The risk of owning U.S. government debt is as great as any time since the 1950s with yields at the year’s lows and Treasury Secretary Timothy F. Geithner locking in borrowing costs by selling longer term securities. Yields on treasuries would only need to rise 0.3 of a percentage point over one year on average from 1.67% to produce a loss. The last time bonds were close to this level was in March 2009.
INVESTMENT banks are finalizing sale documents that will start the bidding process for $4.4bn worth of assets at Lloyds Banking group and Northern Rock. Citigroup and JP Morgan are putting the finishing touches to the information memorandum for the £3bn Lloyds branches, which will be delivered to potential bidders over the next week. Britain finished with a 41% stake in Lloyds after it had to be bailed out with tax payer’s money. The bank was then ordered to sell 600 branches, although the ICB has suggested they may yet need to sell more to boost competition.
THE FTSE 100 is seen falling today in tandem with declines on Wall Street and in Asia after a weak U.S. jobs report stoked concerns that the world’s biggest economy was slowing. On Friday the FTSE 100 rebounded from lows following the poor U.S. jobs numbers to close marginally higher.
U.S. blue chips fell 0.8% on Friday after the governments payrolls report showed 54,000 jobs added in May, the weakest reading since September 2010. Markets in China, Hong Kong, Taiwan and South Korea are closed for a long weekend.
THE EURO touched a month high versus the dollar on prospects officials from the EU will reiterate their intention to prepare a new aid package for Greece, easing concern over the region’s debt crisis. The Euro climbed as high as $1.4658, the strongest since the 5th of May and the 17 nation currency was at 117.51 yen from 117.48. The dollar bought 80.27 yen from 80.34 yen last week, when it touched 80.05, the weakest since the beginning of May.
OPEC ministers meeting in Vienna this week may find themselves supporting opposing camps of a military conflict for the first time in 21 years, with hostilities in Libya complicating an agreement on oil quotas. The conflict underlines the difficulties that OPEC may have in deciding production levels. Oil has gained 9.5% this year to trade at $100 a barrel amid signs that the pace of the global economic recovery may be slowing. OPEC will probably leave its output target unchanged on the 8th of June according to Bloomberg analysts.
FLOODING and droughts in Australia are set to make the suit, the global uniform of executives and politicians, 10% dearer as wool prices have doubled in the past year to a record high. In Australia benchmark prices hit a high of $14.85 a kilo last week, having doubled over the last 12 months in dollar terms. The sharp cost increases are working their way through the global supply chain, causing men’s outfitters to plan price rises.