Bill Gross says investors should stay with US Treasuries

• Reuters

• 19h
• 225

Thomson ReutersBill Gross speaks at the Morningstar Investment Conference in Chicago

NEW YORK (Reuters) - Bill Gross, the closely followed investor, said on CNBC on Tuesday that investors should stick with U.S. Treasuries in the wake of recent market turmoil.

"I would stick to high-quality sovereign debt, as in U.S. Treasuries," said Gross, who runs the Janus Global Unconstrained Bond Fund.

Gross also recommended investors should consider Build America Bonds, which are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder.

"There are a lot of closed-end funds that are selling 10-15 percent discounts to net asset values. That means you are buying something at 80-95 cents on the dollar," Gross said. "Some of these closed-end funds deal in, yes, relatively high-quality municipal bonds."

Last year, the Janus Global Unconstrained Bond Fund outperformed a comparable fund at Gross's former employer, Pimco.

The Janus Global Unconstrained Fund was down 0.43 percent last year while the Pimco Unconstrained Bond Fund was down 2.22 percent for the same time period, according to data from Morningstar. The Janus Global Unconstrained portfolio surpassed 66 percent of its peers in 2015, Morningstar said.

Pimco declined to comment.

(Reporting By Jennifer Ablan; Editing by Jonathan Oatis)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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UK EMPLOYMENT — Getting better and better

• Ben Moshinsky
 

• 6h
• 167

REUTERS/Suzanne PlunkettHappy days

The UK's unemployment rate continues to confound expectations, falling faster than analysts' forecasts.

The headline rate of those out of work fell to 5.1% for November,according to the Office for National Statistics.

Analysts expected the unemployment rate for November, which takes the average of that month and the two that preceded it, to come in at 5.2%, the same as October. 

The last few months have been great for UK jobseekers.

September's unemployment figure was better than the flat 5.4% economists had expected. And August's 5.4% figure was below analysts forecasts of 5.5%.

Office for National Statistics

The UK is more or less at full employment — the economic term for where everyone who can get a job in a functioning economy has one.

The current employment rate is 74%, the highest since records began in 1971.

Figures also out Wednesday show pay is growing slower than forecast. Here's the ONS (emphasis ours):

Comparing the 3 months to November 2015 with the same period in 2014, real AWE (total pay) grew by 2.1%, compared with 2.4% in the 3 months to October. Nominal AWE (total pay) grew by 2.0% in the three months to November, while the CPI rose by 0.1% in the year to November. 

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Oil crashes past $28

• Ben Moshinsky
 

• 8h
• 661
 
• 2

Oil crashed past the $28 per barrel mark in overnight trading, hitting $27.82 (£19.64).

It was the first time since September 2003 that the price had fallen below $28 a barrel. It just keeps getting cheaper. It's now down 75% from July 2014.

The renewed slide corresponds with a report released by the International Energy Agency in which the group warned that the oil market could drown in over-supply in 2016.

As of 7:10 a.m. GMT (7:40 a.m. ET) both major benchmarks, West Texas Intermediate and Brent crude, had rallied a little but were still down more than 2%.

Here's WTI:Investing

And here's Brent:

Investing

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Bloodbath in Asia as Japan enters bear market

• David Scutt, Business Insider Australia
 

• 8h
• 4,190
 
• 3

REUTERS/Yuya ShinoParticipants after a Halloween parade in Kawasaki, south of Tokyo, on October 25.

Only a day after leading risk assets higher, Chinese stocks fell heavily in Wednesday trade, dragging stocks, commodities, and higher-yielding currencies lower across the region.

The benchmark Shanghai Composite index closed the session down 1% at 2,976.69, giving back about a third of the gains achieved Tuesday.

At one point during the session the index was down by close to 2%.

The steep decline in Chinese stocks, not only on the benchmark index but on others around the country, weighed on markets across the region.

The ASX 200 in Australia finished down 1.26% at 4,841.52, the lowest closing level seen in 30 months.

But compared with other markets across Asia, that was a relative outperformance.

The Nikkei 225 in Tokyo fell by 3.71%, closing the session at 16,416.19. Not only was it the lowest closing level since October 2014, it took its decline from last August to 21.6%.

It is now in an official bear market.

Business Insider AustraliaNikkei 225 daily chart.

In late trade the Hang Seng is also under the kosh, down 3.63% at 18,923.70. It is on track to close at the lowest level since July 2012, and it has extended its slide from April last year to about 34%.

Like the Nikkei chart above, it doesn't make for pleasant viewing.

Business Insider AustraliaHang Seng Index daily chart.

Stocks in South Korea, Singapore, and Taiwan also logged declines of about 2%.

US S&P 500 futures, mirroring the carnage in Asia, are trading down 1.63%.

Combined with modest weakness in the offshore traded yuan, commodity markets were also under pressure, with US crude futures tumbling to a fresh 13-year low below $28 a barrel.

The low for the session, so far, is $27.49 a barrel.

Gold is one of the few exceptions, adding 0.49% to $1,092.06 an ounce.

Higher-yielding currencies were also hit hard, particularly the New Zealand dollar, which tumbled earlier in the session after the release of a weak inflation report for the December quarter.

The Australian dollar was also under pressure, falling 0.85% to .6852. As on Tuesday, its movements were closely aligned with those in Chinese stocks.

The chart below from Thomson Reuters reveals the somewhat mysterious relationship between the two seen earlier in the session.

ReutersAustralian dollar in red, Shanghai Composite in white.

Here’s the Asia market scoreboard as at 6 p.m. AEDT.

Stocks

• ASX 200 4841.53 , -61.54 , -1.26%
• Nikkei 225 16416.19 , -632.18 , -3.71%
• Shanghai Composite 2976.52 , -31.22 , -1.04%
• Hang Seng 18923.70 , -712.11 , -3.63%
• KOSPI 1845.45 , -44.19 , -2.34%
• Straits Times 2568.28 , -70.19 , -2.66%
• S&P 500 Futures 1842.50 , -30.50 , -1.63%

Forex

• USD/JPY 116.62 , -1.00 , -0.85%
• USD/CNY 6.5971 , 0.0071 , 0.11%
• AUD/USD 0.6852 , -0.0051 , -0.74%
• NZD/USD 0.6369 , -0.0039 , -0.61%
• AUD/JPY 79.91 , -1.28 , -1.58%
• EUR/USD 1.0951 , 0.0046 , 0.42%
• GBP/USD 1.4149 , -0.0006 , -0.04%
• USD INDEX 98.798 , -0.1930 , -0.19%

Commodities

• Gold $1,092.06 , $5.34 , 0.49%
• Silver $14.02 , $0.00 , -0.02%
• WTI Futures $27.61 , -$0.85 , -2.99%
• Copper Futures ¥35,070 , -¥60 -0.17%
• Iron Ore Futures ¥316.00 , -¥3.50 , -1.10%

10-Year Bond Yields

• Australia 2.662%
• New Zealand 3.225%
• Japan 0.212%
• Germany 0.520%
• UK 1.690%
• US 1.998%

Read the original article on Business Insider Australia. Copyright 2016.

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World markets are getting slammed

• Akin Oyedele
 
•  

• 2m
• 12,320
 
• 10

Global markets are selling off again.

On Wednesday, the rout began in Asia, where Japan's Nikkei index closed in a bear market — defined as a 20% drop from a recent top — while Chinese stocks in Hong Kong fell to their lowest level since 2007.

US stocks started the trading session deep-red, with the Dow falling more than 400 points in morning trading.

To recap, it has been the worst start ever to a calendar year for the stock market. From the first trading day of 2016 to the open Wednesday, the S&P 500 is down 8%.

Investing.com

Crude oil is also getting hit hard. West Texas Intermediate crude oil, the US benchmark, fell nearly 3% to as low as $27.32 a barrel, its lowest level since 2003. Brent crude, the international benchmark, was also down about 2%, following Tuesday's warning from the International Energy Agency that Iran's return to exporting could drown the world in oil.

And as crude oil was declining, so were energy stocks on the S&P 500. The sector was the biggest loser on the benchmark index in early trading with a 1.8% drop.

Meanwhile, investors were buying into the safety of US government debt. The yield on the benchmark 10-year Treasury note, which falls when the note's price rises, fell below 2% and to its lowest level since October.

Strategists everywhere are having to field panicked questions from clients about whether this means the US economy is headed for a recession. As we detailed over the weekend, many of the pros agree that this is not a likely scenario.

And in weekly commentary, Nuveen Investments' Bob Doll noted that non-equity financial assets that are typically under strain near a recession, like government bond yields and non-energy fixed income credit, are stable.

"It looks to us as if stocks are pricing in a 50% chance of a recession; we think the odds are actually closer to 25%," he wrote.

In a note to clients on Wednesday, Deutsche Bank's Jim Reid suggests that what we're seeing is an expected repricing of relatively pricey global assets. And for the investor whose focus is further than the intraday market swings, the present volatility is good news.

He writes,

In our annual long-term studies over the last two or three years we've bemoaned the fact that the vast majority of traditional global assets have recently been very expensive relative to their longer-term trend or fundamental fair value. So in that respect over the last few quarters we've now seen a number of these assets start to cheapen up considerably ... However, at least more opportunities for higher returns in the future are arising with recent market falls. That should be welcomed by most over the medium to longer-term.

The economic-data calendar was dominated by the consumer price index for December, which unexpectedly fell 0.1% due to falling energy costs. 

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Japan tax income to hit record high in FY2017; budget-balancing goal elusive: sources

Japan's Ministry of Finance is set to project tax revenue to hit an all-time high of 62.6 trillion yen (S$767.3 billion) in the fiscal year from April 2017 and reach around 70 trillion yen in five years, to help narrow a budget deficit, sources told Reuters. 

PHOTO: REUTERS

JAN 20, 201610:42 AM

[TOKYO] Japan's Ministry of Finance is set to project tax revenue to hit an all-time high of 62.6 trillion yen (S$767.3 billion) in the fiscal year from April 2017 and reach around 70 trillion yen in five years, to help narrow a budget deficit, sources told Reuters.

The higher tax revenue projections take into account the planned sales tax rise to 10 per cent from the current 8 percent in April 2017 and economic growth, which will reduce new bond issuance to a nine-year low of 33.7 trillion yen in fiscal 2017, the sources said on condition of anonymity because the plan has not been submitted to parliament for debate.

New bond issuance is expected to rebound from the following year and reach 36.1 trillion yen in fiscal 2020 due to the cost of servicing accelerating public debt and rising welfare spending for a fast-ageing population, underscoring the need for further fiscal reform.

As a result, even on the rosy assumption that the economy grows 3 percent, the gap between spending and tax income is estimated at 5.8 trillion yen in fiscal 2020, making the government's goal of balancing the budget in five years appear elusive.

Under a modest assumption of economic growth at 1.5 per cent, the ministry estimates tax revenue at 61.6 trillion yen in fiscal 2017 and 65.1 trillion yen in fiscal 2020, which would result in a wider budget deficit of 8.4 trillion yen that year.

The outstanding government debt is estimated at 916.52 trillion yen in fiscal 2020 and is expected to top 1 quadrillion (1,000 trillion) yen in fiscal 2024, the sources said.

The annual projections will be presented to parliament when it starts debating the government's draft annual budget later this week.

The parliament approved on Wednesday a 3.3 trillion yen extra stimulus budget for this fiscal year.

Prime Minister Shinzo Abe has pledged to bring the country's primary budget balance into the black by fiscal 2020 in a bid to rein in public debt which is more than double annual economic output - the world's heaviest debt burden.

But the target looks elusive even under the government's rosy assumption that the economy grows nominal 3 per cent and real 2 per cent on average in the coming years.

REUTERS

    
 

China says Dec foreign direct investment down 5.8% y-o-y

China attracted US$12.23 billion in foreign direct investment (FDI) in December, down 5.8 per cent from a year earlier, the Commerce Ministry said on Wednesday. 

PHOTO: REUTERS

JAN 20, 201610:25 AM

[BEIJING] China attracted US$12.23 billion in foreign direct investment (FDI) in December, down 5.8 per cent from a year earlier, the Commerce Ministry said on Wednesday.

China's non-financial outbound direct investment (ODI) in December rose 6.1 percent from a year earlier to US$13.89 billion, the ministry said.

REUTERS

      

Gunmen attack university in northwest Pakistan, explosions heard

      

A group of militants stormed a university in northwestern Pakistan on Wednesday, police said, with firing inside the campus still going on and two explosions heard. 

PHOTO: REUTERS

JAN 20, 20161:52 PM

[PESHAWAR, Pakistan] A group of militants stormed a university in northwestern Pakistan on Wednesday, police said, with firing inside the campus still going on and two explosions heard.

Media reported that three gunmen entered the Bacha Khan University in Charsadda, northwestern Khyber Pakhtunkhwa province, and opened fire on students and teachers in classrooms and hostels.

There was no immediate report of casualties.

Pakistan has killed and arrested hundreds of suspected militants under a counter-terrorism plan enacted after a massacre of school children in December 2014 in its volatile northwest.

Deputy Inspector General Saeed Wazir told Reuters that the number of gunmen was unclear but police had moved into the university and a gunfight with the attackers was under way. "We launched an operation inside the university and are trying to rescue the students and staff of the institution," Mr Wazir said.

Shabir Khan, a lecturer in the English department, said he was about to leave the hostel for the department when firing began. "Most of the students and staff were in classes when the firing began," Mr Khan said. "I have no idea about what's going on but I heard one security official talking on the phone to someone and said many people had been killed and injured."

REUTERS