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Posts Tagged ‘Market Conditions’

European Money Market Industry Shutting Down As Goldman Closes MM Fund, Says In «Unchartered Territory» | ZeroHedge

Posted by satyrikon στο 6 Ιουλίου, 2012

JPMorgan Chase Tower (Dallas)
JPMorgan Chase Tower (Dallas) (Photo credit: Wikipedia)
Goldman Sachs Headquarters, New York City
Goldman Sachs Headquarters, New York City (Photo credit: Wikipedia)

Update: BlackRock to restrict subscriptions into 2 Euro money funds

We were the first to bring news that overnight JPMorgan has halted investment in its European money market funds following the ECB’s decision to cut the deposit rate to 0%. Now, it is Goldman’s turn:

GOLDMAN HALTS INVESTMENTS IN EURO GOV MONEY FUND AFTER ECB CUT

GOLDMAN SAYS MARKET CONDITIONS WILL DETERMINE WHEN FUND REOPENS

GOLDMAN DECISION AFFECTS EURO GOVERNMENT LIQUID RESERVES FUND

And finally the conclusion, which is rather obvious:

  • GOLDMAN FUND MEMO: EUROPEAN MARKET IN `UNCHARTERED TERRITORY’ (Er, sic?)

More from Bloomberg:

JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and

BlackRock Inc. (BLK) closed European money market funds to new

investments after the European Central Bank lowered deposit rates to

zero.

 

JPMorgan, the world’s biggest provider of money-market funds, won’t

accept new cash in five euro-denominated money- market and liquidity

funds because the rate cut may result in losses for investors, the

company said in a notice to shareholders. Goldman Sachs won’t accept new

money in its GS Euro Government Liquid Reserves Fund, and BlackRock,

the world’s largest asset manager, is restricting deposits in two

European funds.

 

JPMorgan’s five closed funds had 23.7 billion euros ($29.2 billion)

in assets as of July 5, the bank said in an e-mail, about 22 percent of

all euro-denominated money funds. The funds are JPMorgan’s Euro

Liquidity Fund, Euro Government Liquidity Fund, Euro Money Market Fund,

Euro Liquid Market Fund and JPMorgan Series II Funds — EUR.

 

The deposit rate cut “will almost certainly move cash bids in

short-dated instruments into negative territory, and so we have taken

the step to restrict subscriptions and switches into the funds in order

to protect existing shareholders from yield dilution,” JPMorgan said on

its website.

 

The company had $417 billion in money fund assets as of May 31,

making it the world leader, according to Crane Data LLC, a research firm

based in Westborough, Massachusetts. The entire euro-denominated money

fund industry has about 108 billion euros, Crane Data’s statistics show.

Effectively, the European money market industry is now closed and

only redemptions will be allowed as nobody can make «money» in money

markets in a Zero deposit rate environment. As another reminder, there

are hundreds of billions in residual cash in various European money

markets which is no longer welcome. Which then begs the question: as the

cash is unwound will it go into:

i) stocks
ii) bonds
iii) mattresses
iv) breaking the Swiss National Bank as everyone buys CHF and send the nominal yield on the 2 Year Swissie to -#Ref!
v) gold

We will find out soon enough.

μέσω European Money Market Industry Shutting Down As Goldman Closes MM Fund, Says In «Unchartered Territory» | ZeroHedge.

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EU Commission Confirms ESM Loan Will Have Senior Preferred Creditor Status | ZeroHedge

Posted by satyrikon στο 11 Ιουνίου, 2012

And crushing all hopes of pari passu treatment for Spanish bondholders, is this latest confirmation from the EU Commission.

Via Market News:

The European Commission will conduct its own assessment of the Spanish banking sector before deciding what conditions should be set in exchange for financial support from Eurozone governments.

Ultimately it would be the European Commission making the recommendations and the Eurogroup taking the decisions, the spokesman said.

He said it was too early to speculate on how exactly the aid would be delivered or how much interest Spain would pay, since that would depend on the exact structure of the aid and on the prevailing market conditions.

Any aid that might come from the European Stability Mechanism, which is expected to start work next month, would enjoy a preferred creditor status second-only to the IMF, the spokesman confirmed.

And there you have it (and hopefully this is not a harbinger of imminent IMF intervention as well. That would not go over too well in Spain).

via EU Commission Confirms ESM Loan Will Have Senior Preferred Creditor Status | ZeroHedge.

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