Friday, May 10, 2013

Overnight yen fall sets Asian Central Banks hopping to keep somewhat competitive , meanwhile the JGB is not having a happy ending !

http://beforeitsnews.com/economy/2013/05/maguire-stunning-40-tons-of-gold-bought-on-price-dip-2519044.html


Whistleblower Andrew Maguire told King World News that a stunning 40+ tons of physical gold were bought by sovereign entities on the price dip in the gold market today alone. Maguire, who recently appeared in the extraordinary CBC production titled, “The Secret World of Gold,” also spoke with KWN about what the bullion banks are doing today in their own trading accounts. Below is what Maguire had to say in part I of his remarkable and exclusive series of written interviews which will be released today.

Eric King: “Andrew, what about the physical market (for gold)? What are we seeing in terms of tonnage being taken out of the market today?”
Continue Reading at KingWorldNews.com…



http://silverdoctors.com/gold-silver-cot-report-510-commercials-now-net-short-72-million-ounces-in-silver/#more-26434


GOLD & SILVER COT REPORT 5/10: COMMERCIALS NOW NET SHORT 72 MILLION OUNCES IN SILVER!

MAY 10, 2013 BY  7 COMMENTS
goldcotBy SD Contributor Marshall Swing:
Gold & Silver COT Report 5/10/13:
Commercial longs added 18 contracts to their total and an additional 244 total shorts to end the week with 50.59% of all open interest, a minor decrease of 0.15% in their share of total open interest since last week, and now stand as a group at 72,280,000 ounces net short, which is a small increase of just over 1.1 million net short ounces from the previous week. 

goldcot

silverCOT

Large speculators added 114 contracts to their total longs covered a significant 1,347 net short contracts increasing their net long position to 68,255,000 ounces, a large increase in their net long position of just over 7.3 million ounces from the prior week.

Small speculators added 182 long contracts to their total and also picked up 1,417 short positions for a net long position of 4,025,000 ounces a huge decrease of over 6 million ounces net short from the prior week.

Silver was relatively quiet this past reporting period as commercials practically stood still while speculators made some small changes.

Large speculators took advantage of the prior Wednesday’s price drop of about $1 to cover 1,347 shorts and after price rebounded the small speculators took advantage by picking up 1,417 shorts betting price has not seen the bottom.  It will be interesting to see if they sold today at the low for the week.

In gold, commercials bought heavy longs and shorts while the large specs added to their short side just as they have done the prior 3 weeks.  Small speculators slightly increased their net short position.

The gold producer merchant significantly decreased their net short position.  With the swap dealer holding a significant lead over the producer merchant in net short position, we probably have not seen close to the bottom yet.




Bernanke address leads calendar
SPX: SEE CHART GET CHAIN FIND STRATEGIES

The only event on today's calendar is a speech by Federal Reserve Chairman Ben Bernanke.

The address to the Chicago Fed Banking Conference begins as the market opens at 9:30 a.m. ET. Investors will probably monitor his comments closely for clues about the direction of monetary policy.

Next week begins on a more active note, with Chinese industrial production early in the morning and U.S. retail sales an hour before the opening bell. Both have the potential to influence trading.

Tuesday brings the German ZEW survey of economic sentiment and European industrial-production numbers. German and French GDP follow on Wednesday, while U.S. data will include the New York Fed's Empire regional survey and the NAHB's homebuilder-sentiment index.

Initial jobless claims, housing starts, and building permits will be released the next day. Friday's main headline is consumer sentiment 25 minutes into the trading session.








http://www.zerohedge.com/news/2013-05-10/commodities-crack-under-usd-strength


"Sniff Of Fear" Returns - Commodities Crack Under USD Strength

Tyler Durden's picture
Submitted by Tyler Durden on 05/10/2013 08:16 -0400



While the extreme volatility associated with the 8amET hour in Gold and Silver trading is no surprise, the strength of the USD (helped by JPY weakness along with pretty much every other major) is slamming WTI crude, Gold, and Silver lower this morning. The Dollar Index move in the last two days is the largest in 16 months; Gold's 2-day drop is the biggest (ex-the crash) in 10 months.



And Southwest Securities' Mark Grant sums it up best:
On February 12, 2013 I said in Out of the Box:

"The engagement is just beginning. It will be one of the most significant events of this year and the various skirmishes may lead us into some sort of planetary Battle Royale. It is not Star Wars but “Currency Wars” and you too can engage in the action."

On the same day the yen was 93.47 to the Dollar. This morning it is 101.40 to the Dollar. That is an 8% shift in three months which is a significant move in that period of time. Japan, with a nod from both the Fed and the EU, has actively begun to devalue their currency and to increase inflation before they enter some viral space that they cannot leave without more severe measures. What is happening, however, will cause further dislocations in my opinion and may well cause Europe to react and send the Euro towards 120 to the Dollar.As a matter of fact I think the major central banks are all engaged in a world-wide devaluation of currencies where they all will be worth less and then the relative valuations will all be lower as a result. The small blue and green pieces of paper will be smaller still and goods and services will be more costly.

As the "Currency Wars" go from skirmish to battle we are also faced with a great paradox in the gold markets. The price of paper gold is down, this is gold in any other form than physical delivery, while the demand for physical delivery skyrockets. There is a portent here I am afraid and an unsettling one.

Recently JP Morgan's inventory of gold at the COMEX fell from 2.4 million ounces to 160,000 ounces and we should all note what is happening. Also, recently, ABN Amro said it could not settle its gold contracts with gold and that settlements would have to be made in cash. It has also been reported that the LBMA is having trouble settling their contracts in actual bullion so that it is becoming apparent that something is amiss in the gold markets. China reported in March that their imports hit an all-time high of 223.5 tons. I would guess that April will overshadow March. While there is no apparent economic crisis the demand for physical gold and the vibrations in this market gives me pause that some game might be afoot.

If you consider what is happening in the currency markets and then factor in the demand for the physical delivery of gold there should be some additional note of caution in your evaluation of the markets. Smart money always moves first while dumb money lingers and is baited by those that take advantage of it. A sniff of Fear has returned to the marketplace and Greed may be in the process of giving way. Watch your backs!
Charts:Bloomberg



and.....






http://www.zerohedge.com/news/2013-05-10/japanese-government-bonds-halted-limit-down-yields-spike-10-week-high-worst-day-5-ye


Japanese Government Bonds Halted Limit Down; Yields Spike To 10 Week High; Worst Day In 5 Years

Tyler Durden's picture
Submitted by Tyler Durden on 05/10/2013 00:50 -0400



It appears things are getting a little out of control around the world. Between the collapse in JGB implied volatilities in recent days, today's melt-down in JPY (+255 pips from pre-open US levels), the last few days melt-up in the Nikkei (+6.8% in 3 days), and now the quadrillion Yen Japanese government bond market is halted limit down as yields smash higher by 11bps to 70bps in 10Y - the highest yield since mid-February. For context, this is the worst day in JGBs in five years (and 5Y yields are back near 13 month highs). So much for controlling the domestic bond market while ratcheting up inflation expectations - remember what happens as Japan's cost of debt rises! And just to add some more fun, Japan's economy watchers see the current economic climate dropping for the first time in six months (and household expectations also fell for the first time in six months).

JGB Futures halted limit down...(from 12:39 Tokyo to 12:50) due to rapid price moves... exaggerated soon after the BoJ's buyback efforts on JPY130bn

Yields jump their most in 5 years...

To 10 week highs in 10Y...

and near 13 month highs in 5Y...

2% inflation or bust! or maybe 2% inflation and bust
Japanese Econ Watchers Current Index turns down for first time in six months...

Charts: Bloomberg

http://www.zerohedge.com/news/2013-05-10/overnight-yen-tumble-sends-asia-scrambling-retaliate


Overnight Yen Tumble Sends Asia Scrambling To Retaliate



Tyler Durden's picture
Submitted by Tyler Durden on 05/10/2013 06:57 -0400


The main story overnight is without doubt the dramatic plunge in the Yen, which following the breach and trigger of USDJPY 100 stops has been a straight diagonal line to the upper right (or lower for the Yen across all currency crosses) and at last check was approaching 101.50, in turn sending the USD higher in virtually all jurisdictions. However it is not so much the Yen weakness that was surprising - a nation hell bent on doubling its monetary base in two years will do that - but the accelerating response in neighboring countries all of which are seeing Japan as the biggest economic threat suddenly and all are scrambling to respond. Sure enough, midway through the evening session, Sri Lanka cut its reverse repo and repurchase rate to 9% and 7% respectively, promptly followed by Vietnam cutting its own refinancing rate from 8% to 7%, then moving to Thailand where the finance chief Kittiratt called for a rate cut exceeding 25 bps, and more jawboning from South Korea suggesting even more rate cuts from the export-driven country are set to come as it loses trade competitiveness to Japan. Asian financial crisis 2.0 any minute now?
The overall disturbance in Asia following the sharp move lower also managed to send not only the Nikkei 225 up by 2.7% but also caused a halt in trading of the JGB futures following rapid moves that sent the 10 Year up 6.5 bps to 0.655%, the highest since March 12.
The funny thing is that with Asia openly inviting inflation now, and with the populations soon once again to scramble for even more gold, the precious metal complex has continue to tumble, driven not by what is coming but by the algo correlation response to a strengthening USD. Well, it won't be the first time the market has been 100% wrong.
In other bond-related news, Japan reported that for the first time in six weeks, Japanese investors have turned into net buyers of foreign bonds for the first time in six weeks, reversing a trend in which they had used the yen’s fall as an opportunity to sell overseas holdings and prompting further falls for the currency below JPY100. As FT reports, data released on Friday by the Japanese finance ministry showed that Japanese investors bought Y204bn more of foreign bonds than they sold in the week to April 27, then extended the buying to a net Y310bn the following week, a week in which they also became net buyers of foreign stocks. More disturbing was that US bonds were roundly rejected by Japanese investors, meaning that the bulk of purchases went into high "quality" paper such as Spanish, Italian and Greek bonds. One can't wait to see the Hollywood ending in this one.
Additional trouble for Asia came as Nomura joined the loud calls now emerging from everywhere that due to its now confirmed data manipulation, that Chinese growth in January through April was likely overstated, which means that inflation accelerating once more on even lower growth puts the PBOC truly in a very dead end position. This even as April M2 growth soared the most in two years.
Finally, a quick look at Europe, showed that economic data was as usual abysmal with Italian March industrial production falling -0.8% on expectations of a -0.3% drop, with the February number revised from -0.8% to -0.9% perhaps the show improvement? UK construction output plunged -7.4% Y/Y, on expectations of "only" a 6.6% decline with the prior revised to -5.5%. Although it was the Italian 1 Year Bill auction that raised some eyebrows - despite the yield falling to a record low of 0.703%, the Bid to Cover of 1.16 dropped to just 1.16, the lowest since February 2012. Is the carry trade close to reversing, and if so where will all that Japanese hot money end up?
Full recap bulletin of events courtesy of Bloomberg:
  • JGBs tumbled, with 10Y yields headed for their biggest jump since 2008, after the yen weakened below 101 per dollar equities surged
  • Japanese investors were net buyers of foreign bonds during the week ended May 3 according to figures released by the Ministry of Finance in Tokyo Japanese investors sold a net 200.1b yen of Treasuries in March, longest streak of net selling since Sept. 2008
  • German Finance Minister Wolfgang Schaeuble signaled support for an easing of Europe’s austerity drive on the eve of a meeting of G-7 finance minister and central bankers in London
  • G-7 meets today and tomorrow; split agendas hamper united policy, analysts say
  • Global central bankers are poised to ease monetary policy even further after a wave of interest-rate cuts from India to Poland; South Korea’s rate cut yesterday was 511th reduction since June 2007, according to BofA
  • U.S. won’t hit debt limit until at least after Labor Day (Sept. 2), Treasury Secretary Jack Lew said in CNBC interview; analysts see headroom until 4Q for Treasury to delay hitting debt ceiling given tax receipts, reduced spending due to sequester, Fannie Mae’s $59.4b dividend payment
  • BofAML Corporate Master Index OAS steady at 143bps, new tight for 2013, as $5.65b priced yesterday. Markit IG at 70bps, YTD low 69bps. High Yield Master II OAS narrows to 423bps, new tight since 2007, as $2.65b priced. CDX High Yield falls to 106.96 from record 107.37
  • Sovereign yields mostly lower, led by Japan. Nikkei surges 2.9%, Shanghai +0.6%. European stocks and U.S. stock-index futures rise; WTI crude, gold, metals lower
SocGen on the main macro events to keep an eye for:
The takeaway from this week is that central banks, whether based in developed or emerging markets, continue to show active engagement in battling the headwinds from slowing demand and slowing inflation, and those with the fortunate nominal capacity to cut rates are not wasting much time in easing monetary conditions. Poland and the Bank of Korea cut rates this week confounding market expectations, as did the RBA in the G10. Our EM strategists are calling the Bank of Thailand will follow soon, and in China, the PBoC effectively also eased by lowering 3-month funding levels from 3.05% to 2.91% via PBoC bills. The big ease is on and most are taking advantage of the opportunity to make money by being long risk.
The gathering of G7 central bankers and finance ministers today and tomorrow in Aylesbury takes place as USD/JPY burst through 100.00. Since the gatherings in Moscow (February) and Washington (April), equities have gone on to post new highs in the US, safe havens (JPY, CHF and gold) have come under pressure and the decline in peripheral bond yields has been relentless. US officials have been pushing a more growth-oriented agenda for Europe and are seeing their wish being fulfilled as deadlines to meet deficit targets are being postponed. Solid macro data from Germany, the US and the UK, the return of Portugal to the capital markets, and a solid Spanish bond auction to boot, have cemented the rally in risk. The weekly claims data yesterday in the US in particular will have reinforced confidence that the pace of job creation is picking up, which should culminate in a strong payrolls report on 7 June. With this in mind, the back-up in US 10y yields to 1.85% (swaps 2.00%) suggests that we are leaving the May lows behind, bringing support to the USD. Buying topside strikes in USD/JPY for 7 June expiry looks a good way to take advantage of higher US yields and a firmer USD.
Commodity currencies have been under the spotlight this week after central bank decisions in Norway and Australia, and today it is the turn of the CAD. On the verge of testing parity vs the USD, the monthly employment report for April will garner close attention. Stephen Poloz was the surprise nominee to succeed Mark Carney as the next Bank of Canada governor, but he could have his work cut out pretty soon if he is to slow the ascent of the CAD. As the previous president of the Export Development agency, will Mr Poloz follow the example of the RBNZ or the RBA?
Full overnight recap from Deutsche Bank
Yesterday was a day where speculation about Fed potentially tapering QE elevated itself above the recent background noise of endless central bank liquidity. The widespread chatter came about from a tweet which noted a pending WSJ article from Jon Hilsenrath about Fed tapering. Nothing actually materialised so this could be another false twitter story that has impacted markets.
Away from this speculation we did actually see some hawkish comments from Philadelphia Fed’s Plosser (a firm hawk) who said that he would like to see the Fed begin to scale back QE beginning even as early as the next meeting. He added that the purchases are risky and offer pretty meager benefits. Note however that Plosser is a non-voter this year. These hawkish notes were somewhat countered by Chicago Fed’s Evans (a voter this year) who attributed the labour market improvement to the Fed’s asset purchase program.
The S&P 500 and the Dow closed -0.37% and -0.15% lower on the day on the tapering concerns, although a better-than-expected initial jobless claims (323k v 335k) offered some support. Eight out of the ten major sectors finished the day in the red let by a -1.6% decline in Utilities. IG credit widened 2bps in the US, perhaps a telling indicator of market positioning, and 10-year USTs closed 4bp higher at 1.811% to levels last seen in early April. Dollar strength was the other main theme as we saw the DXY index (+1.10%) gain the most in three weeks which is not helping Gold. The yellow metal fell a little over 1% yesterday to $1458/oz. We can't help thinking that if the Fed did decide to taper, then the Dollar could rip higher which in itself might be a reason that the Fed might be cautious. Its not an era where anyone really wants a strong currency with limited global growth to go round.
The Dollar strength yesterday also helped the JPY push through the 100-mark. This has given Japanese stocks another boost overnight with the Nikkei up +2.7% also on the back of stronger-than-expected current account headlines. Japanese Bond Futures have resumed trading after having hit a circuit breaker earlier due to sharp price moves. JGB 10yr futures are up nearly 8bps in yield to 1.132% overnight and have risen nearly 18bps since the April lows. Elsewhere across Asia markets are fairly mixed with the ASX 200 (+0.2%) moderately higher but the KOSPI (-1.2%) and the Hang Seng (-0.1%) lower. Asian spreads are steady as markets digest what has been a fairly eventful week of new issues. In other currency moves the AUD has also tumbled overnight to an 11-month low of 1.0085. The Aussie has fallen 1.6% since the RBA’s surprise rate cut on Tuesday.
Speaking of rate cuts, the BoE yesterday defied joining the recent trend of surprise central bank easing seen in the past week. Our own Dr. Buckley noted that the past week has seen six central banks cut policy rates: The ECB, Danmarks Nationalbank, the Reserve Bank of Australia, the Reserve Bank of India, the National Bank of Poland and, last night, the Bank of Korea which collectively represent some 23% of world GDP. The BoE’s decision was not a surprise especially given the recent momentum in UK data flow.
Today we will have trade data from Germany and the UK, industrial production numbers from Italy and the monthly budget statement from the US. All eyes will be on Bernanke though when he speaks at the Chicago Fed Conference at 2.30pm London time, especially given Thursday's tapering discussion. Elsewhere G7 Finance Ministers and Central Governors meeting will meet in Aylesbury near London today.

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