Before markets open on Tuesday, here is what you need to know.
Bonds around the world are getting smoked. Overnight, a tepid 10-year auction in Japan caused the benchmark yield to jump 5 basis points to 0.443%. Heavy selling then made its way into German Bunds, with the 10-year yield climbing 9 basis points to 0.701%. The selling has Germany’s benchmark yield at its highest level in 5 months. Weakness has also made its way into the US Treasury complex, where the 10-year yield is higher by 5 basis points, and at its own 5-month high near 2.34%.
Verizon is buying AOL for $US50 per share. The deal values AOL at $US4.4 billion.
New York Fed President Dudley says a rate hike will bring a ‘regime shift.’ Dudley says the timing of a Fed rate hike remains uncertain, but, “After more than six years at the zero lower bound, lift-off will signal a regime shift even though policy would only be slightly less accommodative after lift-off than it is before.” He expects any rate hike to have “implications for global capital flows, foreign exchange valuation and financial asset prices even if it is mostly anticipated when it occurs.”
A Spanish newspaper is reporting the IMF will not participate in a third bailout of Greece. Spanish newspaper El Mundo reports ineffective action and the re-hiring of recent causalities of the country’s austerity measures have drawn the ire of the International Monetary Fund. So much so that the IMF is reportedly saying it will not take place in a third Greek bailout. If the reports are correct, the Eurogroup (the bloc of eurozone finance ministers), the European Commission and the European Central Bank (ECB) will be left to foot the bill. Greece’s 2-year yield is up 24 basis points at 21.08%.
Goldman Sachs must pay $US80 million plus interest to National Australia Bank. An arbitration panel under the Financial Industry Regulatory Authority awarded the settlement, which stems from mortgage-linked securities dating back to 2006. Goldman has been ordered to pay $US80 million plus 3% annual interest. According to Reuters, “NAB had argued for $US230 million in total damages including $US80 million in compensatory damages and interest of $US60 million.”
General Motors cut prices in China. GM became the latest foreign automaker to cut prices in China as the company looks to combat the slowing Chinese economy and increased competition from local brands. According to Bloomberg, “GM’s joint venture with SAIC Motor Corp. announced price cuts of as much as 53,900 yuan ($US8,700) on 40 models across its Buick, Chevrolet and Cadillac brands.”
UK manufacturing production gained the most in six months. The March reading rose 0.4% month-over-month, slightly outpacing the 0.3% mum increase that was anticipated. The British pound trades up 0.7% near 1.5700, a five-month high.
A Picasso sold for a record $US179.4 million. Pablo Picasso’s 1955 “Les femmes d’Alger (Version ‘O’)” sold for a record $US179.4 million at Christie’s. The price tag easily surpassed the previous record set in 2013 when Francis Bacon’s triptych “Three Studies of Lucian Freud” was purchased for $US142.4 million.
Stocks were stronger Asia, but are weaker in Europe and the US. China’s Shanghai Composite (+1.6%) led the way, and is now up 114% over the past year. In Europe, Germany’s DAX (-2.2%) paces the decline. S&P 500 futures are lower by 13.00 points at 2084.75.
US economic data is light. JOLTs Job Openings will be released at 10 a.m. ET and the Treasury budget is due out at 2 p.m. ET. Treasury will auction $US24 billion 3-year notes. The US Dollar Index is down 0.7% at 94.33.
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