http://www.caseyresearch.com/gsd/edition/cme-hikes-gold-margins-by-25
http://jessescrossroadscafe.blogspot.com/2013/06/gold-daily-and-silver-weekly-charts_20.html
( Margin hike effective after close of business Friday June 21 , 2013.. )
The hit on the metals began in the quiet hours overnight, with the dumping of contracts in earnest.
Today was the fait accompli.
I don't need to tell you what I did.
Let's see how we close out the week.
Tonight the CME hiked gold margins by 25%.
As a reminder, next Tuesday June 25 is options expiration for gold and silver on the Comex.
http://www.zerohedge.com/news/2013-06-20/cme-hikes-gold-margins-25
Submitted by Tyler Durden on 06/20/2013 17:39 -0400
At the Comex, the open interest in silver rose by 1815 contracts to 151,706 contracts despite silver's fall in price yesterday. The silver OI is still holding firm at these highly elevated levels. As I mentioned to you yesterday, the bankers will try and do everything possible to remove as many longs from the silver arena as possible. The big test will be tomorrow. If the OI remains at the same level as today, it could only mean somebody with huge deep pockets in standing and quite possibly a sovereign like China.
The open interest on the entire gold comex contracts rose by 5477 contracts to 382,583 which is still extremely low. The bankers today continued to drown more and more of newbie gold paper players . The number of ounces which is standing for gold in this June delivery month remains at 940,100 or 29.24 tonnes. The number of silver ounces standing in this non active month of June also remains constant at 705,000 oz
Tonight, the Comex registered or dealer inventory of gold remains the same at 1.434 million oz or 44.60 tonnes. This is still dangerously low. The total of all gold at the comex also remained the same at 7.706 million oz or 239.68 tonnes of gold.
JPMorgan's customer inventory shows no change and rests tonight at its nadir of 136,380.611 oz or 4.24 tonnes. Its dealer inventory remains at 413,526.284 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory.
The total of the 3 major bullion dealers, Scotia , HSBC and JPMorgan have in the Comex dealer account only 30.02 tonnes of gold
The GLD reported a loss in inventory of 2.42 tonnes of gold inventory. The SLV inventory of silver remained firm with no losses or gains in inventory.
Tonight, we have two major commentaries: i) from Bill Holter and ii) Mark Grant
on today's events. They are both extremely important.
Kingworldnews and Eric King provide two great interviews with James Turk and Bill Kaye.
Also, we have a commentary from Monty Pelerin who agrees with us that it will be impossible to stop QE as there is nobody on the planet who will buy USA bonds. The USA will no doubt have a deficit of 1 trillion dollars and these dollars must be funded by somebody. Strange! nobody seems to address this.
Matt Taibbi, from Rolling Stone Magazine delves through all the emails from the lawsuit with the ratings agencies. He concludes this is one massive fraud as the rating agencies knew what they were doing by giving junk, an AA plus rating etc.
You will not want to miss reading this one as well.
We will go over these and many other stories but first.....................
Let us now head over to the comex and assess trading over there today.
Here are the details:
The total gold comex open interest rose by 5477 contracts from 377,106 up to 382,583 with gold rising by $7.60 yesterday. Remember, the waterfall occurred at 2:15 yesterday (after comex closed) when Bernanke gave his press conference. The front active month of June saw it's OI fall by 30 contracts from 934 down to 904. We had 26 deliveries served upon our longs yesterday,thus we lost 400 gold ounces standing in this June delivery contract month (4 contracts). The next delivery month is the non active July contract and here the OI rose by 36 contracts down to 621. The next active delivery month for gold is August and here the OI rose by 4943 contracts from 212,676 up to 217,619. The estimated volume today was huge at 347,557 contracts. The confirmed volume yesterday was fair at 142,370.
The total silver Comex OI rose by 1815 contracts despite silver falling in price yesterday by 5 cents. The big test will be tomorrow as we see if the longs in silver remain resolute, willing to take on the criminal bankers. If the OI remains relatively constant tomorrow, then no doubt we have a sovereign standing for much of silver. The front non active June silver contract month shows no change in OI at 25. We had 0 notices filed yesterday so in essence we neither gained nor lost any silver contracts. The next big delivery month is July and here the OI fell by only 2322 contracts down to 52,749. We have a little over 1 week to go before first day notice (June 28.2013) and judging from the relatively high OI in July, we may see some fireworks in silver. The estimated volume today was astronomical coming in at 144,877 contracts. The confirmed volume yesterday was good at 55,446. The volume today in oz is 724 million oz or a little less than 100% of annual global production from all mines.
We had zero customer deposits today :
total customer deposits: zero
It is very strange that in a big delivery month, we are witnessing no gold enter the dealer or even the customer.
we had 1 customer withdrawal:
i) Out of Manfra: 257.216 oz
i) total customer withdrawals: 257.216 oz
thus, zero ounces were withdrawn from JPMorgan today as well as no notices filed from the dealer side of JPM.
As we reported to you two weeks ago, that JPMorgan withdrew a huge amount of gold from its customer account:
Out of JPMorgan: 217,844.96 oz.
If you will recall, we needed to see 100,000 oz of gold removed from JPMorgan's customer account. (1000 contracts served upon our longs in mid May).
The last Tuesday in May, we had 15,416.93 oz removed from the JPM's customer account. No doubt that this gold was part of the 1000 contracts issued by JPMorgan customer account and thus we calculated that as of last night 28,389.579 oz was settled upon, leaving 71,611.00 oz still left to arrive in the settling process.
Last Tuesday, June 11, we had 217,844.96 actual ounces leave JPMorgan
Today we had no issuance from any of the major bullion banks, JPMorgan, HSBC and Scotia.
In summary on the customer side of things for JPMorgan:
Today 0 notices were served upon our longs from the JPMorgan's customer side of things.
Thus:
From the beginning of June we have had 1553 notices served from the customer side of JPMorgan for 155,300 oz. If we add the 71,611.00 oz owing from May issuance, we get 226,911 oz. If we subtract the actual withdrawal of gold from JPMorgan of 217,844.96, this still leaves 9,066.04 oz that needs to be settled upon from the vaults of JPMorgan customer side.
Today we had no adjustments.
The total dealer comex gold thus remains at 1.434 million oz or 44.60 tonnes of gold.
The total of all comex gold, dealer and customer rests tonight at 7.706 million oz or 239.68 tonnes..
Thus tonight we have the following closing inventory figures for JPMorgan:
i) dealer account: 413,526.284 oz
ii) customer account remains at 136,380.611 oz. (or only 4.2 tonnes of gold)
Now for JPMorgan's dealer side and what the inventory should be:
Last Tuesday night June 11.2013 we reported that 4935 contracts have been issued by JPMorgan's house account since first day notice and not yet subtracted out of inventory
You will also recall two weeks ago on Saturday (and again on that following Monday night,) I reported that JPMorgan had 470,322.102 oz in it's dealer account. From that day until now, 58,795.82 oz was either withdrawn or adjusted out, leaving the dealer side at 413,526.284 oz where it sits tonight.
On the dealer side here are the last 9 trading sessions as to notices issued from JPMorgan's dealer side:
Friday: zero
Monday: 1
Another disturbing piece of news is the low dealer gold inventory for our 3 major bullion banks: Scotia, HSBC and JPMorgan equal to 30.08 tonnes
i) Scotia: 285,596.23 oz or 8.88 tonnes
ii) HSBC: 270,197.277 oz or 8.4 tonnes
iii) JPMorgan: 413,526 oz or 12.8 tonnes
Brinks dealer account has the lions share of the dealer gold at 445,398.58 oz 13.89 tonnes.
There were no changes in inventory from all sides today.
Today we had 1 notice served upon our longs for 100 oz of gold. In order to calculate what I believe will stand for delivery in June, I take the OI standing for June (904) and subtract out today's notices (1) which leaves us with 903 contracts or 90,300 oz left to be served upon our longs.
8498 contracts x 100 oz per contract or 849,800 oz served upon + 903 contracts or 90,300 oz (left to be served upon) = 940,100 oz or 29.24 tonnes of gold.
We lost 400 gold ounces standing in this June delivery month.
We now have the official USA production of gold last year and it registered 230 tonnes. Thus approximately 19.16 tonnes of gold is produced by all mines in the USA per month. Thus the amount standing for gold this month represents 152.6% of that total production.
Ladies and Gentlemen: we have a three-fold problem:
i) the total dealer inventory of gold is at a very dangerously low level of only 44.32 tonnes and none of the 9.5 tonnes delivery notices from May and the 29 tonnes from June have been removed from inventory as of yet.
ii) a) JPMorgan's customer inventory remains at an extremely low 136,380 oz.
If you are a customer of JPMorgan and have your gold in its vault, I think it is best to remove it before we have another fiasco like MFGlobal.
ii b) JPMorgan's dealer account rests tonight at 413,000 oz. However all of this gold has been spoken for plus an additional 81,000 oz
iii) the 3 major bullion banks have collectively only 30.08 tonnes of gold left!!
and Greece fire returns .....
¤ YESTERDAY IN GOLD & SILVER
Gold got sold down a bit when Thursday trading began...and the price held more or less steady until shortly before the London open. Then the high-frequency traders went to work...and the rest as they, is history.
Yesterday's engineered price decline was identical to the one that was pulled in early Far East trading on Monday, April 15th...the last time that gold got creamed by JPMorgan et al. The modus operandiwere identical...spin the prices lower and then buy everything in sight as sell stops are hit and the long holder are forced to sell as the margin calls go out. Ted Butler has been going on about this for a decade now.
The highs and lows on Thursday aren't worth mentioning. Gold got smacked for $73.50...and closed at $1,277.80 spot. Gross volume was an over-the-moon 390,000 contracts, so there was obviously massive long liquidation.
Of course it was silver that really got it in the neck...and the price pattern was the same, although the sell-off began an hour or so before the London open. After that, it was all same.
Silver closed on its absolute low of the day, which was $19.60 spot...down $1.75 from Wednesday's close. Volume, net of roll-overs out of the July delivery month, was an astonishing 72,500 contracts.
Platinum and palladium weren't spared yesterday, either. Here are the charts...
Once the markets closed for the day on Thursday, Kitco recorded the damage as follows: Gold down 5.44%...silver down 8.18%...platinum down 3.83%...and palladium down 4.47%. There was no news in the real world to account for this sell-off. It was all "da boyz".
The U.S. Dollar Index closed on Wednesday afternoon in New York at 81.34. Once Far East trading began on their Thursday, the index rallied to its high of the day...82.14...shortly after 10:00 a.m. in New York. Within an hour or so, the index was back below the 82.00 mark, closing the day at 81.75...up 42 basis points on the day.
If you believe that what happened in the precious metals on Thursday was any way related to what happened in the currency markets, then I have a bridge just for you.
The CME's Daily Delivery Report showed that 70 gold and one silver contract were posted for delivery on Monday within the Comex-approved depositories. The only two short/issuers were JPMorgan out of its client account with 38 contracts...and Jefferies with 32. The long/stoppers were "all the usual suspects"...including JPMorgan Chase out of its in-house [proprietary] trading account. The link to this activity is here.
Not surprisingly, there was another withdrawal from GLD yesterday. This time it was 135,308 troy ounces. There was also a smallish withdrawal from SLV...482,564 troy ounces.
Joshua Gibbons, the Guru of the SLV Bar List didn't have much to say in his weekly report..."Analysis of the 19 June bar list, and comparison to the previous week's list. No bars were added, removed, or had a serial number change. As of the time that the bar list was produced, it was over-allocated 222.7 troy ounces." The link to his website is here.
There was no sales report from the U.S. Mint
Wednesday was a quiet day for silver over at the Comex-approved depositories. They didn't report receiving any...and shipped a smallish 67,582 troy ounces of the stuff out the door. The link to that activity is here.
It was even quieter in gold on Wednesday. The depositories reported receiving 100 troy ounces...and shipped 257 troy ounces out the door. If you want to see for yourself...here's the link.
I just knew it was going to be busy at the store yesterday, as the phone rang about a dozen times before the owner picked it up when I called in yesterday morning. We were busy all day long. Good silver orders...but the amount of gold we've been selling over the last couple of months continues to astound me. Yesterday was no exception.
Since yesterday was the 20th of the month...and it fell on a week day...The Central Bank of the Russian Federation updated their website...including their new gold reserve numbers. It was fourth month in a row that they added 200,000 troy ounces. Their reserves, at least the ones they admit to, now total 32.0 million troy ounces. Nick Laird's most excellent chart is posted below.
(Click on image to enlarge)
Here's a chart from McClellan Financial Publications that was sent to me yesterday by U.A.E. reader Laurent-Patrick Gally...and it's titled "SP500 Following in 1998's Footsteps". The link to the associated commentary on it is here.
It was pretty quiet on the Internet yesterday, as most people were probably in shock...and I was surprised at how few e-mails were in my in-box when I got up yesterday morning. That has certainly affected the number of stories I have for you today, which aren't a lot.
and......
Five U.K. Banks Must Raise Extra $21 Billion Capital
The five lenders, including Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, have already submitted plans to raise half the total, the London-based BOE said in a statement today. Lloyds must plan to raise an extra 7 billion pounds, while RBS and Barclays need 3.2 billion pounds and 1.7 billion pounds of additional capital.
The strength of Britain’s banking system is under scrutiny as the government considers selling its stake in Lloyds, which is 39 percent-owned by the state, and splitting up RBS. Chancellor of the Exchequer George Osborne said in a speech in London yesterday that the U.K. government would proceed only “if we get value for the taxpayer.”
The central bank, whose Prudential Regulation Authority unit took over as the U.K.’s banking supervisor from the Financial Services Authority this year, outlined potential losses for banks of 52 billion pounds in March. Lenders must “hold capital resources equivalent to at least 7 percent of their risk weighted assets,” with those losses taken into account, the BOE said.
This Bloomberg story was posted on their website in the wee hours of yesterday morning MDT...and I thank Laurent-Patrick Gally for finding it for us.
ECB Bank Oversight Start Said to Be Delayed to Late 2014
The European Central Bank probably won’t take over as euro-area bank supervisor until the final months of 2014, further delaying the banking union that leaders wanted in place quickly to stem the sovereign debt crisis.
Late next year is now the timeline for the transition to the new banking supervision regime, in part because of German-caused procedural delays, according to two European officials who spoke on condition of anonymity because the preparations are ongoing. This contrasts with an initial goal of moving to the new system in March, later pushed back to July.
As a result, postponing the new supervision regime could reopen questions about whether EU leaders will follow through on promises to break the link between banks and sovereigns. Over the past three years, five of the euro area’s 17 nations have sought bailouts and investors remain jittery that contagion could flare up again.
“It matters symbolically and sends out the message that the euro zone is not even able to fix the easiest part of banking union,” said Carsten Brzeski, senior economist at ING Belgium, said by e-mail.
Here's another Bloomberg story. This one was posted on their website during the Denver lunch hour yesterday...and it's worth skimming.
Turkey announces plans ‘for gas’ and cyber security in face of Gezi protests
Turkey has announced plans to purchase 100,000 gas bomb cartridges and launch a central cyber security agency, local media report. This comes after protests across the country which also saw a series of attacks on government’s websites.
The order for the 100,000 new cartridges will be accompanied by an order for 60 water cannon vehicles, the daily local newspaper Milliyet reported, also stating that the excessive use of gas bomb cartridges meant that Turkish riot police used up some 130,000 units across the space of a mere 20 days.
The protests began in Istanbul, but nationwide demonstrations shortly followed suit, drawing thousands in support of the Gezi Park protesters suffering brutal police repressions. In one of the instances, a horrifying video emerged of a man in a wheelchair being fired at by a similar vehicle on June 11.
The protests began in Istanbul, but nationwide demonstrations shortly followed suit, drawing thousands in support of the Gezi Park protesters suffering brutal police repressions. In one of the instances, a horrifying video emerged of a man in a wheelchair being fired at by a similar vehicle on June 11.
Here's a Russia Today story that was filed on their Internet site early yesterday evening Moscow time...and my thanks go out to Roy Stephens for sharing it with us.
China Money Rates Retreat After PBOC Said to Inject Cash
China’s benchmark money-market rates retreated from records after the central bank was said to have made funds available to lenders amid a cash squeeze.
The one-day repurchase rate dropped 384 basis points, or 3.84 percentage points, to 7.90 percent as of 9:33 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That is the biggest drop since 2007. The seven-day rate fell 351 basis points to 8.11 percent. They touched record highs yesterday of 13.91 percent and 12.45 percent, respectively.
“The worst is over; the PBOC is likely to serve as a last resort and intervene to calm the markets and avoid such huge volatility,” said Chen Qi, a Shanghai-based strategist at UBS Securities Co. “Although a reduction in interest rates or reserve ratios is not likely in order to avoid confusing policy signals, we do think reverse repos are very likely to be resumed and PBOC will use window guidance as well. We expect liquidity tightness to persist.”
This story was filed from Singapore early Friday morning in the Far East...and posted on the Bloomberg website at 8:00 p.m. MDT last night I thank Laurent-Patrick Gally for his final offering in today's column.
Three King World News Blogs
1. Hong Kong fund manager William Kaye: "Stunning Volume on Gold and Silver Smash in Suspect Trading". 2. Nigel Farage: "The Massive Plunge in Gold and Silver Markets". 3. Keith Barron: "Criminal" Paper Derivative Selling Used To Crush Gold Market
Gold plunges again: unleashes perfect storm for the bears
Some heavy selling following Ben Bernanke’s upbeat statement suggesting a cutting back of QE later this year, and a possible end next, hit gold hard overnight with the bullion price falling back close to $1300 before making a small recovery – and then falling back again in London to breach the $1300 level on the downside in a very volatile market. There were renewed sales from the big SPDR gold ETF, GLD, taking it down below 1,000 tonnes for the first time since February 2009.
SocGen’s analyst Michael Haigh was predicting a fourth quarter gold price average of only $1200 while Nouriel Roubini would have been smiling given his recent prediction that gold would fall back to $1,000. The U.S. dollar surged, seemingly yet another nail in gold’s coffin. All in all something of a perfect storm for gold bears. Could the downturn be turning into a rout?
The other factor to watch is whether some of the major short positions in gold and silver on the COMEX now get unwound at the lower prices. If this happens gold and silver could both be set for a major upturn, regardless of China, as the big banks and hedge funds start to look for major profits on the upside.
This essay by Lawrence Williams was posted on the mineweb.com Internet site yesterday...and he cuts to the heart of the matter in the last paragraph that I cut and paste above. This is what it's all about. Nothing else matters.
¤ THE WRAP
After mulling over the situation for days, I have finally decided that, in deference to my subscribers, the best position for me is to have no position in the market. As soon as you buy stocks, the normal sentiment is to want the market to go up. I don't want to be in the position of wanting the market to go up or down. I want to be emotionally neutral and basically realistic. Therefore, the only position I will own will be gold. I have not added or subtracted gold from my position in a long time, nor will I. I treat gold like my home. It's a tangible asset, and I don't trade it. - Richard Russell...17 June 2013
If one could have had a peek at the Commitment of Traders Report for positions held at the close of Thursday trading in New York, I know what it would show. It would show that JPMorgan is even more massively long the gold market than it was a week ago...and it's also a good bet that they're short position in silver is history.
Unfortunately, that data won't be available until next Friday...and the cut-off for that report is at the close of Comex trading on Tuesday...a lifetime away...as anything can happen between now and then.
And I'm not surprised by the fact that gold and silver bullion is flowing out of the various ETFs once again and, without doubt, it is being scooped up by very strong hands...the same hands that are buying all the mining shares that are falling off the table as well.
They have to be strong hands with almost infinite financial resources, because the general public is basically out of the market at this point...and there was a buyer [not just a seller] for every share/Comex futures contract/and troy ounce of physical metal sold during this entire ordeal.
It's impossible to tell whether yesterday's engineered price decline was the absolute low or not...but as Ted Butler has already pointed out on several occasions, there is a limit to how much further speculative long liquidation is possible...and how much financial effort has to be expended by JPMorganet al to get it, because there's a finite limit to how short the technical funds, and others, are prepared to go. But...like horseshoes, hand grenades and atomic bombs...close is sometimes good enough...and that's where I believe we are now.
Here are the 3-year weekly charts for both gold and silver...and from the data presented here, if the bottom isn't in...it's close. It only remains to be seen what JPMorgan and the rest of the powers that be do when the inevitable rally begins once they're through pounding the precious metal prices into the dirt. They are now in total control on the long side in every respect...and what happens from here is entirely up to them...which was pretty much the case when they were in control on the short side. But now positioned on the long side, it may turn out to be whole ball game...and I expect that will be the case. All we can do at this point is wait it out and see what their plans are.
(Click on image to enlarge)
(Click on image to enlarge)
The other thing that Ted pointed out when we were talking on the phone yesterday was that JPMorgan et al most likely have a record long position back on in copper...and a record short position in the U.S. dollar index. As we've all discovered in the past, "da boyz" never make bets this size unless they expect to cash in big at a later date...but what day that "later date" is...is only known to them.
In Far East trading on their Friday, all four precious metals got sold down to new lows by around 9:30 a.m. Hong Kong time. All metals then rallied, but gold and silver's respective attempts to break through the $1,300 price mark in gold...and $20 in silver...were quietly turned aside at the London open. As of 4:08 a.m. EDT, gold's gross volume is already north of 60,000 contracts...and silver's net volume is a hair over 10,000 contracts. Considering the price action, these are big numbers. The dollar index, which had slid a bit in Far East trading, has now rallied back to almost the 82.00 mark once again...and is up 12 basis points at the moment.
We get the latest Commitment of Traders Report at 3:30 p.m. EDT today...and there shouldn't be much in it. It's what happened on Wednesday...and particularly Thursday...that really matters...and all that activity occurred after the cut-off for this report. This is another trick that "da boyz" like to use when they want to hide their actions from prying eyes for as long as possible...and the price action of the last few days is a textbook example of this.
And as I hit the 'send' button on today's column at 5:15 a.m. EDT, gold is up about seventeen bucks...and silver is up 12 cents from Thursday's close in New York. Neither metal has challenged the $1,300 or the $20 price marks since the London open. Gold's gross volume is now north of 70,000 contracts...and silver's net volume is over 12,000 contracts. The dollar index is still up 12 basis points.
I haven't the foggiest notion as to what might happen during the Comex trading session in New York today...but since it's Friday, nothing would surprise me.
Enjoy your weekend...or what's left of it if you leave west of the International Date Line...and I'll see here tomorrow.
http://jessescrossroadscafe.blogspot.com/2013/06/gold-daily-and-silver-weekly-charts_20.html
( Margin hike effective after close of business Friday June 21 , 2013.. )
20 JUNE 2013
Gold Daily and Silver Weekly Charts - Cavalcade of Policy Errors
The hit on the metals began in the quiet hours overnight, with the dumping of contracts in earnest.
Today was the fait accompli.
I don't need to tell you what I did.
Let's see how we close out the week.
Tonight the CME hiked gold margins by 25%.
As a reminder, next Tuesday June 25 is options expiration for gold and silver on the Comex.
http://www.zerohedge.com/news/2013-06-20/cme-hikes-gold-margins-25
CME Hikes Gold Margins By 25%
How very unexpected. And how, judging by today's massive selloff, it is almost as if someone knew in advance this would happen. Can JPMorgan just restock its vault with whatever gold it needs to meet its massive delivery demands (at three year low prices) so some normalcy can return to the market?
Source: CME
http://harveyorgan.blogspot.com/2013/06/bloodbath-todaygreece-coalition-falling.html
Thursday, June 20, 2013
Bloodbath today/Greece coalition falling apart/Greece needs 3-4 billion or IMF cuts off funding/
Good evening Ladies and Gentlemen:
Gold closed down by $87.70 to $1285.90 (comex closing time ). Silver fell by $1.80 cents to $19.82 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: 1281.00
silver: $19.64
It is futile talking about actual gold/silver trading as these precious metals are manipulated by the bankers every minute of the day.
Gold closed down by $87.70 to $1285.90 (comex closing time ). Silver fell by $1.80 cents to $19.82 (comex closing time)
In the access market at 5:00 pm, gold and silver finished trading at the following prices :
gold: 1281.00
silver: $19.64
It is futile talking about actual gold/silver trading as these precious metals are manipulated by the bankers every minute of the day.
At the Comex, the open interest in silver rose by 1815 contracts to 151,706 contracts despite silver's fall in price yesterday. The silver OI is still holding firm at these highly elevated levels. As I mentioned to you yesterday, the bankers will try and do everything possible to remove as many longs from the silver arena as possible. The big test will be tomorrow. If the OI remains at the same level as today, it could only mean somebody with huge deep pockets in standing and quite possibly a sovereign like China.
The open interest on the entire gold comex contracts rose by 5477 contracts to 382,583 which is still extremely low. The bankers today continued to drown more and more of newbie gold paper players . The number of ounces which is standing for gold in this June delivery month remains at 940,100 or 29.24 tonnes. The number of silver ounces standing in this non active month of June also remains constant at 705,000 oz
Tonight, the Comex registered or dealer inventory of gold remains the same at 1.434 million oz or 44.60 tonnes. This is still dangerously low. The total of all gold at the comex also remained the same at 7.706 million oz or 239.68 tonnes of gold.
JPMorgan's customer inventory shows no change and rests tonight at its nadir of 136,380.611 oz or 4.24 tonnes. Its dealer inventory remains at 413,526.284 oz but it still must settle upon contracts issued in the June delivery month which far exceeds its inventory.
The total of the 3 major bullion dealers, Scotia , HSBC and JPMorgan have in the Comex dealer account only 30.02 tonnes of gold
The GLD reported a loss in inventory of 2.42 tonnes of gold inventory. The SLV inventory of silver remained firm with no losses or gains in inventory.
Tonight, we have two major commentaries: i) from Bill Holter and ii) Mark Grant
on today's events. They are both extremely important.
Kingworldnews and Eric King provide two great interviews with James Turk and Bill Kaye.
Also, we have a commentary from Monty Pelerin who agrees with us that it will be impossible to stop QE as there is nobody on the planet who will buy USA bonds. The USA will no doubt have a deficit of 1 trillion dollars and these dollars must be funded by somebody. Strange! nobody seems to address this.
Matt Taibbi, from Rolling Stone Magazine delves through all the emails from the lawsuit with the ratings agencies. He concludes this is one massive fraud as the rating agencies knew what they were doing by giving junk, an AA plus rating etc.
You will not want to miss reading this one as well.
We will go over these and many other stories but first.....................
Here are the details:
The total gold comex open interest rose by 5477 contracts from 377,106 up to 382,583 with gold rising by $7.60 yesterday. Remember, the waterfall occurred at 2:15 yesterday (after comex closed) when Bernanke gave his press conference. The front active month of June saw it's OI fall by 30 contracts from 934 down to 904. We had 26 deliveries served upon our longs yesterday,thus we lost 400 gold ounces standing in this June delivery contract month (4 contracts). The next delivery month is the non active July contract and here the OI rose by 36 contracts down to 621. The next active delivery month for gold is August and here the OI rose by 4943 contracts from 212,676 up to 217,619. The estimated volume today was huge at 347,557 contracts. The confirmed volume yesterday was fair at 142,370.
The total silver Comex OI rose by 1815 contracts despite silver falling in price yesterday by 5 cents. The big test will be tomorrow as we see if the longs in silver remain resolute, willing to take on the criminal bankers. If the OI remains relatively constant tomorrow, then no doubt we have a sovereign standing for much of silver. The front non active June silver contract month shows no change in OI at 25. We had 0 notices filed yesterday so in essence we neither gained nor lost any silver contracts. The next big delivery month is July and here the OI fell by only 2322 contracts down to 52,749. We have a little over 1 week to go before first day notice (June 28.2013) and judging from the relatively high OI in July, we may see some fireworks in silver. The estimated volume today was astronomical coming in at 144,877 contracts. The confirmed volume yesterday was good at 55,446. The volume today in oz is 724 million oz or a little less than 100% of annual global production from all mines.
Comex gold/May contract month:
June 20/2013
the June contract month:
the June contract month:
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
nil
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| 32.15 oz (Brinks) |
No of oz served (contracts) today
|
1 (100 oz)
|
No of oz to be served (notices)
|
903 (90,300 oz
|
Total monthly oz gold served (contracts) so far this month
|
8498 (849,800 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
78,856.579 oz
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 259,153.01 oz |
We again had tiny activity at the gold vaults
The dealer again had 1 deposit and no withdrawals.
Into Brinks; 100.65 oz
Into Brinks; 100.65 oz
We had zero customer deposits today :
total customer deposits: zero
It is very strange that in a big delivery month, we are witnessing no gold enter the dealer or even the customer.
we had 1 customer withdrawal:
i) Out of Manfra: 257.216 oz
i) total customer withdrawals: 257.216 oz
thus, zero ounces were withdrawn from JPMorgan today as well as no notices filed from the dealer side of JPM.
As we reported to you two weeks ago, that JPMorgan withdrew a huge amount of gold from its customer account:
Out of JPMorgan: 217,844.96 oz.
If you will recall, we needed to see 100,000 oz of gold removed from JPMorgan's customer account. (1000 contracts served upon our longs in mid May).
The last Tuesday in May, we had 15,416.93 oz removed from the JPM's customer account. No doubt that this gold was part of the 1000 contracts issued by JPMorgan customer account and thus we calculated that as of last night 28,389.579 oz was settled upon, leaving 71,611.00 oz still left to arrive in the settling process.
Last Tuesday, June 11, we had 217,844.96 actual ounces leave JPMorgan
Today we had no issuance from any of the major bullion banks, JPMorgan, HSBC and Scotia.
In summary on the customer side of things for JPMorgan:
Today 0 notices were served upon our longs from the JPMorgan's customer side of things.
Thus:
From the beginning of June we have had 1553 notices served from the customer side of JPMorgan for 155,300 oz. If we add the 71,611.00 oz owing from May issuance, we get 226,911 oz. If we subtract the actual withdrawal of gold from JPMorgan of 217,844.96, this still leaves 9,066.04 oz that needs to be settled upon from the vaults of JPMorgan customer side.
Today we had no adjustments.
The total dealer comex gold thus remains at 1.434 million oz or 44.60 tonnes of gold.
The total of all comex gold, dealer and customer rests tonight at 7.706 million oz or 239.68 tonnes..
Thus tonight we have the following closing inventory figures for JPMorgan:
i) dealer account: 413,526.284 oz
ii) customer account remains at 136,380.611 oz. (or only 4.2 tonnes of gold)
Now for JPMorgan's dealer side and what the inventory should be:
Last Tuesday night June 11.2013 we reported that 4935 contracts have been issued by JPMorgan's house account since first day notice and not yet subtracted out of inventory
You will also recall two weeks ago on Saturday (and again on that following Monday night,) I reported that JPMorgan had 470,322.102 oz in it's dealer account. From that day until now, 58,795.82 oz was either withdrawn or adjusted out, leaving the dealer side at 413,526.284 oz where it sits tonight.
On the dealer side here are the last 9 trading sessions as to notices issued from JPMorgan's dealer side:
Friday: zero
Monday: 1
Tuesday: 0
Wednesday : 0
Wednesday : 0
Thursday: 0
Friday: 0
Monday: 0 .
Tuesday: 0
Wednesday: 0
Thursday: 0
Thus, 4946 notices have been issued by JPMorgan (dealer side) so far in June for 494,600 oz and these ounces have yet to settle from JPMorgan's dealer side.
JPMorgan's dealer vault registers tonight 413,526.284 oz.
Somehow we have a huge negative balance as i) the gold has not left JPMorgan's dealer account and has yet to settle
and
ii) it is now deficient by 81,074 oz (413,526 inventory - 494,600 oz issued = 81,074 oz)
In other words, the entire 413,526 must be first transferred out of Morgan's dealer category ( in the same format as in the customer category) leaving it with zero, plus the 81,074 of additional gold
JPMorgan has not had any deposits in gold in quite some time. As a matter of fact, zero ounces has entered on the dealer side from the beginning of 2013.
How will JPMorgan satisfy this shortfall??
Friday: 0
Monday: 0 .
Tuesday: 0
Wednesday: 0
Thursday: 0
Thus, 4946 notices have been issued by JPMorgan (dealer side) so far in June for 494,600 oz and these ounces have yet to settle from JPMorgan's dealer side.
JPMorgan's dealer vault registers tonight 413,526.284 oz.
Somehow we have a huge negative balance as i) the gold has not left JPMorgan's dealer account and has yet to settle
and
ii) it is now deficient by 81,074 oz (413,526 inventory - 494,600 oz issued = 81,074 oz)
In other words, the entire 413,526 must be first transferred out of Morgan's dealer category ( in the same format as in the customer category) leaving it with zero, plus the 81,074 of additional gold
JPMorgan has not had any deposits in gold in quite some time. As a matter of fact, zero ounces has entered on the dealer side from the beginning of 2013.
How will JPMorgan satisfy this shortfall??
Another disturbing piece of news is the low dealer gold inventory for our 3 major bullion banks: Scotia, HSBC and JPMorgan equal to 30.08 tonnes
i) Scotia: 285,596.23 oz or 8.88 tonnes
ii) HSBC: 270,197.277 oz or 8.4 tonnes
iii) JPMorgan: 413,526 oz or 12.8 tonnes
Brinks dealer account has the lions share of the dealer gold at 445,398.58 oz 13.89 tonnes.
There were no changes in inventory from all sides today.
Today we had 1 notice served upon our longs for 100 oz of gold. In order to calculate what I believe will stand for delivery in June, I take the OI standing for June (904) and subtract out today's notices (1) which leaves us with 903 contracts or 90,300 oz left to be served upon our longs.
Thus we have the following gold ounces standing for metal in June:
8498 contracts x 100 oz per contract or 849,800 oz served upon + 903 contracts or 90,300 oz (left to be served upon) = 940,100 oz or 29.24 tonnes of gold.
We lost 400 gold ounces standing in this June delivery month.
We now have the official USA production of gold last year and it registered 230 tonnes. Thus approximately 19.16 tonnes of gold is produced by all mines in the USA per month. Thus the amount standing for gold this month represents 152.6% of that total production.
Ladies and Gentlemen: we have a three-fold problem:
i) the total dealer inventory of gold is at a very dangerously low level of only 44.32 tonnes and none of the 9.5 tonnes delivery notices from May and the 29 tonnes from June have been removed from inventory as of yet.
ii) a) JPMorgan's customer inventory remains at an extremely low 136,380 oz.
If you are a customer of JPMorgan and have your gold in its vault, I think it is best to remove it before we have another fiasco like MFGlobal.
ii b) JPMorgan's dealer account rests tonight at 413,000 oz. However all of this gold has been spoken for plus an additional 81,000 oz
iii) the 3 major bullion banks have collectively only 30.08 tonnes of gold left!!
end
now let us head over and see what is new with silver:
now let us head over and see what is new with silver:
Silver:
June 20.2013: June silver contract month:
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 67,582.898 oz (CNT,Scotia Delaware,JPM) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | nil |
| No of oz served (contracts) | 0 (nil oz) |
| No of oz to be served (notices) | 25 (125,000 oz) |
| Total monthly oz silver served (contracts) | 116 (580,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 988,092.07 oz |
| Total accumulative withdrawal of silver from the Customer inventory this month | 4,398,468.5 oz |
Today, we had fair activity inside the silver vaults.
we had 0 dealer deposits and 0 dealer withdrawals.
We had 0 customer deposit:
total customer deposits nil oz
We had 4 customer withdrawals:
We had 0 customer deposit:
total customer deposits nil oz
We had 4 customer withdrawals:
i) Out of Scotia: 2099.50 oz
ii) Out of CNT: 59,223.898 oz
iii) Out of JPM: 5247.40
iv) Out of Delaware: 1012.10
total customer withdrawal : 67,582.898 oz
ii) Out of CNT: 59,223.898 oz
iii) Out of JPM: 5247.40
iv) Out of Delaware: 1012.10
total customer withdrawal : 67,582.898 oz
we had 0 adjustments today
Registered silver at : 41.263 million oz
total of all silver: 164.318 million oz.
The CME reported that we had 0 notices filed for nil oz today. In order to calculate what we believe will stand in the month of June, I take the Oi standing for June (25) and subtract out today's notices (0) which leaves us with 25 notices or 125,000 oz.
Thus the total number of silver ounces standing in this non active delivery month of June is as follows:
116 contracts x 5000 oz per contract (served) = 580,000 oz + 25 contracts x 5000 oz or 125,000 oz left to be served upon = 705,000 oz
we neither gained nor lost any silver ounces standing today.
Thus the total number of silver ounces standing in this non active delivery month of June is as follows:
116 contracts x 5000 oz per contract (served) = 580,000 oz + 25 contracts x 5000 oz or 125,000 oz left to be served upon = 705,000 oz
we neither gained nor lost any silver ounces standing today.
Now let us check on gold inventories at the GLD first: 4.21 tons left GLD today , we should see more of the same after Friday...... Which is a quadruple witch option expiration date - can you say volatility ?
June 20/2013:
June 19 ,2013
June 20/2013:
Tonnes995.35
Ounces32,001,564.66
Value US$41.348 billion
Tonnes999.56
Ounces32,136,872.89
Value US$44.1026 billion
selected news and views....
Liquidation Wave Sweeps Globe In Bernanke Aftermath
Submitted by Tyler Durden on 06/20/2013 07:03 -0400
- 10 Year Treasury
- Bank of England
- Barclays
- Ben Bernanke
- Bond
- Carry Trade
- CDS
- China
- Copper
- CPI
- Crude
- Equity Markets
- European Central Bank
- Eurozone
- fixed
- France
- Germany
- Gross Domestic Product
- India
- Japan
- Jim Reid
- LatAm
- Lloyds
- Nikkei
- Nominal GDP
- Norway
- Philly Fed
- Price Action
- RANSquawk
- RBS
- recovery
- Sovereign CDS
- Switzerland
- United Kingdom
- Vigilantes
- Volatility
The global liquidation wave started with Bernanke's statement yesterday, which was interpreted far more hawkishly than any of his previous public appearances, even though the Fed had been warning for months about the taper (even if meant sacrificing what little credibility Hilsenrath had following his latest "blog" article). Still, markets were shocked, shocked.
Then it moved to Japan, where for the first time in months, the USDJPY and the Nikkei diverged, and despite the strong dollar, the Nikkei slumped 1.74%. Then, China was swept under, following the weakest HSBC flash manufacturing PMI print even as the PBOC continued to not help a liquidity-starved banking sector, leading to the overnight repo rate briefly touching on an unprecedented 25%, and locking up the entire interbank market, sending the Shanghai Composite down nearly 3% as China is on its way to going red for the year.
Then, India got hit, with the rupee plunging to a record low against the dollar and the bond market briefly being halted limit down.
Then moving to Europe, market after market opened and promptly slid deep into the red, despite a services and mfg PMI which both beat expectations modestly (48.6 vs 47.5 exp., 48.9 vs 48.1 exp) while German manufacturing weakened. This didn't matter to either stocks or bond markets, as peripheral bond yields promptly soared as the unwind of the carry trade is facing complacent bond fund managers in the face. And of course, the selling has now shifted to the US-premarket session where equity futures have seen better days. In short: a bloodbath.
In fact, no fundamental news at all mattered for a market that is now in liquidation panic mode, selling equities, bonds and commodities across the board: the 10 Year Treasury hitting 2.45% moments ago will not help with the impression that things are spiraling out of control, and the only sell off that is helping the Fed's cause is that of gold which tumbled to two year lows under $1300, driven by a scramble for dollars.
Of course, what the market is forgetting is that just like in Japan a month ago, the volatility that will emerge from Bernanke's hawkish stance will lead to a sell off, which in turn will force the Fed to promptly undo any taper talk, and even promptlier lead to speculation when the untaper will hit. Which is to be expected in a market in which over 50% of the gains since 2009 are on the back of the $12 trillion in global central bank liquidity.
Either way, the plunge protection team will have its hands full this morning to put a halt to the equity sell off. We wish them luck.
* * *
A different summary of overnight's action from RanSquawk:
Stocks and bonds under pressure in Europe as markets re-price Fed QE tapering expectations. The price action was dominated by bond vigilantes this morning, with stocks also in free-fall mode as market participants reacted to the release of less than impressive macroeconomic data in China, but also digested the statement and more importantly comments by the governor Bernanke who suggested that tapering could begin this year. The belly of the treasury curve bore the brunt of the sell-off, while credit spreads blew out overnight in Asia and in Europe this morning as the USD rallied and the index looks set to make a test on the 1000MA level at 82.18. The USD was also supported by worsening liquidity conditions in the Chinese interbank market, where the 7-day repo rate soared. Heading into the North American open, stocks are seen lower across the board, with basic materials and financials seen as the worst performing sectors, while health care stocks outperformed given the flight to quality sentiment.
Going forward, market participants will await the release of the latest weekly jobs data, as well as the Philadelphia Fed survey.
* * *
A bulletin recap of all the news highlights via Bloomberg
- Treasuries extend yesterday’s losses after Bernanke indicated Fed is prepared to begin phasing out its easing, with tapering of $85b in monthly bond buying later this year, halt purchases around mid-2014
- 5Y yields surged as much as 22bps yesterday, most since Jan. 1962; 5Y-30Y yields all at highest levels since August 2011
- Unwind tactical UST 5Y longs on more hawkish Fed, JPM says
- China’s benchmark money-market rates climbed to records as the central bank refrained from using reverse-repurchase agreements to address a cash crunch
- China’s manufacturing is shrinking at a faster pace this month, adding to stresses in the economy and financial system
- Investors are pulling money from emerging markets at the fastest pace in two years as slowing economic growth and the prospect of less global stimulus sink stocks, bonds and currencies from India to Brazil
- Swiss National Bank President Thomas Jordan pledged to defend the Swiss currency ceiling “with utmost determination” after the central bank underlined the measure’s importance in protecting the economy
- Norges Bank signaled interest rates may be cut later this year as inflation is slowing more than projected amid weakening economic growth in western Europe’s largest oil producer
- JGBs are set for the worst quarterly performance in a decade as the central bank’s unprecedented buying of the debt crowds out investors and increases volatility
- MSCI Pacific Index dropped 4.2%, most in two years
- Five U.K. banks including Barclays, RBS and Lloyds must find GBP13.4b ($21 billion) to plug a GBP27.1b capital shortfall by the end of the year, the Bank of England said
- Sovereign yields surge. Nikkei falls 1.7%; Asian, European equity markets and U.S. index futures uniformly lower. WTI crude falls, copper and gold plunge
SocGen highlights the main macro events:
The dust is settling on the FOMC announcement of yesterday evening and realistically speaking, today's packed data and event calendar should not be too influential we suspect. Central bank decisions in Norway and Switzerland are likely to stick to the ‘low for longer' mantra on interest rates in contrast to the US where the Fed yesterday took another step towards normalisation and the weaning of excess liquidity. Don't fight the Fed: tapering may start later this year and asset purchases may cease altogether in mid 2014 if the economy (read labour market) follows the Fed's projected path (jobless rate forecast lowered for 2013 and 2014; more insight from SG economics here). The back up in UST 10y yields carried on overnight, further inflating US/G10 and US/EM rate differentials and supporting the USD across the board. The outflow of bonds into cash is set to continue. EM currencies predictably took a severe hit but the AUD is competing for the crown of worst performer. A break of 0.9216 in AUD/USD opens up a return to the Jun-10 low of 0.8067.
Turning to the SNB, annual CPI inflation in Switzerland has averaged 0.55% so far in Q2 which means that it is not following the official central bank forecast. In March, the SNB put out a Q2 forecast of -0.4% which would only be reached on a leap from -0.4% in May to -0.1% in June. Unlikely. And with the EUR/CHF and the trade-weighted franc having surrendered all of the gains since the March meeting, the case for another downward revision to the inflation forecast is a foregone conclusion. Look for the SNB to reiterate that it will enforce the minimum EUR/CHF 1.20 rate with the utmost determination. But as the normalisation in US rates gathers momentum in the second half and the eurozone turns the corner, the erosion of the franc's safe haven status is anticipated to continue. The 3.4% retracement from the 1.2650 high was reminiscent of the move in January and February, but the correlation of EUR long-term rates with the US should soon cause the uptrend to reverse. This should lead participants to pay up for EUR/CHF vol and narrow the gap with EUR/JPY vol.
In the eurozone, the preliminary manufacturing and services PMIs from Germany and France will draw close attention. A narrowing in the difference between the PMIs of both countries started to materialise in late spring and, though a gap of 3pts and 5pts respectively in manufacturing and in services continues to exist, confirmation today of the mild improvement from the lows and a cheapening in EUR/USD will keep a lid on expectations of further ECB easing. Where the Spanish and French auctions are concerned, we look for good demand in 5y and 8y Bonos and see more value in 2y vs 5y OATs.
In the US today, we will get weekly initial claims and the Philly Fed survey. In the UK, a 1.0% gain in May retail sales is forecast to reverse two successive months of decline.
* * *
And finally, Jim Reid from DB wraps it all together:
If the Fed’s new revised economic forecasts are correct then over the medium term there is not much to worry about them being more hawkish than expected last night. However, will their expectation that tapering will start before the end of 2013 and bond purchases be totally removed by mid-2014 actually cause a global risk sell-off that means these forecasts end up being too optimistic? If so, then the pace of tapering will end up being slower than the scenario painted last night by Bernanke. But for now there’s little doubt that this was a hawkish FOMC as the Fed showed little desire to squeeze the tapering genie back into the bottle. Investors have been given warning that liquidity and carry sensitive trades are dangerous if the summer sees stronger data.
So where do we go from here? Well, the Fed have just made the market even more sensitive to data than it was previously and the volatility surrounding each key data print will likely multiply. We now think this will be a difficult few weeks for risk, especially if the data is on the stronger side. If you wanted to be more sanguine you would highlight the fact that they remain data dependent and no stimulus reduction has been announced yet. The removal still requires another few weeks of improving data. It might now need data to disappoint over the summer
for risk to perform.
As we wrote yesterday, the last two quarters have seen the lowest US nominal GDP since Q1 in 2010 – some 13 quarters ago now. This has recently been a weakening nominal recovery and one that even at its peak was still very weak relative to history. Clearly the Fed has emphasized many times the difference between the end of asset purchases and a policy rate hike but investors may perceive the latest signalling as the beginning of a ‘tightening’ journey. If that’s the case we note that the Fed has never hiked rates in the past when nominal GDP is growing below 3.5% (3.4% in Q1 2013). Furthermore, for the Fed to be tightening while nominal GDP has been weakening is also a rare occasion. The last time we saw this was in 1979/80 when nominal GDP fell from 14.6% in Q1 1979 to 10.6% in Q1 1980 whilst the Fed Funds rate rose from 10% to 20% during the same time on sharp inflationary concerns. What’s also unusual is that yesterday’s ‘tightening’ came as the Fed lowered their projections for core inflation to 1.2-1.3% from 1.5-1.6% for year-end 2013 although they noted that there are transitory influences, and acknowledged that inflation over the medium term will likely run at or below its 2% objective. So they are hoping by the time the tapering is underway nominal GDP will be edging back up but it will still be a low nominal growth environment to be withdrawing stimulus.
So what was the market reaction last night and this morning? Starting with last night, the S&P500 managed to limit its losses initially following the FOMC’s statement, as markets digested the Fed’s comment about “diminished” downside risks to the economic outlook. But the sell-off gathered steam as Bernanke started his press conference and his talk of tapering and the ending of QE next year. The S&P500 closed at a session low of -1.39% and now stands about 2.4% below its May all-time high. By sector, the higher yielding telco (-2.7%), utilities (-2.25%) and consumer goods (-1.8%) industry stocks were the underperformers. In fixed income, 10yr UST yields jumped 17bp to close at a 16-month high of 2.33%. The belly of the treasury curve bore the brunt of the sell-off. Yesterday’s rise in 10yr yields was also the largest one-day increase in basis point terms since October 2011. Indeed, 10yr yields were last seen at these levels March 2012. But we have to go back to mid-2011 to find a time when 10yr yields traded consistently above 2.30%. On the inflation front, US 10yr breakeven rates fell 3bp to their lowest level in a one year (2.04%) while in DM credit, the IG20 widened sharply post-FOMC to close 7bp wider. The EM complex remains under enormous pressure with the MSCI EM Latam equities index down 3.5% last night with Latam sovereign CDS anywhere between 16-30bp wider on the day. The US dollar (dollar index +1%) was perhaps one of the few assets to see strength yesterday.
The risk-off sentiment has continued in Asia with equities and credit markets all weaker as we type, but some markets have managed to stabilise towards the second half of the session. The disappointing Chinese HSBC Flash Manufacturing PMI (48.3 v 49.1 expected) and the worsening liquidity conditions in the Chinese interbank market are unlikely to improve sentiment today. On the latter point, China’s 7-day repo rate rose by 374bps overnight to a record 12%. The Shanghai Composite (-0.7%) is down for the second consecutive day and the benchmark has fallen 13 out of the last 15 trading sessions. Asia credit spreads are also markedly wider overnight with the Asia iTraxx IG about 22bp wider at one point.
and Greece fire returns .....- 10 Year Treasury
- Bank of England
- Barclays
- Ben Bernanke
- Bond
- Carry Trade
- CDS
- China
- Copper
- CPI
- Crude
- Equity Markets
- European Central Bank
- Eurozone
- fixed
- France
- Germany
- Gross Domestic Product
- India
- Japan
- Jim Reid
- LatAm
- Lloyds
- Nikkei
- Nominal GDP
- Norway
- Philly Fed
- Price Action
- RANSquawk
- RBS
- recovery
- Sovereign CDS
- Switzerland
- United Kingdom
- Vigilantes
- Volatility
The global liquidation wave started with Bernanke's statement yesterday, which was interpreted far more hawkishly than any of his previous public appearances, even though the Fed had been warning for months about the taper (even if meant sacrificing what little credibility Hilsenrath had following his latest "blog" article). Still, markets were shocked, shocked.
Then it moved to Japan, where for the first time in months, the USDJPY and the Nikkei diverged, and despite the strong dollar, the Nikkei slumped 1.74%. Then, China was swept under, following the weakest HSBC flash manufacturing PMI print even as the PBOC continued to not help a liquidity-starved banking sector, leading to the overnight repo rate briefly touching on an unprecedented 25%, and locking up the entire interbank market, sending the Shanghai Composite down nearly 3% as China is on its way to going red for the year.
Then, India got hit, with the rupee plunging to a record low against the dollar and the bond market briefly being halted limit down.
Then moving to Europe, market after market opened and promptly slid deep into the red, despite a services and mfg PMI which both beat expectations modestly (48.6 vs 47.5 exp., 48.9 vs 48.1 exp) while German manufacturing weakened. This didn't matter to either stocks or bond markets, as peripheral bond yields promptly soared as the unwind of the carry trade is facing complacent bond fund managers in the face. And of course, the selling has now shifted to the US-premarket session where equity futures have seen better days. In short: a bloodbath.
In fact, no fundamental news at all mattered for a market that is now in liquidation panic mode, selling equities, bonds and commodities across the board: the 10 Year Treasury hitting 2.45% moments ago will not help with the impression that things are spiraling out of control, and the only sell off that is helping the Fed's cause is that of gold which tumbled to two year lows under $1300, driven by a scramble for dollars.
Of course, what the market is forgetting is that just like in Japan a month ago, the volatility that will emerge from Bernanke's hawkish stance will lead to a sell off, which in turn will force the Fed to promptly undo any taper talk, and even promptlier lead to speculation when the untaper will hit. Which is to be expected in a market in which over 50% of the gains since 2009 are on the back of the $12 trillion in global central bank liquidity.
Either way, the plunge protection team will have its hands full this morning to put a halt to the equity sell off. We wish them luck.
* * *
A different summary of overnight's action from RanSquawk:
Stocks and bonds under pressure in Europe as markets re-price Fed QE tapering expectations. The price action was dominated by bond vigilantes this morning, with stocks also in free-fall mode as market participants reacted to the release of less than impressive macroeconomic data in China, but also digested the statement and more importantly comments by the governor Bernanke who suggested that tapering could begin this year. The belly of the treasury curve bore the brunt of the sell-off, while credit spreads blew out overnight in Asia and in Europe this morning as the USD rallied and the index looks set to make a test on the 1000MA level at 82.18. The USD was also supported by worsening liquidity conditions in the Chinese interbank market, where the 7-day repo rate soared. Heading into the North American open, stocks are seen lower across the board, with basic materials and financials seen as the worst performing sectors, while health care stocks outperformed given the flight to quality sentiment.
Going forward, market participants will await the release of the latest weekly jobs data, as well as the Philadelphia Fed survey.
* * *
A bulletin recap of all the news highlights via Bloomberg
- Treasuries extend yesterday’s losses after Bernanke indicated Fed is prepared to begin phasing out its easing, with tapering of $85b in monthly bond buying later this year, halt purchases around mid-2014
- 5Y yields surged as much as 22bps yesterday, most since Jan. 1962; 5Y-30Y yields all at highest levels since August 2011
- Unwind tactical UST 5Y longs on more hawkish Fed, JPM says
- China’s benchmark money-market rates climbed to records as the central bank refrained from using reverse-repurchase agreements to address a cash crunch
- China’s manufacturing is shrinking at a faster pace this month, adding to stresses in the economy and financial system
- Investors are pulling money from emerging markets at the fastest pace in two years as slowing economic growth and the prospect of less global stimulus sink stocks, bonds and currencies from India to Brazil
- Swiss National Bank President Thomas Jordan pledged to defend the Swiss currency ceiling “with utmost determination” after the central bank underlined the measure’s importance in protecting the economy
- Norges Bank signaled interest rates may be cut later this year as inflation is slowing more than projected amid weakening economic growth in western Europe’s largest oil producer
- JGBs are set for the worst quarterly performance in a decade as the central bank’s unprecedented buying of the debt crowds out investors and increases volatility
- MSCI Pacific Index dropped 4.2%, most in two years
- Five U.K. banks including Barclays, RBS and Lloyds must find GBP13.4b ($21 billion) to plug a GBP27.1b capital shortfall by the end of the year, the Bank of England said
- Sovereign yields surge. Nikkei falls 1.7%; Asian, European equity markets and U.S. index futures uniformly lower. WTI crude falls, copper and gold plunge
SocGen highlights the main macro events:
The dust is settling on the FOMC announcement of yesterday evening and realistically speaking, today's packed data and event calendar should not be too influential we suspect. Central bank decisions in Norway and Switzerland are likely to stick to the ‘low for longer' mantra on interest rates in contrast to the US where the Fed yesterday took another step towards normalisation and the weaning of excess liquidity. Don't fight the Fed: tapering may start later this year and asset purchases may cease altogether in mid 2014 if the economy (read labour market) follows the Fed's projected path (jobless rate forecast lowered for 2013 and 2014; more insight from SG economics here). The back up in UST 10y yields carried on overnight, further inflating US/G10 and US/EM rate differentials and supporting the USD across the board. The outflow of bonds into cash is set to continue. EM currencies predictably took a severe hit but the AUD is competing for the crown of worst performer. A break of 0.9216 in AUD/USD opens up a return to the Jun-10 low of 0.8067.
Turning to the SNB, annual CPI inflation in Switzerland has averaged 0.55% so far in Q2 which means that it is not following the official central bank forecast. In March, the SNB put out a Q2 forecast of -0.4% which would only be reached on a leap from -0.4% in May to -0.1% in June. Unlikely. And with the EUR/CHF and the trade-weighted franc having surrendered all of the gains since the March meeting, the case for another downward revision to the inflation forecast is a foregone conclusion. Look for the SNB to reiterate that it will enforce the minimum EUR/CHF 1.20 rate with the utmost determination. But as the normalisation in US rates gathers momentum in the second half and the eurozone turns the corner, the erosion of the franc's safe haven status is anticipated to continue. The 3.4% retracement from the 1.2650 high was reminiscent of the move in January and February, but the correlation of EUR long-term rates with the US should soon cause the uptrend to reverse. This should lead participants to pay up for EUR/CHF vol and narrow the gap with EUR/JPY vol.
In the eurozone, the preliminary manufacturing and services PMIs from Germany and France will draw close attention. A narrowing in the difference between the PMIs of both countries started to materialise in late spring and, though a gap of 3pts and 5pts respectively in manufacturing and in services continues to exist, confirmation today of the mild improvement from the lows and a cheapening in EUR/USD will keep a lid on expectations of further ECB easing. Where the Spanish and French auctions are concerned, we look for good demand in 5y and 8y Bonos and see more value in 2y vs 5y OATs.
In the US today, we will get weekly initial claims and the Philly Fed survey. In the UK, a 1.0% gain in May retail sales is forecast to reverse two successive months of decline.
* * *
And finally, Jim Reid from DB wraps it all together:
If the Fed’s new revised economic forecasts are correct then over the medium term there is not much to worry about them being more hawkish than expected last night. However, will their expectation that tapering will start before the end of 2013 and bond purchases be totally removed by mid-2014 actually cause a global risk sell-off that means these forecasts end up being too optimistic? If so, then the pace of tapering will end up being slower than the scenario painted last night by Bernanke. But for now there’s little doubt that this was a hawkish FOMC as the Fed showed little desire to squeeze the tapering genie back into the bottle. Investors have been given warning that liquidity and carry sensitive trades are dangerous if the summer sees stronger data.
So where do we go from here? Well, the Fed have just made the market even more sensitive to data than it was previously and the volatility surrounding each key data print will likely multiply. We now think this will be a difficult few weeks for risk, especially if the data is on the stronger side. If you wanted to be more sanguine you would highlight the fact that they remain data dependent and no stimulus reduction has been announced yet. The removal still requires another few weeks of improving data. It might now need data to disappoint over the summer
for risk to perform.
for risk to perform.
As we wrote yesterday, the last two quarters have seen the lowest US nominal GDP since Q1 in 2010 – some 13 quarters ago now. This has recently been a weakening nominal recovery and one that even at its peak was still very weak relative to history. Clearly the Fed has emphasized many times the difference between the end of asset purchases and a policy rate hike but investors may perceive the latest signalling as the beginning of a ‘tightening’ journey. If that’s the case we note that the Fed has never hiked rates in the past when nominal GDP is growing below 3.5% (3.4% in Q1 2013). Furthermore, for the Fed to be tightening while nominal GDP has been weakening is also a rare occasion. The last time we saw this was in 1979/80 when nominal GDP fell from 14.6% in Q1 1979 to 10.6% in Q1 1980 whilst the Fed Funds rate rose from 10% to 20% during the same time on sharp inflationary concerns. What’s also unusual is that yesterday’s ‘tightening’ came as the Fed lowered their projections for core inflation to 1.2-1.3% from 1.5-1.6% for year-end 2013 although they noted that there are transitory influences, and acknowledged that inflation over the medium term will likely run at or below its 2% objective. So they are hoping by the time the tapering is underway nominal GDP will be edging back up but it will still be a low nominal growth environment to be withdrawing stimulus.
So what was the market reaction last night and this morning? Starting with last night, the S&P500 managed to limit its losses initially following the FOMC’s statement, as markets digested the Fed’s comment about “diminished” downside risks to the economic outlook. But the sell-off gathered steam as Bernanke started his press conference and his talk of tapering and the ending of QE next year. The S&P500 closed at a session low of -1.39% and now stands about 2.4% below its May all-time high. By sector, the higher yielding telco (-2.7%), utilities (-2.25%) and consumer goods (-1.8%) industry stocks were the underperformers. In fixed income, 10yr UST yields jumped 17bp to close at a 16-month high of 2.33%. The belly of the treasury curve bore the brunt of the sell-off. Yesterday’s rise in 10yr yields was also the largest one-day increase in basis point terms since October 2011. Indeed, 10yr yields were last seen at these levels March 2012. But we have to go back to mid-2011 to find a time when 10yr yields traded consistently above 2.30%. On the inflation front, US 10yr breakeven rates fell 3bp to their lowest level in a one year (2.04%) while in DM credit, the IG20 widened sharply post-FOMC to close 7bp wider. The EM complex remains under enormous pressure with the MSCI EM Latam equities index down 3.5% last night with Latam sovereign CDS anywhere between 16-30bp wider on the day. The US dollar (dollar index +1%) was perhaps one of the few assets to see strength yesterday.
The risk-off sentiment has continued in Asia with equities and credit markets all weaker as we type, but some markets have managed to stabilise towards the second half of the session. The disappointing Chinese HSBC Flash Manufacturing PMI (48.3 v 49.1 expected) and the worsening liquidity conditions in the Chinese interbank market are unlikely to improve sentiment today. On the latter point, China’s 7-day repo rate rose by 374bps overnight to a record 12%. The Shanghai Composite (-0.7%) is down for the second consecutive day and the benchmark has fallen 13 out of the last 15 trading sessions. Asia credit spreads are also markedly wider overnight with the Asia iTraxx IG about 22bp wider at one point.
Then this biggy!!
(courtesy zero hedge)
Then this biggy!!
(courtesy zero hedge)
(courtesy zero hedge)
Stocks Plunge As IMF Tells Greece To Plug Holes Or It Pulls The Plug
Submitted by Tyler Durden on 06/20/2013 14:29 -0400
As we warned earlier in the week, Greece is notably missing its Troika goals and the issue just became a lot more critical. AsThe FT reports, the IMF is preparing to suspend aid payments to Greece over what it claims is a EUR 3-4 billion shortfall that has opened up. Between healthcare budget shortfalls, central banks refusing to roll-over Greek bonds, and amid signs that even the scaled-back privatization plans that Athens had agreed to being behind schedule, the IMF - following its own admissions of mistakes in the Greek bailout, has warned EU officials the shortfall will require it to stop aid payments by the end of July. The equity market is already reacting (as is EURJPY - EUR weakness against the big carry pair) to this re-awakening of EU event risk (and the awkward timing with Merkel's election so close) - with the Fed's comfort blanket somewhat removed.
Via The FT,
The International Monetary Fund is preparing to suspend aid payments to Greece by the end of next month unless eurozone leaders plug a €3bn-€4bn shortfall that has opened up in Greece’s €172bn rescue programme, according to officials involved in management of the bailout.
The gap emerged after eurozone central banks refused to roll over Greek bonds they hold, and comes amid signs that even the scaled-back privatisation plan Athens agreed to last year is falling behind schedule.
...
The shortfall will force eurozone finance ministers to discuss “alternate sources” of funding
...
But the timing is particularly awkward as Germany is holding parliamentary elections on September 22. In the run-up to polling day Chancellor Angela Merkel will be loath to submit any further aid request to the Bundestag where it would likely be highly controversial.
...
the IMF has warned EU officials the gap will require it to stop aid payments at the end of July, said a person involved in the discussions.
Under its rules, governments must have at least 12 months of financing in place to receive IMF disbursements under a bailout programme. This latest shortfall of €3bn-€4bn means that Greece’s financing needs are only covered up to the end of July 201
Then this:
(courtesy zero hedge)
Greek Coalition On Verge Of Collapse: Snap Elections Scenario Returns
Submitted by Tyler Durden on 06/20/2013 16:17 -0400
And just like that, the entire world is on fire with Greece back in the frying pan following news from Kathimerini's Chrysoloras that the Greek coalition has collapsed, and the possibility of a snap election front and center, and with it the likelihood that the Greek memorandum is voided, the Grexit follows and so on.
As we warned earlier in the week, Greece is notably missing its Troika goals and the issue just became a lot more critical. AsThe FT reports, the IMF is preparing to suspend aid payments to Greece over what it claims is a EUR 3-4 billion shortfall that has opened up. Between healthcare budget shortfalls, central banks refusing to roll-over Greek bonds, and amid signs that even the scaled-back privatization plans that Athens had agreed to being behind schedule, the IMF - following its own admissions of mistakes in the Greek bailout, has warned EU officials the shortfall will require it to stop aid payments by the end of July. The equity market is already reacting (as is EURJPY - EUR weakness against the big carry pair) to this re-awakening of EU event risk (and the awkward timing with Merkel's election so close) - with the Fed's comfort blanket somewhat removed.
Via The FT,
The International Monetary Fund is preparing to suspend aid payments to Greece by the end of next month unless eurozone leaders plug a €3bn-€4bn shortfall that has opened up in Greece’s €172bn rescue programme, according to officials involved in management of the bailout.The gap emerged after eurozone central banks refused to roll over Greek bonds they hold, and comes amid signs that even the scaled-back privatisation plan Athens agreed to last year is falling behind schedule....The shortfall will force eurozone finance ministers to discuss “alternate sources” of funding...But the timing is particularly awkward as Germany is holding parliamentary elections on September 22. In the run-up to polling day Chancellor Angela Merkel will be loath to submit any further aid request to the Bundestag where it would likely be highly controversial....the IMF has warned EU officials the gap will require it to stop aid payments at the end of July, said a person involved in the discussions.Under its rules, governments must have at least 12 months of financing in place to receive IMF disbursements under a bailout programme. This latest shortfall of €3bn-€4bn means that Greece’s financing needs are only covered up to the end of July 201
Then this:
(courtesy zero hedge)
Then this:
(courtesy zero hedge)
(courtesy zero hedge)
Greek Coalition On Verge Of Collapse: Snap Elections Scenario Returns
Submitted by Tyler Durden on 06/20/2013 16:17 -0400
And just like that, the entire world is on fire with Greece back in the frying pan following news from Kathimerini's Chrysoloras that the Greek coalition has collapsed, and the possibility of a snap election front and center, and with it the likelihood that the Greek memorandum is voided, the Grexit follows and so on.
And just like that, the entire world is on fire with Greece back in the frying pan following news from Kathimerini's Chrysoloras that the Greek coalition has collapsed, and the possibility of a snap election front and center, and with it the likelihood that the Greek memorandum is voided, the Grexit follows and so on.
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