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    Daily Digest 7/6 – Brazil Exports Drop, Bad Debt Piled in Italian Banks Looms as Next Crisis

    by saxplayer00o1

    Wednesday, July 6, 2016, 2:23 PM


Selling bonds may help U.S. pensions: Bank of America Merrill Lynch

The average funded ratios of the top 100 U.S. corporate pensions are expected to fall to the lows seen in 2012 as the U.S. 30-year yield has fallen half a percentage point and yield premiums on corporate bonds also have declined since April, according to Bank of America analysts.

Canada Post lockout: work stoppages and unsustainable pension plans need to end

CFIB issued a letter to Canada Post president and CEO Deepak Chopra last week, calling for a settlement, but stressing that unfunded liabilities in Canada Post’s pension plan are not a trivial issue, with a $6.2 billion solvency deficit. Pension costs must to be lowered to ensure plans are sustainable and don’t force rate hikes or service cuts on customers.

Russia to empty one of its sovereign funds next year – ministry proposal

The National Wealth Fund, which at the start of July contained $73 billion, is not intended for covering budget shortfalls. It was originally intended to pay for future pensions but a portion of the fund has been committed to investment projects.

U.K. Pension Fund Deficit Likely to Hit Record as Brexit Turmoil Squashes Bond Yields

The latest official data from the Pension Protection Fund showed a deficit of £295 billion ($392 billion) for the PPF 7800 — an index of thousands of defined benefit pension schemes — at the end of May. That deficit likely widened to around £388 billion by the end of June, according to analysts at Morgan Stanley, based on the changes in yields and share prices.

Senate votes to slash minimum wage for youth in Puerto Rico

Holding their noses and faced with a July 1 deadline, senators voted on June 29 for a Puerto Rico fiscal rescue bill that cuts the island commonwealth’s minimum wage for young workers, by $3 an hour, to $4.25, endangers overtime pay and imperils union contracts there, the measure’s foes say.

High-interest consumer lending jumps in Golden State

Some of these financial products charge annual interest rates ranging from 30 to 180 percent. Firms licensed under the California Finance Lenders Law loaned a total of $34.1 billion in 2015, up 48.7 percent from the previous year, according to the report.

Brexit Accelerates the British Pound’s 100 Years of Debasement

The world’s oldest currency — sterling is derived from the old German “ster” for strong or stable — bought almost $5 during World War I. The day of the EU referendum, it traded at $1.50. It touched a 31-year low of $1.3115 on Tuesday.

Brazil New Vehicle Sales Fall 25.4% in First Half Amid Poor Economy

New vehicle sales in Brazil plunged in the first half of the year, as the country’s economic recession persisted in the period, hurting consumer confidence.

Yield Curve Shows 60% Chance of Recession, Deutsche Bank Says

The so-called yield curve suggests there’s a 60% chance of a U.S. recession occurring in the next 12 months, according to analysts at Deutsche Bank, led by Dominic Konstam. The calculations attach the highest probability to an economic contraction since the financial crisis.

Exports to Brazil drop 24% in 6 months

The impact of the deep recession in neighbouring Brazil on Argentine businesses has been fully exposed — data from a consultancy firm revealed yesterday that exports by the local industrial sector to Latin America’s biggest economy have slumped by a staggering 24 percent over the last six months.

Second Property Fund Suspends Trades Over Brexit Fears

Aviva Investors suspended trading in a 1.8 billion-pound ($2.4 billion) real estate investment fund, after Standard Life Investments froze its fund Monday, as investors demanded their money back in the wake of Britain’s vote to leave the European Union.

Government Bond Yields in U.S., Europe Hit Historic Lows

Benchmark 10-year government debt yields from the U.S., Germany, Switzerland, France, Denmark and Sweden all fell to fresh historic lows on Tuesday as persistent uncertainty surrounding the economic and political fallout from the U.K.’s vote to quit the European Union continues to boost demand for haven assets.

Benchmark U.S. yields hit record lows on global uncertainty

U.S. 10-year Treasury notes were last up 21/32 in price to yield 1.389 percent after touching a record low of 1.377 percent at 5:39 a.m. ET (0939 GMT), while 30-year bonds were last up 2-2/32 in price to yield 2.157 percent after touching a yield of 2.141 percent at 5:39 a.m. ET. That was the lowest yield on 30-year bonds since the 1950s, Bank of America Merrill Lynch data showed.

Italian banks under pressure as political crisis looms

Banks in Italy are weighed by about €360 billion in nonperforming loans, or unpaid debts, according to Italy’s central bank. That represents 18.1% of total loans to consumers. Roughly €210 billion of those loans have been taken out by borrowers now considered to be insolvent.

Bad Debt Piled in Italian Banks Looms as Next Crisis

In Italy, 17% of banks’ loans are sour. That is nearly 10 times the level in the U.S., where, even at the worst of the 2008-09 financial crisis, it was only 5%. Among publicly traded banks in the eurozone, Italian lenders account for nearly half of total bad loans.E

Italian Bank Risk Surges as Capital Needs Fuel Bail-In Concerns

Italy is talking with European Union authorities to get approval to provide capital to Monte Paschi, its third largest bank, a person with knowledge of the plan said on Tuesday. Failing unanimous approval by EU member states to waive rules designed to protect taxpayers, any injection of public funds would require shareholders and junior creditors to take losses.

FTSE turns higher after new Bank of England stimulus

Britain’s top shares index rose on Tuesday, lifted by new measures from the Bank of England to prop up the economy in the wake of the country’s vote to leave the European Union.

Gold & Silver

Click to read the PM Daily Market Commentary: 7/5/16

Provided daily by the Peak Prosperity Gold & Silver Group

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