20121219 1002 Global Markets Related News.

Asia FX By Cornelius Luca - Tue 18 Dec 2012 17:20:50 CT (CME/www.lucafxta.com)
The appetite for risk remained firm on Tuesday on checkered signs of progress in the "fiscal cliff" politics. The politicians' differences narrowed significantly after President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy.
The European currencies ended higher again, but the commodity currencies fell. The yen remains under pressure after hitting over a 1 ½- year low on Monday. The US stock markets, gold, oil and silver advanced.
The short-term outlook for the financial currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on all European and commodity currencies and short yen. Good luck!

Overnight
US: The current account deficit narrowed to $107.5 billion in the third quarter from $118.1 billion in the second quarter.
US: The NAHB/Wells Fargo Housing Market Index climbed to 47 in December from a revised 45 in November.

Today's economic calendar
Australia: Westpac Leading Index for October
Japan: Merchandise trade balance total for November
Japan: The BoJ monetary policy meeting minutes
Japan: All Industry Activity Index for October
Japan: Leading Economic Index for October

Asian Stocks Rise on U.S. Optimism; Nikkei Above 10,000 (Bloomberg)
Asian stocks rose, with the regional benchmark headed for the highest close since February, amid confidence U.S. policy makers will reach a budget deal and the Bank of Japan will add to economic stimulus.
Canon Inc. (7751), a camera maker that gets 27 percent of its sales in the Americas, gained 4.5 percent as Japan’s benchmark Nikkei 225 Stock Average climbed above 10,000 for the first time since April 4. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, jumped 5.9 percent on speculation the BOJ will add to monetary easing when a two-day meeting concludes tomorrow. Whitehaven Coal Ltd. added 5.5 percent in Sydney after saying it hasn’t received approaches to buy assets from China Shenhua Energy Co. in Australia or any proposal from the Chinese company to take over the coal producer.
The MSCI Asia Pacific Index gained 0.6 percent to 128.67 as of 10:01 a.m. in Tokyo before markets in Hong Kong and China opened. The Nikkei 225 advanced 1.2 percent to 10,044.95. The Nikkei has climbed 16 percent since Nov. 14 on speculation the Liberal Democratic Party, which returned to power in weekend elections, will press for more bond purchases by the BOJ.
“I think U.S. lawmakers will be able to avoid the worst- case scenario,” said Kazuyuki Terao, chief investment officer of Allianz Global Investors Japan Co., Ltd. Allianz Global Investors oversees about 250 billion euros ($331 billion) in assets globally. “Japan’s new leadership is showing its resolve that the government and the BOJ will join forces to beat deflation. The BOJ is under pressure to change, given its governor is to step down soon.”
Asia’s benchmark equities index has risen 13 percent this year as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.6 times average estimated earnings, compared with 14 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nikkei 225 Climbs Above 10,000 for First Time Since April (Bloomberg)
Japanese stocks rose, pushing the Nikkei 225 Stock Average (NKY) above 10,000 for the first time since April, amid optimism the Bank of Japan will expand stimulus tomorrow at the close of a two-day policy meeting.
Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, jumped 6.3 percent amid bets for more monetary easing. Toyota Motor Corp. gained 2.3 percent after the Nikkei newspaper reported the carmaker plans to raise its output to 9.9 million vehicles next year. Canon Inc., the world’s top camera maker, led exporters higher as the yen traded near a 20-month low against the dollar.
The Nikkei 225 gained 1.3 percent to 10,055.45 as of 9:54 a.m. in Tokyo, heading for the first close above 10,000 since April 3. The broader Topix Index climbed 1.8 percent to 831.02, with all but one of its 33 industry groups advancing.
“The Bank of Japan is likely to expand the asset- purchasing program to stimulate and sustain growth momentum,” Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the central bank, said in a Bloomberg Television interview. “We expect around 10 trillion yen, mainly by JGB purchasing. This kind of policy will encourage yen selling and support overseas investments into Japanese corporates.”

S&P 500 Advances to 2-Month High Amid Optimism on Budget (Bloomberg)
U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level in two months, amid signs of progress in efforts by President Barack Obama and Republicans to reach agreement on a new budget in Washington.
An index of homebuilders gained 2.3 percent as confidence among U.S. homebuilders climbed in December to the highest in more than six years. Bank of America Corp. (BAC) and Morgan Stanley rose more than 3.1 percent to pace gains in financial shares. Apple Inc. (AAPL), the most valuable company, added 2.9 percent.
The S&P 500 rose 1.2 percent to 1,446.79 at 4 p.m. in New York. It has gained 15 percent so far in 2012. The Dow Jones Industrial Average added 115.57 points, or 0.9 percent, to 13,350.96 today. About 7.4 billion shares changed hands on U.S. exchanges, 20 percent above the three-month average.
“There is certain optimism that it could potentially be done before the end of the year and that would be a very positive sign to the market,” Philip Tasho, chief investment officer at Alexandria, Virginia-based Tamro Capital Partners LLC, which manages about $1.8 billion, said in a phone interview. “Once the solutions are in the rear view mirror in terms of fiscal policy, we will simply look forward. It’s a blip in the long-term trend.”
The S&P 500 sank as much as 7.7 percent from its 2012 high in September as Obama’s re-election set up a budget showdown with the Republican-controlled House of Representatives. The benchmark gauge has climbed 6.9 percent since its November low amid optimism a compromise will be reached to avoid more than $600 billion in automatic tax increases and spending cuts.

European Stocks Rise Amid U.S. Budget Optimism (Bloomberg)
European stocks rose for the first time in four days as U.S. President Barack Obama changed his position on tax increases, leading to optimism that Democrats and Republicans will agree on a compromise budget.
BHP Billiton Ltd. (BHP) climbed 1.2 percent as mining companies gained after China’s policy makers set their economic-growth target at 7.5 percent for next year. Banco Santander SA (SAN) and UBS AG (UBSN) gained 2.2 percent and 1.9 percent, respectively, as the shares of lenders rose. Ratos AB (RATOA) tumbled 5.1 percent after saying it will pay a smaller dividend this year.
The Stoxx Europe 600 Index added 0.5 percent to 280.46 at the close of trading. The equity benchmark has rallied 15 percent this year, its first annual gain since 2010, as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“It looks like the U.S. budget talks are getting better and better,” said Pierre Mouton, who helps oversee $6 billion as portfolio manager at Notz Stucki & Cie. in Geneva. “We’re not quite there yet, but both camps seem to be trying to get to an agreement. It’s quite positive and the market’s reaction is linked to that.”
The volume of shares changing hands on the Stoxx 600 companies was 37 percent greater than the average of the last 30 days, according to data compiled by Bloomberg. On Spain’s IBEX 35 Index, the volume was more than double the average.

Emerging-market stocks advanced, pushing the benchmark index to an eight-month high, as prospects of a recovery in China and a resolution to the U.S. budget impasse bolstered raw materials companies. (Bloomberg)
Gold producer Zhaojin Mining Industry Co. (1818) rallied the most in six weeks in Hong Kong, while Industrias CH SAB (ICHB), Mexico’s largest steelmaker, helped lead a gauge of emerging-market materials stocks to the highest level since May. OAO Rostelecom’s preferred shares rallied to a six-week high on a report the Russian phone operator may need to buy stock to maintain state control. Usinas Siderurgicas de Minas Gerais SA led the Bovespa Index’s advance to the highest in 12 weeks.
The MSCI Emerging Markets Index (MXEF) climbed 0.6 percent to 1,046.24 in New York, the highest close since April 3. Goldman Sachs Group Inc. raised its quarterly growth forecast for China, where the economy has slowed over the past seven quarters. U.S. President Barack Obama and House Speaker John Boehner moved closer to a budget deal as Obama lowered his tax revenue demand by $200 billion and offered to start tax rate increases at incomes of $400,000, not $250,000.
“China’s coming back, and that means better times not only for China but throughout the region,” Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, where he oversees more than $20 billion, said by phone. “In the short run, everyone is waiting to see what the fiscal cliff resolution is.”
The 21 countries in the emerging-markets index send about 17 percent of their exports to the U.S., according to data compiled by the World Trade Organization. China is the world’s largest exporter and counts the U.S. and Europe as its biggest trading partners.

Yen Falls to August 2011 Low Versus Euro on Stimulus Bets (Bloomberg)
The yen fell to its lowest level since August last year against the euro on prospects that the Bank of Japan (8301) will expand stimulus at the meeting that starts today, its first after the nation’s general election.
Japan’s currency traded near the weakest level since April 2011 versus its U.S. counterpart after data today showed the country’s trade deficit widened in November. The 17-nation euro maintained seven days of gains against the dollar that pushed it to a seven-month high yesterday amid optimism U.S. lawmakers will reach a budget pact, reducing demand for the greenback as a haven.
“Yen-selling is likely to remain intact,” said Koji Iwata, vice president of foreign-exchange trading in New York at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest financial group by market value. “The BOJ will probably disappoint the market if it doesn’t boost asset purchases.”
The yen touched 111.63 per euro, the weakest since Aug. 30, 2011, before trading at 111.57 as of 9:01 a.m. in Tokyo, 0.2 percent below the close yesterday. Japan’s currency lost 0.2 percent to 84.35 per dollar, after falling to 84.48 on Dec. 17, the lowest since April 12 last year. The euro was little changed at $1.3230 after it reached $1.3238 yesterday, the most since May 2.
Seventeen of 21 analysts surveyed by Bloomberg expect the BOJ to ease monetary policy at the end of the two-day meeting. Incoming Prime Minister Shinzo Abe, whose Liberal Democratic Party swept to victory in elections for the lower house of Japan’s Parliament on Dec. 16, said yesterday that he requested BOJ Governor Masaaki Shirakawa agree to an accord containing a 2 percent inflation target.
Japan’s exports fell 4.1 percent last month from a year earlier, leaving a trade deficit of 953.4 billion yen ($11.3 billion), the Finance Ministry said today in Tokyo.
The yen has lost 13 percent this year, the worst performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar weakened 3.3 percent and the euro has dropped 1.1 percent.

Australian Dollar Holds Gains Against Yen Before BOJ (Bloomberg)
Australia’s dollar maintained a six- day advance against the yen before a Bank of Japan (8301) decision tomorrow amid speculation the central bank will add monetary stimulus and weaken the Asian nation’s currency.
Gains in the so-called Aussie were limited after the Australian Financial Review reported Reserve Bank of Australia Governor Glenn Stevens said there may not be a seamless “handover” from mining to other drivers of economic growth. New Zealand’s dollar remained lower versus its U.S. peer after a two-day decline even after the nation’s annual current-account deficit narrowed.
“There’s no doubt the events of the past week and the expectations of the new government will weaken the yen,” said Hans Kunnen, economist at St. George Bank Ltd. in Sydney, referring to the victory by Shinzo Abe’s Liberal Democratic Party in Japan’s parliamentary elections. “A fair bit of Bank of Japan easing has been built in the Aussie-yen, so now we have to see the actual action.”
The Australian dollar bought 88.64 yen as of 11:13 a.m. in Sydney from 88.71 yesterday, having climbed 2.7 percent over the previous six days. It touched 89.13 on Dec. 17, the highest since May 2011. The Aussie slid 0.2 percent to $1.0512.
New Zealand’s dollar, known as the kiwi, fetched 70.81 yen from 70.86 yesterday. It reached 71.51 yen on Dec. 17, the strongest since October 2008. The currency bought 83.98 U.S. cents from 84.14 yesterday, when it declined 0.4 percent.
The yield on Australia’s 10-year government debt was 3.39 percent from 3.38 percent yesterday.

Yields on Treasury seven-year notes were near a two-month high before a $29 billion sale today amid speculation U.S. leaders will avert the so-called fiscal cliff that could push the economy into recession. (Bloomberg)
An auction of five-year notes yesterday, part of sales worth $113 billion this week, drew the least demand in five months. President Barack Obama and House Speaker John Boehner are negotiating to end a budget stalemate as spending cuts and tax increases totaling more than $600 billion are set to start in January.
“There are more signs that we’ll avoid a complete drop off the fiscal cliff, which are driving bond yields higher,” said Makoto Suzuki, a senior bond strategist in Tokyo at Okasan Securities Co.
The seven-year yield was little changed at 1.23 percent as of 9:24 a.m. in Tokyo after touching 1.25 percent yesterday, the highest since Oct. 26. The 1 percent security due in November 2019 traded at 98 1/2, according to Bloomberg Bond Trader Prices. The benchmark 10-year rate was at 1.81 percent from 1.82 percent yesterday.
Japan’s 10-year government bond yield added as much as two basis points to 0.775 percent, the most since Nov. 2.

Boehner Seeks to Sell Tax Boost to Anti-Tax Republicans (Bloomberg)
House Speaker John Boehner is trying to sell a tax increase for top earners to fellow Republicans whose opposition to tax increases for anyone is a central part of their identity and pitch to voters.
The speaker said the House will vote this week on a budget “plan B” that would raise tax rates on income of more than $1 million a year. President Barack Obama’s administration and other Democrats immediately rejected the proposal as inadequate.
“It’s important that we protect as many American taxpayers as we can,” Boehner told reporters in Washington today. House Republicans met privately late today to hear details.
Fewer than two weeks remain to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to start in January. Boehner’s decision to set up a second legislative track complicates the situation, which had been focused on the intensifying talks between the speaker and the president.
After the meeting, Minnesota Republican John Kline declined to predict how much support Boehner would get for his plan because that’s “hard to quantify.”
Still, the discussion showed “there is an understanding” that “absent action we are going to be faced with a huge, huge tax hike,” Kline said.

Current-Account Deficit in U.S. Narrowed 9% in Third Quarter (Bloomberg)
The current-account deficit in the U.S. narrowed in the third quarter, helped by slowing imports.
The gap, the broadest measure of international trade because it includes income payments and government transfers, shrank 9 percent to $107.5 billion, the smallest in almost two years, from a $118.1 billion shortfall in the prior quarter, a Commerce Department report showed today in Washington. The median forecast of economists in a Bloomberg survey called for the deficit to narrow to $103 billion.
Cooling demand in the world’s largest economy is limiting imports at the same time that a slowdown in growth from Europe to China reduces overseas sales, a sign it’ll get harder to keep shrinking the trade deficit. The balance of payments gap also is a reminder the U.S. remains dependent on foreign investors for funding.
“We could have the current account balance remaining broadly where it is,” Jeremy Lawson, senior U.S. economist at BNP Paribas in New York, said before the report. “If growth in emerging markets picks up next year, that would boost export performance. Similarly, faster growth in the U.S. would increase imports. It’s hard to say how much of an improvement we could see.”
Estimates in the Bloomberg survey ranged from deficits of $98.5 billion to $116.1 billion. The second-quarter shortfall was revised to $118.1 billion from a previously reported $117.4 billion.

Bank Deposits Surge $2 Trillion More Than Loans: Credit Markets (Bloomberg)
Deposits at U.S. banks exceed loans by an unprecedented $2 trillion as the threat of a slowing economy tempers borrower demand and lenders preserve tightened standards.
Cash deposited at firms from JPMorgan Chase & Co. to Bank of America Corp. expanded 8.7 percent this year to a record $9.17 trillion through Dec. 5, Federal Reserve data show. That outpaced a 3.7 percent gain in loan assets to $7.17 trillion. The gap between what banks take in and lend out has surged since October 2008, the month after Lehman Brothers Holdings Inc. collapsed, when loans exceeded deposits by $205 billion.
U.S. consumers paring debt loads and banks tightening lending practices that fueled the credit bubble in 2007 are limiting the reach of the Fed, which has sought to spur spending by holding its benchmark interest-rate at almost zero for four years. The low rates are limiting investment options, making savers content to hold their cash at lenders, according to Royal Bank of Canada’s Gerard Cassidy.
“Borrowers are still de-leveraging, so the demand is not at the level it would be in this part of the recovery,” Cassidy said in a telephone interview. “That combined with the low-r

Builders Hanging Help-Wanted Signs as Industry Rebounds (Bloomberg)
Construction employment in the U.S. is poised to rebound as a swelling pipeline of projects prompts companies to expand.
Builders in October had the most job openings and broke ground on more homes than at any time in four years, government data show. Billing by architecture firms, which typically leads construction by at least nine months, is climbing at the fastest pace since December 2010.
“You have a lot of projects right now in design and development, and as soon as the financing hits and the approvals are out, then the shovels go in the ground,” said Suzanne Breistol, co-owner of ConstructionConnection.com, a Marble Falls, Texas-based employment consulting service.
While construction payrolls accounted for 4.1 percent of all U.S. employment in November, a six-decade low, industry hiring will ripple through the world’s largest economy, prompting manufacturers, retailers, landscapers, real-estate brokers and transportation companies to also take on staff, according to economist Mark Zandi. About 250,000 construction and related jobs will be created in 2013, 13 percent of the 1.93 million Zandi projects the U.S. will add.
“Construction is a small share of the job market, but it can be a very large share of job growth, particularly when the construction industry is in an upswing,” said Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “A big share of the improvement in jobs growth that I anticipate will come from construction and anything related.”

Homebuilder Confidence Rises to Highest Level Since 2006 (Bloomberg)
Confidence among U.S. homebuilders climbed in December for the eighth straight month, reaching its highest level in more than six years and adding to signs the real-estate market is aiding the economic expansion.
The National Association of Home Builders/Wells Fargo index of builder confidence increased to 47, the highest since April 2006, from a revised 45, the Washington-based group reported today. The December figure matched the median forecast in a Bloomberg survey of 49 economists.
Low interest rates and rising prices are bringing more buyers into the market at the same time a growing number of households boosts demand. That’s injected optimism at Toll Brothers Inc. (TOL) and Hovnanian Enterprises Inc., which are rebounding from the 2008 financial crisis that flooded the market with foreclosures and brought building to a near halt. Hovnanian is among companies that are raising prices.
“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Florida. “One thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.”

China Company Profits to Grow 10% Next Year, Russell Says (Bloomberg)
Chinese corporate earnings are set to climb as much as 10 percent next year as the world’s second- biggest economy emerges from its slowdown and more people move to cities, Russell Investments says.
Companies that can benefit from an increase in domestic consumption may post even greater growth, Gustavo Galindo, who helps manage $8 billion of emerging-market equities for Russell in New York, said in a phone interview yesterday.
“What you have is more and more people joining into the middle class and that trend is very likely to continue,” Galindo said. “When the economy improves, they have to buy more goods and services and they are the ones that will be pushing consumer companies to better profits.”
Goldman Sachs Group Inc. raised its fourth-quarter and 2013 economic growth forecasts for China yesterday to account for gains in production, after data last week showed industrial output climbing the most in eight months in November. Retail sales last month also rose at the fastest pace since March, adding to signs the economy is emerging from a slowdown that started in the first quarter of 2011.
The Russell Emerging Markets Fund that Galindo oversees has returned 16 percent this year, beating 43 percent of its peers. The MSCI Emerging Markets Index has returned 18 percent, while the Shanghai Composite Index of domestic Chinese shares posted a return of 0.9 percent, data compiled by Bloomberg show.

Japan Exports Slide Even as Yen Decline Improves ’13 Outlook (Bloomberg)
Japan’s exports fell for a sixth month in November and the trade deficit swelled, underscoring the challenge that incoming Prime Minister Shinzo Abe faces in reviving growth.
Shipments slid 4.1 percent from a year earlier, the Finance Ministry said in Tokyo today. The median forecast of 23 economists was for a 5.5 percent decline. Imports rose 0.8 percent leaving a deficit of 953.4 billion yen ($11.3 billion), the third-largest on record.
The Nikkei 225 Stock Average (NKY) rose above 10,000 for the first time since April on speculation that the Bank of Japan (8301) will expand monetary stimulus, a move that could aid exports by fueling more declines in the yen. JPMorgan Chase & Co. and Bank of America Merrill Lynch forecast that that the central bank will add 10 trillion yen to an asset-purchase fund at a policy meeting that ends tomorrow.
“The improvement of overseas economies will cause a pickup in exports in the second half of 2013,” Junko Nishioka, chief economist at RBS Securities Japan Ltd., said before the report. At the same time, “the trade deficit will probably not shrink much, as the weaker yen will raise the cost of energy imports.”
Exports to China fell 14.5 percent from the previous year as car shipments to the country tumbled 64 percent. Exports to the European Union dropped 19.9 percent, while those to the U.S. rose 5.3 percent.

Greeks Can’t Find Euros to Buy Heating Oil With Winter Economy (Bloomberg)
In the Greek mountain town of Kastoria, less than an hour from the Albanian border, Kostas Tsitskos, 88, can’t afford fuel to heat his home against the winter’s cold. So he and his son live in a single bedroom, warmed by a small electric heater.
“One room is enough,” said Tsitskos, who lives on a 734 euro-a-month ($971) pension and doesn’t have the 1,000 euros a month he needs to buy heating oil.
Greece is facing a heating-oil crisis. With an economy that has contracted for five years and an unemployment rate at a record 25 percent, residents in northern Greece can’t heat their homes. Kastoria hasn’t received funds from the central government to warm schools and the mayor said he will close all 53 of them rather than let children freeze, a step already taken in a nearby town. Truckloads of wood are arriving from Bulgaria as families search for alternative fuels.
“This is the coldest place in Greece,” said Emmanouil Hatzisimeonidis, Kastoria’s mayor, in an interview in his office. “It’s winter from October to April. This year we are very lucky. Last year, it was snowing for four months.”
When temperatures fall below freezing, Tsitskos spends most of his time in his bedroom and rarely leaves the house, he said. For meals, he and his son move the electrical heater to the kitchen. Other older residents in the town spend their days at a senior center and cafes to save on heating costs, returning home only to sleep, he said.

U.K. Inflation Remains at 2.7% on Cost of Food, Utility: Economy (Bloomberg)
U.K. inflation held at the highest rate since May last month as higher electricity and gas costs kept consumer-price growth above the Bank of England’s target.
Consumer prices rose 2.7 percent from a year earlier, unchanged from October, the Office for National Statistics said in London today. That matched the median forecast of 34 economists in a Bloomberg News survey. Upward pressure on inflation came mostly from food and utilities.
“Consumers’ spending power is being tightly squeezed in the run-up to Christmas,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. “Looking ahead, inflation looks set to hover between 2.5 and 3 percent for the best part of the next year as further increases in utility and food prices kick in.”
Bank of England Chief Economist Spencer Dale raised concerns last week that inflation may show “stickiness,” complicating the task of policy makers seeking to stimulate the economy with price growth above their 2 percent goal. The central bank raised its near-term inflation forecast last month and today’s data may fuel debate on whether the central bank’s mandate should be changed.
The pound remained higher against the dollar after the data were published. It traded at $1.6215 as of 11:17 a.m. in London, up almost 0.1 percent on the day.

Moody’s Seeks Feedback on Changes to Its Sovereign Rating Method (Bloomberg)
Moody’s Investors Service is seeking feedback on changes to the way it rates governments to boost transparency after being criticized for its methodology.
The proposed changes will place more importance on economic growth and event risk of countries among its metrics, the world’s second-largest credit-rating company said in a statement today. The system will continue to focus on a nation’s institutional and fiscal strength, it said.
In the past year, ratings companies have been criticized for issuing sovereign-debt downgrades that countries including Portugal, Greece and Ireland say triggered their need for bailouts from the European Union and the International Monetary Fund. Investors ignored 56 percent of Moody’s rating and outlook changes this year, data compiled by Bloomberg showed.
The proposed amendments “are aimed at further increasing the transparency and forward-looking nature of Moody’s current approach,” it said today. Feedback will be received until Feb. 1, 2013, it said, adding that it does not expect any revisions of current ratings when the changes are implemented.
Yields on sovereign securities moved in the opposite direction from what ratings by Moody’s and Standard and Poor’s suggested in 53 percent of the 32 upgrades, downgrades and changes in credit outlook this year, according to data compiled by Bloomberg.
While Moody’s and S&P face legal proceedings and increased regulation after contributing to the worst financial calamity since the Great Depression, politicians cite the grades as one reason for austerity.
Moody’s has downgraded 6.4 government ratings for every upgrade this year in the U.S. and Europe, the highest ratio since at least 2002, Bloomberg data show. S&P, Moody’s and Fitch Ratings, a unit of Paris-based Fimalac SA, provided more than 99 percent of rankings of government, municipal, and sovereign debt and 96 percent of all outstanding grades last year, according to a Nov. 15 U.S. Securities and Exchange Commission report.