
10 Aug 07: 06:32GMT
Wind direction shifting to the east.... with some talks that a Japanese bank - unconfirmed, no details - maybe in trouble, possibly on back of the US subprime woes. Very choppy trading in late Asia/ early Europe/ London, as early US houses, Europeans/ Swiss/ UK clearers started the day selling huge EUR, GBP, AUD, NZD and Cross/JPY on JPY carry trades unwinding.
10 Aug 07: 07:26GMT
Both "low yielding" currencies and carry trades favourite JPY and CHF seen fighting against "high yielders" on back of JPY, CHF Carry trades unwinding in the midst of current financial markets turmoil and risk aversion. Though JPY seen off highs or Cross/JPY seen lows, on market rumours that a Japanese mega-city bank may be exposed to huge subprime losses. Meanwhile, SNB seems to have added lots of liquidity in the markets, offering overnight funds at 2.60%, and keeping 1 week repo unchanged at 2.43%.