Traders are increasingly worried that the US government may soon run out of ways to pay its bills

• Akin Oyedele
 

• 2h
• 1,277

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The bond market continues to reflect fears that the US government may soon run out of funding.

A $20 billion auction on Tuesday for Treasury bills that expire in four weeks — just after the deadline for a bill to fund the government — drew the highest yield since the 2008 financial crisis. For some perspective, the high yield, at 1.30%, was higher than when the government shut down in 2013. This indicates that bond traders want a premium in return for expecting the government to repay them just as it may be running out of funding.

The auction results were "ghastly," according to Ward McCarthy, the chief financial economist at Jefferies.

"The October 5th maturity date for this auction turned off a lot of investors due to debt ceiling concerns," he said in a note.

Yields on existing bills that expire in October jumped by more than 4 basis points after the auction, according to Bloomberg.

By the end of September, Congress must pass a bill to keep the government funded, or it risks a shutdown of nonessential functions. It must also raise the debt ceiling by early October to prevent breaching it and to avoid a default.

The auction came on a strong day for Treasurys and other safe-haven assets following North Korea's nuclear test over the Labor Day weekend. The yield on the benchmark 10-year note fell 8 basis points, to 2.07%, the lowest since the day after the 2016 election.

As this chart from Deutsche Bank shows, the yield on bills expiring during the likely period of the debt-ceiling showdown is higher than comparable bills during previous episodes:

Deutsche Bank

SEE ALSO: Wall Street has 'a bigger fear' of a debt-ceiling crisis than in the past — here's what happened to markets during the last scare

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In Search of the Bankers' Brain (Video)

In Search of the Bankers' Brain

2013 , 

The disastrous impact of the 2008 financial crisis still lingers today. What lessons have been learned and which steps are being taken to prevent future economic catastrophe? The informative new documentary In Search of the Bankers' Brain investigates the continuing effect of the crisis on London's economy, and profiles the mysterious bankers who have yet to rectify their corruptive ways.

The content of the film stems from the work of Joris Luyendijk, a journalist for The Guardian whose far-reaching blog focuses on matters related to finance and banking. "We know more about ancient Egypt than about the people who currently shape our lives," he observes. Luyendijk's efforts seek to unmask the key bankers, investment managers, risk management personnel, traders and hedge fund high rollers who can make or break a nation's economy.

The film also features interviews with former players of the financial game who have now embraced their status as industry whistleblowers. They all testify to a system that's sick with unregulated greed and rewards the truly ruthless with unimaginable wealth. We learn how they manage to operate in relative anonymity, and the tricks and triggers they employ to excel in their line of work.

The film's central thesis, however, regards the chemistry of greed. A psychologist chimes in to share insights on the effects of greed on the brain, and explains the cerebral characteristics that define many of the most successful masters of banking and investments. It's not a flattering portrayal; in fact, the film pulls no punches by labeling these subjects as psychopaths. They possess a level of deviance and superficiality that makes them ideally suited for victory in today's excessive and permissive financial climate. If they should incur defeat, many will resort to suicide.

Many documentaries have tackled the subject of the financial crisis over the years. In Search of the Bankers’ Brain is a work of distinction because it approaches the topic from an entirely unique perspective. By exploring the neurological components of those who rise to the top of the financial sector through questionable practices, we can better understand the corrosive culture that empowers them every step along the way.

Directed by: Jos de Putter

Here's why China's crypto crackdown is 'bigger than most people think'

• Oscar Williams-Grut
 

• 4h
• 2,601

• China announced a crackdown on "ICOs" — issuing of new virtual currencies;
• Wording of edict makes all cryptocurrency trading illegal, according to eToro China exec;
• Others dispute interpretation, as Chinese exchanges continue to operate.

An investor looks at an electronic screen at a brokerage house in Hangzhou, Zhejiang province, January 26, 2016. REUTERS/China Daily

LONDON — China's crackdown on "initial coin offerings" may be much wider than first thought, with the wording of the crackdown potentially making all cryptocurrency trading illegal.

However, other watchers of the space say the government is not looking to crackdown on digital currencies like bitcoin and ethereum.

The People's Bank of China (PBoC) on Monday outlawed ICOs, a method of raising money by issuing new digital currencies. The trend has become hugely popular, with over $1.5 billion raised using this method in 2017 alone.

However, the wording of the PBoC edict also suggested that trading and usage of all cryptocurrencies, including bitcoin, could now be illegal in China.

The PBoC said that virtual currencies that are "not issued by the monetary authorities... do not have legal status equivalent to money, and can not and should not be circulated as a currency in the market use."

The PBoC added that "any so-called tokens financing trading platform shall not engage in the exchange of legal currency and tokens." It even goes so far as to ban platforms from "provid[ing] pricing, information, [and] intermediary services."

Adam Efrima, the operations director of trading platform eToro in China, described the ruling as a "huge deal," saying: "It's bigger than most people think it is."

Efrima, who first alerted Business Insider to the far reaching nature of the PBoC ruling, said: "I don't think the Chinese government are against blockchain and high-level blockchain development, I think what they're trying to do is take down scammers."

But he added: "Cryptocurrency related exchanging and trading activities are officially forbidden. If you interpret the law literally then you cannot engage in any crypto exchange — crypto-to-crypto or crypto-to-fiat."

Wong Joon Ian, the cryptocurrency reporter for Quartz, reports that most Chinese exchanges have notified customers on WeChat that bitcoin trading will continue despite Monday's ICO ruling.

cnLedger, a Twitter account for cryptocurrency news in China, also disputes eToro's interpretation of the ruling.

8h

cnLedger @cnLedger

1/ PBoC bans ICO. From now on no organizations / persons in China are allowed to raise funds via ICOs.http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/index.html …

 Follow

cnLedger @cnLedger

5/ To clarify, in the notice PBoC used two different notions: Crypto-Currency (BTC, ETH) and Tokens. ICO ban =/= Crypto-Currency ban.

2:33 AM - Sep 4, 2017

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Charles Hayter, the CEO and founder of CryptoCompare, told Business Insider: "These are generally left open to interpretation and a lot of uncertainty reigns in the meantime, until clarification is given by the authorities."

Efrima told Business Insider: "What we're seeing in the market is a lot of Chinese people in the market getting scared."

Efrima said he now expects a regional crackdown on Chinese operators as municipalities follow the PBoC's lead and issue bylaws.

Commenting on the effects the law could have on the global ICO market, Efrima said: "It's huge. There's not a quality project that's not doing a road show in China right now. An educated guess is that this will be very, very negative."

Ethereum is down over 15% against the dollar on Monday afternoon.

Efrima added: "In the long run, it might be good as there'll be less projects and less scams and that could support the price of Ethereum."

Separately on Monday South Korea also announced a crackdown on digital currencies. Business Korea reports that a government task force on Sunday concluded that "digital currencies cannot be considered money and currency, nor financial products," and pledged to "strengthen levels of punishment," for ICOs.

Get the latest Bitcoin price here.

SEE ALSO: China just banned initial coin offerings, calling them illegal fundraising

DON'T MISS: There was a $20 billion cryptocurrency price correction over the weekend

NEXT UP: Ethereum is getting smoked after China and South Korea's ICO crackdown

The New York Stock Exchange wants to delay when companies can drop big news after the closing bell

• Aparajita Saxena, Reuters

• 20h
• 701

Traders work on the floor of the NYSE in New York Thomson Reuters

The New York Stock Exchange filed a proposal on Tuesday to delay the release of important company news immediately after official closing time to reduce investor confusion and market disruption.

Publishing information after 4:00 p.m. can cause a company's stock to trade in other markets at materially different prices than that of NYSE's closing auction, the exchange operator said in a letterto the U.S. Securities and Exchange Commission.

If the proposal passes, listed companies will have to delay news releases till 4:05 p.m., or until the time the NYSE publishes the stock's closing price for the day, whichever comes first.

Designated market makers (DMMs) usually complete closing auctions for securities assigned to them within five minutes of the official closing time, the exchange said.

Some companies issue statements, including earnings reports, which could adversely affect their stock prices, after U.S. markets close.

As part of the proposed change, a listed company would not be able to issue important news between the official closing time and completion of the closing auction.

DMMs, formerly known as "specialists", operate both manually and electronically to facilitate price discovery during market openings, closings and during periods of substantial trading imbalances or instability for thousands of NYSE-listed stocks.

In order for the change to take effect, an SEC approval is needed. 

(Reporting By Aparajita Saxena in Bengaluru; Editing by Martina D'Couto)

SEE ALSO: 13 brilliant quotes from the greatest investor of all time

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China's economy provided something for both the bulls and bears in August

DAVID SCUTT 

AUG 31, 2017, 11:27 AM

Photo: Mohd Rasfan/AFP/Getty Images

China’s economy offered something for both the bulls and bears in August, according to data released by China’s National Bureau of Statistics (NBS) today.

The nation’s manufacturing Purchasing Manager’s Index (PMI) came in at 51.7 in August, beating expectations for a decline to 51.3.

It was also stronger than the 51.4 level previously reported in July.

The PMI measures changes in activity levels across China’s manufacturing sector from one month to the next. Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating. The distance away from 50 indicates how quickly activity levels are expanding or contracting.

So at 51.7, that means that activity levels across the sector improved at a faster pace than July.

The NBS said that the PMI for large manufacturers fell 0.1 points to 52.8, while that for mid-tier firms improved after deteriorating in July, rising 1.4 points to 51.0. Smaller manufacturers remained the laggard, coming in at 49.1, up 0.2 points from one month earlier.

By activity subindex, production and new orders grew at a faster pace than July.

New export orders grew at a slower pace, indicating that the strength in orders was largely domestic in August.

Of note, prices for raw materials and finished products both increased at a rapid pace, indicating that higher input costs are being passed on to customers.

However, while activity levels across the manufacturing sector picked up, the same can’t be said for other sectors of the economy which saw activity levels improve at a slower pace than a month earlier.

The separate non-manufacturing PMI from the NBS, capturing the performance of China’s non-industrial sectors such as services and construction, fell to 53.4, below the 54.5 level of July.

That means that while activity levels continued to improve, they did so at a slower pace.

Indeed, as seen in the chart below, the PMI was the lowest level since May 2016.

The NBS said that new orders grew at a slower pace while those from abroad fell after a solid increase in July.

Not the best news given this is a lead indicator on activity levels across non-manufacturing sectors in the future.

In a further sign that construction activity is cooling following measures from policymakers to slow rapid house price, the PMI measuring construction activity fell to 58.0, down 4.5 points on one month earlier.

Although still pointing to a rapid improvement, it was well below the levels reported in the first half of the year.

Following the release of the government’s PMI reports today, market attention will now turn to the release of the Caixin-IHS Markit China PMI reports in the coming days.

They’re private sector surveys, and tend to generate more of a reaction across financial markets than the the official PMI reports.

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