Bloomberg Brief invited two leading China academics to discuss whether far-reaching reforms can maintain growth in the world’s second-largest economy at its current pace. Eswar Prasad says that expansion can continue at 6 percent to 7 percent, while Michael Pettis argues that rising debts and high costs of reform mean a sharp slowdown is inevitable. Next week, [...]
Pilgrim’s Pride has paid down or plans to repay a total $410 million of term loans as soon as April, said Treasurer Gustavo Biscardi. Click HERE for more.
The U.S. default rate will end this year at 2.3 percent, up from 2.2 percent at the end of 2013 and down from 2.7 percent in the third quarter, according to Moody’s. Europe is expected to see the biggest fall in defaults, to 2.1 percent at year-end, from 3.6 percent in the third quarter of 2013. Click [...]
Most sell-side strategists expect loan returns to beat bonds this year. BAML and JPMorgan disagree. Click HERE for more.
Skadden Arps, Davis Polk are up, Kirkland & Ellis is down. Click HERE for more.
Banks that sell U.S. structured notes may be pressed to further increase the complexity and maturities of the securities as their declining credit risk makes it harder to pay attractive returns. An average of five-year credit-default swap prices for the six largest U.S. banks dropped to a six-year low of 71.8 basis points on Jan. [...]
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A strengthening Chinese yuan and weakening Japanese yen mean Asia’s two major currencies face sharply contrasting fortunes in 2014. China’s yuan is set for a strong year. The currency ended 2013 at 6.05 to the dollar, increasing 2.9 percent annually. In 2014, the yuan will rise to 5.98 by the end of the year, according to the median forecast of economists in [...]
The Federal Reserve took a first step toward exiting its five-year intervention into asset markets by announcing it will begin reducing the pace of Treasury and mortgage purchases by $10 billion to $75 billion per month beginning in January. The pace of the taper is more symbolic than substantive given the probability that the Fed will remain ultra-accommodative during the next two to three [...]
Current price levels and related trends are similar today to recent periods when deflation fears forced the Federal Reserve to ease policy. Commodity prices have been on a steady decline since mid-2011 and non-petroleum import prices have contracted at a 1.2 percent pace during the last 12 months. Given personal consumption expenditure (PCE) inflation of only 0.7 percent and an associated core PCE of [...]