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Money markets us 4 week t bill rates rise to highest in a year

* Increasing supply boosts U.S. 4-week T-bill yields * Three-month euro/$ cross currency basis swap tightens By Chris Reese and Marius Zaharia NEW YORK/LONDON, Aug 15 U.S. one-month Treasury bill yields climbed to their highest level in over a year on Wednesday as rising supply of shorter-dated U.S. government debt pushed down prices. The yield on the one-month bill rose to 0.11 percent, which was the highest since July 2011, from 0.09 percent late Tuesday. "It is primarily a supply issue," said Brian Smedley, U.S. rates strategist at Bank of America Merrill Lynch in New York. "The increase in short-term yields is related to this week's issuance of 15-day Treasury cash management bills. The one-month sector has cheapened as the market has had to digest a $25 billion increase in bill supply." The Treasury on Tuesday sold $25 billion of 15-day cash management bills at a high rate of 0.11 percent. Also on Tuesday, the Treasury sold $40 billion of four-week bills at a high rate of 0.11 percent, which was the highest rate since a similar auction Feb. 14. Bill issuance is expected to rise through the year to meet deficit financing needs. The increase in supply comes as the Federal Reserve sells shorter-dated Treasuries as part of its latest stimulus program, dubbed "Operation Twist." The program extends the maturity of the central bank's Treasuries holdings in a bid to lower mortgage rates and other long-term borrowing costs. As part of "Operation Twist," the Federal Reserve on Wednesday sold $7.796 billion of Treasuries with maturities ranging from February 2014 through August 2014. Meanwhile, a barometer of dollar funding risk reached its best levels in a year on Wednesday and was likely to improve further in the near term on perceptions of a brighter global economic outlook and a slowdown in the pace of the euro zone debt crisis. Stronger-than-expected French and German economic output data and U.S. retail sales on Tuesday improved appetite for riskier assets. The dollar rose against major currencies on bets that the data would make the Federal Reserve less willing to print more greenbacks. But rising U.S. government debt yields show dollar demand purely for the purpose of holding a safe-haven currency has decreased, which is also reflected in some sectors of money markets. Also, the European Central Bank's signal that it may resume purchases of government bonds if certain conditions are met has helped at least temporarily to ease worries over banks' holdings of high-yielding Spanish and Italian debt. As a result, the three-month euro/dollar cross currency basis swap, which shows the rate charged when swapping euro interest rate payments on an underlying asset into dollars, narrowed to minus 37.50 basis points, its tightest since late July 2011. The measure, which widens in times of stress when dollars are harder to find, traded as wide as minus 167.50 in November last year when the euro zone crisis had heightened before massive ECB cash injections cooled the situation. "This narrowing is ... due to the potential stepping up of the policy response within Europe, particularly led by the ECB," said Ian Stannard, head of European FX strategy at Morgan Stanley in London. "The market hopes that policy initiatives are likely to be forthcoming following ... indications that they (the ECB) are willing to provide further assistance if required." Euro/dollar FX basis swaps could narrow further in the next few weeks, but "not dramatically," Stannard said. The trend could well reverse if the anti-crisis plan proposed by the ECB fails to materialize by the end of September or at least to look like a credible future backstop to the euro zone crisis. For now, markets see risks in the ECB's pre-condition that troubled countries need to ask for aid from euro zone rescue funds, as it raises the possibility that the debt crisis in Spain may have to worsen before Madrid considers such a move.

Money markets us rate futures fall after jpmorgan loss

* JPMorgan trading loss raises counterparty concerns * Risk seen rising on a steep Moody's cut of JPMorgan * No signs of immediate dollar-funding stress for banks By Richard Leong NEW YORK, May 11 Front-month U.S. short-term interest-rate futures fell and risk premiums on interest-rate swaps grew on Friday after JPMorgan Chase & Co warned investors of a $2 billion loss on soured credit derivatives bets. On the other hand, there was no sign of immediate strain in the dollar-funding market in the wake of this stunning news late Thursday from JPMorgan, which is perceived to be the safest among large U.S. banks, analysts said. Still, this trading loss at JPMorgan raised concerns about other banks' own derivatives strategies and their exposure to JPMorgan's book of derivatives, analysts and traders said. Most Eurodollar futures for delivery through September 2004 ended 0.5 to 3.5 basis points lower for the day, while deferred contracts ended 1 basis point to 4 basis points higher. The risk premium on short-dated dollar interest-rate swaps over Treasuries rose to the highest level since late February, suggesting investors reduced their holdings of these over-the-counter contracts, which are often underwritten by banks. "People have been selling outright, based on swap-spread wideners," said Jim Lee, head of short-term markets and futures strategy at RBS Securities in Stamford, Connecticut. The yield spread on two-year interest-rate swaps over comparable Treasuries was last quoted at 34.50 basis points mid-market, 2.25 basis points wider than late on Thursday, according to Tradeweb. JPMorgan's derivatives loss occurred as investors are fretting once again about contagion on the global banking system from the debt crisis plaguing the euro zone, they said. Some analysts said the loss increased the chances that Moody's Investors Service could impose a steep downgrade of the credit ratings of JPMorgan, the biggest U.S. bank by assets. There are few details at this time on how JPMorgan's bets soured. "It validates Moody's review on these global financial institutions," said Lance Pan, director of research and strategy at Capital Advisors Group in Newton, Massachusetts. He added that part of "the rationale is that their books are 'black boxes.'" Moody's has said it will announce its rating decisions on European banks, and 17 global institutions, including JPMorgan, sometime from early May through late June. The rating agency said in February it could lower JPMorgan's long-term credit rating by up to two notches after its broad bank review. Moody's currently has a Aa3 long-term rating on JPMorgan. But JPMorgan's top-notch P-1 short-term rating from Moody's is not subject to this review. In the credit default swap market, the five-year cost to insure against JPMorgan's debt rose to 128 basis points, up from 124 basis points on Thursday and 110 basis points on Wednesday, according to data firm Markit. "It's a black eye for (JPMorgan chief) Jamie Dimon, but investors might end up punishing other banks," Capital Advisors' Pan said. The five-year CDS prices on other U.S. banks rose with JPMorgan's. For example, Bank of America's five-year CDS prices rose to 282 basis points, the highest in about a month, while Morgan Stanley's five-year CDS prices climbed to 399 basis points, the highest since Jan. 2, Markit data showed. NO IMMEDIATE FUNDING STRESS So far, news of JPMorgan's loss did not result in a spike in short-term borrowing costs for banks and Wall Street firms. Interest rates in the $1.6 trillion tri-party U.S. repurchase markets, a key source of cash for banks and Wall Street firms to finance their trades, held steady on Friday. They mostly traded in a range of 15 basis points to 17 basis points, matching Thursday's range, investors and traders said. As investors grapple with the longer-term implications of this loss on JPMorgan and the banking system, investors said JPMorgan has plenty of capital and a huge deposit base. It is not reliant on issuing commercial paper and other short-term debt to raise cash, they said. "It's not a funding issue for them. It is still a sound company," said Bret Barker, portfolio manager at TCW Group in Los Angeles, which manages $128 billion in assets. Earlier in London, Libor on three-month dollars held again at 0.46685 percent, hovering near its lowest level since mid-November. Libor is a rate benchmark for $360 trillion worth of financial products worldwide.

Money markets us short term rates pause in wake of fed

* U.S. rates futures, T-bill rates little changed* Dollar Libor falls to lowest in nearly a yearBy Luciana LopezNEW YORK, Sept 24 Short-term U.S. interest rates were little changed on Monday as investors paused to weigh the market impact of new central bank easing in the United States and Europe. Three- and six-month bills were largely flat on the day, with yields stuck within the same ranges of recent months. The Federal Reserve earlier this month said it will pump $40 billion into the U.S. economy each month through buying mortgage-backed securities until it sees a sustained upturn in the weak jobs market.

"The market is still kind of struggling to figure out what relationships should be in the context of the Fed's new policy," said Tom Simons, money market economist from Jefferies & Co in New York."They made a really dramatic move in MBS markets. Some formerly consistent relationships between Treasuries and MBS (mortgage-backed securities) are no longer as consistent as they once were," he added."I think it makes the market somewhat difficult to trade and I think perhaps that also contributes to sort of a lackadaisical tone to the market as a whole."

U.S. federal funds futures were mostly unchanged to 0.5 basis point lower from Friday's close. The Fed's announcement followed a week after the European Central Bank agreed to launch a new and potentially unlimited bond-buying program to try to cap the region's ongoing debt crisis.

But disappointing German business sentiment data on Monday underscored the long road ahead as major economies could continue lackluster for years to come, taking the shine off markets to start out the week. Investors are now looking ahead to Treasury sales of notes this week totaling $99 billion: $35 billion in two-year notes, $35 billion five-year notes and $29 billion in seven-year notes. In addition, the Treasury sold $32 billion in 3-month bills at a high rate of 0.110 percent and $28 billion in 6-month bills at a high rate of 0.140 percent on Monday. Yields on three-month bills edged down to 0.101 percent on Monday from 0.107 percent on Friday. Yields on six-month bills traded at 0.142 percent, flat from Friday's near one-month high. In unsecured lending, the London interbank offered rate on three-month dollars slid to 0.36725 percent, its lowest in almost a year.

Press digest australian business news feb 20

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)Locomotives and wagons made by engineering and construction company UGL will be built in India, chief executive Richard Leupen has announced. "You can't compete [with overseas] when the labour costs in the workshop are a tenth of yours  the reality is that in certain sectors it's very hard for the domestic market to compete and so, yes, we're off in India with a manufacturing facility," Mr Leupen said yesterday. Page 1.-- Hedge fund Apollo Global Management has continued to back the plans of the management of media company Nine Entertainment Co to restructure A$2.7 billion of its senior debt into equity. Owned by private equity group CVC Asia Pacific, Nine has around A$3.7 billion of debt but generates over A$350 million of free cash flow a year and has a strong asset base. Page 14.-- Chief executive of Billabong International, Derek O'Neill, said yesterday that there are no plans to sell further assets as the troubled surfwear retailer struggles under the weak trading conditions. However major shareholder Perennial Value Management has urged the company to hold talks with private equity group TPG, who lodged a A$3 a share takeover bid, and to also make changes to the board of Billabong. Page 15.-- A lack of technology investment across its Trans-Tasman operations has cost facility services business Spotless dearly, its chief executive Jo Farnik acknowledged. "The lack of standardisation has cost this company. Look at the level of overheads and look at comparison to international peers," Mr Farnik said yesterday. Spotless is currently weighing up a takeover offer from private equity group Pacific Equity Partners. Page 17.-- THE AUSTRALIAN (this site)Fund manager Challenger has revealed it may exceed its growth forecast of 25 percent for retail annuity sales this year as retirees move away from buying shares and into guaranteed income streams. "Sitting here today, we have a boutique funds management business that has a lot of equity managers in it. What we propose to people is that annuities is only a product they should use in the overall retirement solution," new chief executive Brian Benari said yesterday. Page 23.--

Provisions in the Fair Work Act that make small businesses use default superannuation funds need to be changed, according to the Financial Services Council (FSC). "This unnecessary restrictive regulatory framework has a negative impact on the ability of employers to administer their compulsory superannuation obligations," an FSC submission to the federal government's review of the Fair Work Act stated. Page 23.-- The Australian government needs strong fiscal integrity and an emergency stimulus fund to stop the budget from going into the red, the Business Council of Australia (BCA) said. A fund of around A$40 billion would allow stimulus payments in the event of another financial crisis. Equal to 3 percent of Australia's gross domestic product, the BCA said payments could be made once every thirteen years. "We want the federal government to put aside money for a rainy day once public debt has been paid down," BCA president Tony Shepherd said yesterday. Page 23.-- The Australian Securities and Investments Commission (ASIC) will be forced to cut back on investigations into suspicious behaviour and litigation because its resources are being monopolised by an increasingly more complex financial services sector. ASIC policing methodology has adopted similar programs to those the Australian Taxation Office uses to achieve higher levels of compliance with the law. Page 23.--

THE SYDNEY MORNING HERALD (this site)A further A$140 million investment will be made by United States discount supermarket group Costco as it looks to expand its Australian operations. In a move that will add pressure to its supermarket rivals Coles and Woolworths , Costco will look to open a further three warehouses in the country. "We would like to do two in calendar 2013 ideally  we could do three but are likely to do two for sure," Costco Australia managing director Patrick Noone said. Page B1.-- The Australian Taxation Office (ATO) has cautioned small businesses over falling behind with employee superannuation payments, with proposed new laws designed to tackle wayward employers. Despite the difficult market conditions and tight cash flows, the small to medium business sector has been told not to defer super payments as large penalties could result. The ATO said businesses that do not pay employees super within 28 days of the due date face fines and interest on the missed payments. Page B1.-- Australian Securities Exchange chief executive, Elmer Funke Kupper, has given ground to large stockbrokers by signalling his intent to loosen restrictions contained in proposals for dark pool exchange limits. Although indicating he may be flexible on the current A$50,000 minimum trade proposal, Mr Funke Kupper said a minimum amount was required to avoid unregulated exchanges from arising. Page B3.--

A A$438 million dollar plan by Rio Tinto to use driverless trains in its Pilbara iron ore operations has the mining giant on a likely collision course with unions with about 500 people employed to drive trains. "We've got 10,500 employees [in the Pilbara] today and over the coming years that number will grow  some of the jobs will change," Rio Pilbara operations president Greg Lilleyman said. "People talk about re-skilling but you don't need a team of truck drivers to operate one computer," Construction, Forestry, Mining and Energy Union representative Gary Wood said. Page B3.-- THE AGE (this site)Data from market research company DBM Consultants shows the overall business satisfaction rating of banking giant Australia and New Zealand Banking Group (ANZ) dropping from 7.1 percent in November to 6.9 percent for January. "ANZ is now 0.5 points behind Westpac and National Australia Bank in the large segment, and trails Commonwealth Bank of Australia by 0.8 point," DBM Consultants revealed. Page B3.-- Telecommunications giant Telstra has taken a step to catch up to its rivals in providing online customer self-service with initial take-up of 28 percent exceeding expectations. "At some point we are probably going to reach that [35 percent target]  once we have got well-performing channels and customers get used to using them it is unlikely that we are going to go back to the old way," executive director of Telstra digital Gerd Schenkel said. Page B3.-- Chief executive of the Commonwealth Bank of Australia , Ian Narev, has defended the latest increase in its standard variable interest rate, saying it was now just breaking even on new home loans. "At the moment on the current cost of funds, new loans have just crossed the profitability line again but  10 basis points doesn't exactly make a huge difference," Mr Narev said. Page B4.-- United States paint company Valspar lost its account with Wesfarmers-owned hardware chain Bunnings but is optimistic that the new Masters hardware joint-venture with supermarket giant Woolworths will make up for the US$30 million of lost turnover. In 2010, Valspar acquired Australian paint brand Wattyl. "We want most of the shelf space in those stores with our Lowe's brands and most stores are doing very well  we have a number of growth initiatives occurring in Wattyl  and break even  is probably  the end of this year," Valspar president Gary Hendrickson said. Page B5.