Saturday, January 8, 2011

Massive Drainage of silver at the comex/another failed raid/jobs report less than expected

Dear Ladies and Gentlemen:

 

Good morning.  Before commencing our regular commentary Sheila Bair announced last night that there were two new entrants into the banking morgue:

 

 

1. .First Community Bank of Florida headquartered in Orlando Florida.

2. Legacy Bank, Headquarted in Scottsdale Arizona.

 

may they rest in "pieces".

 

Gold closed Friday night at $1368.50 down $2.90 on the day (comex closing time 1:30 pm). In the access market it basically regained the loss and closed at $1369.80.  Silver fell by 37 cents to $28.74.  In the access market in dropped a few pennies to $28.69.
Yesterday saw the release of the jobs report and as always, the bankers whack gold and silver in an attempt to show the world that the economy is improving.  The actual number disappointed the street even with the massive seasonal adjustments and the famous plug addition of the B/D number.  (B/D means birth/death...for every death of a job there is a new job born).  I will go over the number with you after I report on the comex trading.

 

The total gold comex open interest surprised investors greatly once they were released at 1:30 yesterday afternoon.  The total open interest in gold rose by 640 contracts to 583,920 (basis Thursday).  The raid was huge and thus no gold leaves fell from the comex tree much to the chagrin of the bankers.  The front options delivery month of January saw the open interest decline from 71 contracts to 28 for a drop of 43 contracts.  All of the drop was due to Thursday delivery notice of 60 contracts.  The next key number is the front delivery month of February.  The month of February is a big delivery month and is generally third as to the mostly played months in the gold calendar following December and June.  The February open interest declined by a very tiny margin:5939 contracts (335,228 to 329,289).  You will see a slow decline in this month until the first day notice. The estimated volume on the gold comex yesterday was a monstrous 252,190 as the bankers threw massive un- backed paper trying to quell gold's demand.  Judging from the eventual rise in price of the gold (  as the shorts tried to cover) and the open interest announcement at 1;30,  the raid was a massive failure. The confirmed volume on Thursday was also a massive 208,593.  Wait until you see what happened in silver.....

 

 

The total silver comex open interest rose again for the 3rd consecutive day by 731 contracts to 139,291.  (Thursday's reading was 138560 which is basis Wednesday).  The reading at 1:30 Friday is basis Thursday night. Can you imagine the shock on all the bankers faces when they discovered Thursday night that their relentless supply of un backed paper has no effect on our longs. On a net summation, instead of losing some silver leaves we gained some as many have caught on to the bankers scheme.  The bankers , by their raiding tactics provided silver at lower prices and many were waiting in the wings to take on cheaper silver metal.  The front options delivery month of January saw its OI mysteriously climb from 95 to 153 for a gain of  58 contracts.  In another surprising statistic, the front delivery month of March saw its OI  rise by 267 contracts to 77,747 from 77,480.  The front delivery month boys were not scared off.  The estimated volume Friday was a very large 89009.  The confirmed volume for Thursday turned out to be a healthy 68,429.

 

 

Here is a chart for Jan 7.2011 on deliveries and inventory changes at the comex:

 

Silver

Withdrawals from Dealers Inventory 

769,941 oz

Withdrawals from customer Inventory 

 1,019,310 oz  

Deposits to the dealer Inventory

 zero

Deposits to the customer Inventory

6507 oz

No of oz served  (contracts  85

425,000oz

No of notices to be served.68

340,000 oz

Gold

Withdrawals from Dealers Inventory 

zero oz

Withdrawals from customer Inventory 

 997oz

Deposits to the dealer Inventory

  zero oz

Deposits to the customer Inventory

zero

No of oz served (contracts 5

500  oz

No of oz to be served 23

 2300 oz

Let us start with gold:

Please note again the extreme tranquility in gold as compared to silver. The problem of course is where is the gold coming from  to settle upon all our longs?

We only got a small withdrawal of 997 oz from one customer.  There were a total of 5 notices sent down for a total of 500 oz of gold.  The total number of notices sent down so far in this options delivery month of January totals 327 or 32700 oz of gold.

To obtain what is left to be served, I take the OI of January at 28 notices and subtract out the 5 deliveries which gives us a total of 23 notices or 2300 oz of gold to be served.

Thus the total gold oz from options exercised for January is as follows:

32700 oz (already served)  + 2300 oz (to be served)  =  35,000 oz  (as promised we registered a gain of 1700 oz from Thursday's level of 33,300 oz)

 

And now for the big silver report.

We witnessed a massive withdrawal of silver unprecedented in the history of the comex.  First there was a smallish  6507 oz of silver deposited to two customers, one being  497 oz and the other 6010 oz).  But just look at the huge withdrawals:

Four customers (not dealers) withdrew a total of 1,019,310 oz from the comex vaults.  This is real silver leaving from 4 registered vaults.  The individual withdrawals are:  579,081, 30,380, 399,994 and 9855 oz.

The dealer (our bankers) also were involved in the withdrawal of silver to the tune of 769,941 oz  (there were 2 dealers involved removing 102,866 and 667,875 ozs).  When you see this massive drain of silver, the fire is raging.  The total silver withdrawal

by both dealer and customer totalled an astronomical 1,789,251.  The Brink's trucks must have been very busy yesterday.

The comex folk notified us that an amazing 85 notices were sent down for servicing for a total of 425,000 oz of silver.  The total number of silver notices sent down so far total 323 or  1,615,000 oz.  To obtain what is left to be served, I take the open interest for January at  153 and subtract 85 deliveries leaving a total of 68 notices or  340,000 oz left to be serviced.

Thus the total number of silver ounces standing in this non delivery month of January is as follows:

1,615,000 oz +  340,000  =   1,955,000 oz (Thursday total =  1,625,000).  As promised to you, this number is rising and will continue to rise until the end of the month as our banker cartel scrambles to get any morsel of silver to satisfy the massive demand for this metal.

Our bankers are stunned to see such a huge amount of silver options in a traditionally slow month.

 

I hope everyone caught the Eric Sprott story on Kingworld news that he is having trouble locating silver. I would also like to report that it has now been several months that the Central Fund of Canada has not added to its inventory of silver and gold.

It looks to me like these 2 ETF's have done considerably damage to our banking cartel by removing valuable physical metal from the market and out of the reaches of these greedy fraudsters.

 

Let us see how our ETF's fared yesterday

 

This annoys me greatly.  Again our GLD inventory was removed and probably involved in the raid or to satisfy an investor who wanted physical. We lost  1.52 tonnes of gold.

I wonder what the Bank of England will do when it cannot get its required gold back?

 

 Total Gold in Trust  Friday Jan 7.2011

Tonnes: 1,271.16

Ounces:40,869,183.64

Value US$:
55,863,791,250.72

 

 

 Here is Thursday's total:

Total Gold in Trust   Thursday Jan 6.2011

Tonnes: 1,272.68

Ounces:40,917,984.67

Value US$:
55,992,492,172.62

 

 

 

 

 

 

How about the SLV?  I am getting more annoyed:

The total inventory is silver of 1,700,000 oz were removed from the SLV.

It looks like this inventory was needed to put out fires at the LBMA!!  Some may have been used in the raid:

 last night's figures:

Ounces of Silver in Trust

348,504,166.900

Tonnes of Silver in Trust Tonnes of Silver in Trust

 

 

unces of Silver in Trust

350,214,049.900

Tonnes of Silver in Trust Tonnes of Silver in Trust

10,892.87

 

 

Sprott's silver fund has been updated and the premium lowered a bit to 11.26% positive to NAV

The Sprott gold fund saw its premium to NAV fall to 1.8%

The premium on the central fund of canada lowered to 6.7%

end

 

And now let us go to the COT report and see what is happening on that front.  First gold:

 

 Posted Friday, 7 January 2011 | Digg This ArticleDigg It! | Share this article | Source: GoldSeek.com 

Gold COT Report - Futures

Large Speculators

Commercial

Total

Long

Short

Spreading

Long

Short

Long

Short

250,305

47,987

68,997

193,319

447,901

512,621

564,885

Change from Prior Reporting Period

-7,840

5,630

-4,196

2,879

-2,309

-9,157

-875

Traders

209

69

72

53

51

295

166

 

 

Small Speculators

 

 

 

Long

Short

Open Interest

 

 

79,992

27,728

592,613

 

 

 

7,280

-1,002

-1,877

 

 

 

non reportable positions

Change from the previous reporting period

 

 

Those large speculators that have been long reduced some of those positions by a rather large 7840 contracts.

Those large speculators that have been short increased again those positions by 5630 contracts.

 

In the commercial category:

 

those commercials that have been long gold inreased those positions by 2879 contracts.

and those commercials that have been perennially short gold lessened their shorts by 2309 contracts.

 

In the small spec category:

 

those small specs that were long added massively to their longs to the tune of 7280 contracts and thus these guys were fleeced again due to the many raids this week.

those small specs  that are short reduced their short position by 1002 contracts and thus these guys also got it wrong.

 

 

and now for silver:

 

COT Gold Report - Positions as of

Tuesday, January 04, 2011

 

Silver COT Report - Futures

Large Speculators

Commercial

Total

Long

Short

Spreading

Long

Short

Long

Short

40,483

10,448

34,204

29,598

79,349

104,285

124,001

-1,056

1,028

866

-688

-1,828

-878

66

Traders

78

38

37

32

42

135

96

 

Small Speculators

 

 

 

Long

Short

Open Interest

 

 

32,646

12,930

136,931

 

 

 

-109

-1,053

-987

 

 

 

 

 

 

those large speculators that have been long decreased those positions by a fare bit:  1056 contracts.

those large speculators that have been short silver added to their short positions by 1028 contracts.

 

and now for our famous commercial category:

 

those commercials that have been long silver reduced their longs by 688 contracts.

and JPMorgue and the boys that have been perennially short  reduced those positions by 1828 contracts.

 

the small specs are not in the silver game having been fleeced to oblivion on previous raids.

 

 

 

Ed Steer has given a report on the short positions by the banks and how JPMorgan seems to be covering those shorts.

 

The banking participation report just released seems to put to rest the notion that foreign banks are holding all the shorts.

It is my belief that the short positions are held in the big holding companies of Goldman Sachs and Bank of America  as these are non reporting.

 

The total open interest on silver refuses to decline so you can bet that JPMorgue is the conductor orchestrating where these silver shorts are to hide. You can also assume that they are conducting the hiding of the gold as well.

 

Here is the Steer report together with the banking participation report  for you to read.:

 

First the Steer  COT commentary:

 

The Commitment of Traders Report [for positions held at the close of trading on Tuesday, January 4th] showed slight improvements in the Commercial short positions of both metals.

In silver, the Commercial net short position declined by 1,140 contracts...and is now down to 49,751 contracts...or 248.8 million ounces. Of that amount, the '4 or less' traders are short 205.4 million ounces...and the '8 or less' traders [which includes the '4 or less' traders] are short 278.7 million ounces.

In gold, the Commercial net short position declined by 518,800 troy ounces...and is now down to 26.46 million ounces of gold. Of that amount, the '4 or less' bullion banks are short 20.8 million ounces...and the '8 or less' traders are short 27.0 million ounces.

Although these declines in net short position by these eight bullion banks is all well and good..the real fact of the matter is that there's almost no indication that this past week's big price declines in both gold and silver are anywhere to be found in this COT report. As I suspected, the bullion banks pushed everything into the next COT report, which won't be released until 3:30 p.m. on Friday, January 14th.

 

 

end

 

 

 

And now the Steer commentary on the banking participation report.  The graph is from Ted Butler's commentary and the graph is courtesy of sharelynx.com

 

Here's Ted's "Days of World Production to Cover Short Contracts" for all commodities that trade on the Comex. The graph is courtesy of sharelynx.com.

http://www.caseyresearch.com/gsd/sites/default/files/Day%20of%20Production%20to%20Cover_0.png

Click here to enlarge.

But, without doubt, there have been massive declines in the gold and silver short positions held by all the bullion banks in general...and JPMorgan in particular...during this week's bullion bank-instigated sell-off.

The Bank Participation Report for January [based on the same Tuesday, January 4th cut-off as the COT report] was a wonder to behold. In silver, the two big U.S. bullion banks [JPMorgan and HSBC USA] decreased their net short positions in December by 3,619 contracts...and are now down to 22,340 Comex silver contracts held short between the two of them. That's a decline of 13.9% from the December BPR. I would guess that 95% of that 22,340 contract short position in silver held by these two big U.S. bullion banks is held by JPMorgan.

Since we know from the COT report in silver [a couple of paragraphs above] that the Commercial net short position was 49,751 contracts...then Grade 3 arithmetic shows that JPMorgan holds approximately 42% of the entire Commercial net short position in silver all by themselves...a fact that CFTC Commissioner Bart Chilton has been harping on in public for the last little while.

There are ten non-U.S. bullion banks that hold a total net short position of 3,128 Comex silver contracts as of January 4th cut-off date for the report. That is an improvement of 866 contracts [21.7%] since the December BPR report. Divided up amongst these ten foreign banks, each bank, on average, holds short approximately 313 Comex silver contracts each. These are insignificant amounts.

In gold, the Bank Participation Report shows that 4 U.S. banks are net short 91,988 Comex contracts...which is down 11,170 contracts from the December BPR report. That's a drop of 10.8% in one month. These 4 U.S. bullion banks are short 34.7% of the Commercial net short position in gold.

The 18 Non-U.S. banks that hold futures positions in gold are net short 37,721 Comex contracts. This number represents a 17.5% decline from what they reported holding in the December BPR. And that amount only represents 14.3% of the Commercial net short position...and spread amongst 18 banks...each only holds a fraction of one percent.

What the January Bank Participation is showing is that the bullion banks, whether they be domestic or foreign, are getting out of Dodge. This is especially true of JPMorgan. Ted Butler was hugely encouraged by this report...and we both agreed that if we could get a snapshot of the COT as of the end of yesterday's trading, we would see another huge decline in the short positions of all the bullion banks...especially JPM.

This should lay to rest some of my reader's concerns about foreign banks taking over the short positions of JPMorgan. There was a lot written about this on the Internet in early December when the December Bank Participation Report came out...and it's blatantly obvious from the January BPR report that these fears had no basis in fact whatsoever.

 

 

 

end.

 

 

 

 

Now let us see the  big stories of yesterday:

 

The big story of course is the jobs number.

 

Here is the official release of the Bureau of Labour Statistics: (courtesy Reuters)

 

 

US payrolls rise 103,000 in Dec, jobless rate falls

WASHINGTON, Jan 7 (Reuters) - The U.S. economy created far fewer jobs that expected in December, suggesting the Federal Reserve will complete its asset buying program, but the unemployment rate dropped to its lowest in more than 1-1/2 years.

Non-farm payrolls increased 103,000, the Labor Department said on Friday, below economists' expectations for 175,000.

Private hiring rose 113,000, while government employment fell 10,000.

However, overall employment for October and November was revised to show 70,000 more job gains than previously reported.

The unemployment rate fell to 9.4 percent, the lowest since May 2009, from 9.8 percent in November.

Economists raised their employment forecasts after payrolls processing company ADP Employer Services said on Wednesday private employers added 297,000 in December -- the largest gain on ADP records dating to 2000.

"The labor market improvement is still way slower than what everybody would hope for," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Federal Reserve officials will weigh the jobs report when they meet on Jan. 25-26. Signs of strength in the economic recovery had led to calls for the U.S. central bank to scale back its widely criticized $600 billion government bond-purchasing program aimed at keeping interest rates low to boost demand.

Some policymakers indicated in December they had a "fairly high" threshold for curtailing the stimulus program.

 

 

end.

 

Here is John Williams on the data released by the BLS  (courtesy Jim Sinclair commentary)

 

Jim Sinclair’s Commentary

Your must have subscription in the climate of confused reporting is John Williams’ www.shadowstats.com

- December Jobs Increase Was Statistically Indistinguishable from Decline 
- December Unemployment: 9.4% (U.3), 16.7% (U.6), 22.4% (SGS) 
- Seasonal Factor Issues "Improved" Both Payroll and Unemployment Reporting 
- Watch Out for Next Month’s Revisions

www.shadowstats.com

 

 

Gallup released this commentary showing the job scene actually faltering and not gaining: (from the Jim Sinclair commentary)

 

Gallup Finds Unemployment at 9.6% in December 
Underemployment rose to 19.0% in December from 17.2% at the end of November 
by Dennis Jacobe, Chief Economist 
January 6, 2011

PRINCETON, NJ — Unemployment, as measured by Gallup without seasonal adjustment, increased to 9.6% at the end of December — up from 9.3% in mid-December and 8.8% at the end of November.

clip_image001

Meanwhile, the percentage of part-time workers who want full-time work increased to 9.4% of the workforce in December — up from 9.2% in mid-December and 8.4% at the end of November.

clip_image002

Underemployment at 19.0% in December

The increase in Gallup’s U.S. unemployment rate and the worsening in the percentage of part-time workers wanting full-time work combined to raise underemployment to 19.0% in December from 18.5% in mid-December and 17.2% at the end of November.

clip_image003

Implications

The U.S. unemployment picture may seem unusually confusing these days. Gallup monitoring showed a sharp improvement in the jobs situation in November, particularly as companies added holiday workers. However, the government surprised Gallup and most other economic observers as it reported last month that the U.S. unemployment rate increased to 9.8% in November. It appears that the government made a larger seasonal adjustment than was generally anticipated for the month.

More…

 

 

end.

 

 

 

Jim Sinclair commented on the jobs number and it is important for all of you to read and understand what he is saying.  He is perfectly correct:

 

 

Dear Extended Family,

1. It is debt first, not business that is responsible for currency values and the malaise we are in economically.

2. There will be NO robust recovery for a long time to come.

3. Markets are algorithms versus algorithms as there is no longer what used to be called retail demand or supply.

4. This results in painted charts more akin to patients in a mental ward.

5. All this employment improvement hype is just that and seasonally adjusted.

Please review the following:

Regards, 
Jim

Click chart to enlarge

January0711UnderUt

Here’s The Most Bizarre Number From Today’s Dismal Jobs Report 
Joe Weisenthal | Jan. 7, 2011, 8:39 AM

So despite the weak headline jobs-created number, the unemployment rate fell pretty markedly to 9.4%.

The easy answer there is that, well, unemployment is a function, also, of the size of the labor force, and it could reflect people dropping out of the work force.

And yet, that’s not obviously what’s going on.

The weirdest thing is that U-6 — so-called "real" unemployment — fell pretty sharply to 16.7% from 17.0%. So that’s not the issues.

Anyway, stocks are down, but really not by that much. Perhaps the market smells a rat.

More…

 

end.'

 

 

In other news, the following is a huge story as the courts are rejecting the banks notion that they do not need the original documentation in order to repossess foreclosures.  I guess they were wrong:

 

Banks Lose Pivotal Massachusetts Foreclosure Case 
By Thom Weidlich – Jan 7, 2011 9:44 AM MT

US Bancorp and Wells Fargo & Co. lost a foreclosure case in Massachusetts’s highest court that will guide lower courts in that state and may influence others in the clash between bank practices and state real estate law. The ruling drove down bank stocks.

The state Supreme Judicial Court today upheld a judge’s decision saying two foreclosures were invalid because the banks didn’t prove they owned the mortgages, which he said were improperly transferred into two mortgage-backed trusts.

“We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph D. Gants wrote.

Wells Fargo, the fourth-largest U.S. lender by assets, dropped $1.10, or 3.4 percent, to $31.05 at 11:41 a.m. in New York Stock Exchange composite trading. US Bancorp declined 28 cents, or 1.1 percent, to $26.01.

The 24-company KBW Bank Index fell as much as 2.2 percent after the decision was handed down.

More…

 

 

Jim Sinclair comments on this case:

 

 

Jim Sinclair’s Commentary

As I told you yesterday, this is big. Unless a law is passed to make legal what is clearly illegal, the banks are once again is deep trouble.

This means our kids and grandkids will have to carry this burden. That means a bailout (Fanny and Freddie bailing out BOA) or direct like TARP.

Parties may be different or have cute new names, but the bosses never change.

Banks Lose Pivotal Massachusetts Foreclosure Case 

 

 

end.

 

We had another city in California go bust on Thursday:  (courtesy Ed Steer): the article is from the Business Insider and the author is Gus Lubin.

 

 

ANOTHER CITY GOES: Chowchilla, Calif. Defaults On Bond

Gus Lubin | Jan. 7, 2011, 2:00 PM | 2,880 | comment 12

·         A A A

·          

·          

·          

·         inShare1

chowchilla

Central California's Women's Facility in Chowchilla

Image: wikimedia commons

Chowchilla, Calif. has failed to make its January payment on a bond issued to make expensive renovations to its city hall.

We warned you on Tuesday that city was on the brink and could foreshadow similar cases across the country.

Now Chowchilla has crossed the line.

The 11,000-person town got into this situation through a massive collapse in home prices and bad fiscal management, not least of which was an $8 million city hall project. Earlier this year the city posted a technical default by depleting its bond reserve fund to make a payment.

And the outlook isn't good. The next step could be moving city operations into the local police department to save on overhead costs or just disincorporating the city.

Check out 16 cities facing bankruptcy if they don't make deep cuts >

Tags: California, State Governments, Municipal Debt | Get Alerts for these topics »

Short URL


Read more: http://www.businessinsider.com/chowchilla-default-2011-1#ixzz1ASUgiJR9.

 

 

end.

 

 

Obama did not like to see this.  The private ECRI research group has lowered its leading indicators basically saying the economy is faltering:

 

US econ growth gauge falls to 2-week low - ECRI

NEW YORK, Jan 7 (Reuters) - A measure of future U.S. economic growth fell to a 2-week low in the latest week, while the annualized growth rate rose to a 32-week high, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 128.9 in the week ended Dec. 31 from 129.0 the previous week.

That was the lowest since Dec. 17, when it was 128.0.

The index's annualized growth rate rose to 3.3 percent from 2.3 percent a week earlier. That was the highest since May 21, when it stood at 4.9 percent.

"Occasionally the WLI level and growth rate can move in different directions, because the latter is derived from a four-week moving average," ECRI said in a statement.

-END-

 

 

Because of the many faulty data issued by the government with respect to the labour and unemployment, many are using the labour participation rate which is made up of a percentage of all available labour in the usa between the ages of 16 and 64.

 

The general average over the years has seen a level of 68%.  The mean average is around 66%.  It has now dropped to 64%. As Tyler Durden of zero hedge comments:  where are the missing unemployed:

 

Labor Force Participation Rate Drops To Fresh 25 Year Low, Adjusted Unemployment Rate At 11.7%

Submitted by Tyler Durden on 01/07/2011 08:54 -0500

While today's unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66%, means that the civilian labor force, which in December came at 153,690, a drop of 260,000 from November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%.

http://www.lemetropolecafe.com/img2011/Midas/Midas0107A.png

-END-

 

 

 

From the daily Telegraph, we see that the ECB had to step in on continual fears concerning a bond collapse in Portugal.  The author is Andrew Trotman of the UK Telegraph.

 

ECB forced to step in to calm market fears over Portugal

The European Central Bank (ECB) was forced to step in as market fears grew over Portugal's ability to solve its debt crisis.

A Portugal fan with a painted face looks on before game against Spain in their Euro 2004 Group A soccer match at the Jose Alvalade Stadium in Lisbon. ECB forced to step in to calm market fears over Portugal

Portugal's announcement that it will issue its first bonds of the year next Wednesday is seen as a key moment for Lisbon Photo: Reuters

 11:12PM GMT 07 Jan 2011

51 Comments

The eurozone country's cost of borrowing rose to post-euro record highs, while some banking shares hit 17-year lows amid concerns Lisbon will have to follow Greece and Ireland into applying for a bail-out.

With Portuguese debt maturing in April and June, the bond markets, which fell for a third day in succession, have grown nervous.

José Sócrates, Portugal’s prime minister, played down concerns over the steep rise in bond yields, stating that the government would achieve its 2010 budget deficit target without needing help from the EU.

The government has promised to cut its deficit to 7.3pc of GDP in 2010, down from 9.3pc in 2009. Portugal’s announcement this week that it will issue its first bonds of the year next Wednesday is seen as a key moment for Lisbon.

The government has also issued 1bn euros of 2.5-year notes through a private placement in a bid to narrow its budget gap.

 

Portugal sold zero-coupon debt due July 2012 in a transaction led by Deutsche Bank.

The country sold 500m euros of six-month bills on January 5, according to its debt agency.

Portuguese 10-year bond yields closed at 7.14pc on Friday. Lisbon officials have said 10-year yields above 7pc are not sustainable. Traders said the ECB was buying Portuguese bonds to prevent a steeper sell-off.

Meanwhile, the pound hit its strongest level in more than three months against the euro as speculation that the UK economy will be more resilient than the euro region outweighed a weaker-than-forecast US employment report.

Portugal sold zero-coupon debt due July 2012 in a transaction led by Deutsche Bank.

The country sold 500m euros of six-month bills on January 5, according to its debt agency.

Portuguese 10-year bond yields closed at 7.14pc on Friday. Lisbon officials have said 10-year yields above 7pc are not sustainable. Traders said the ECB was buying Portuguese bonds to prevent a steeper sell-off.

Meanwhile, the pound hit its strongest level in more than three months against the euro as speculation that the UK economy will be more resilient than the euro region outweighed a weaker-than-forecast US employment report.

 

 

end.

 

 

 

It seems that China is now willing to back the Euro as it sheds its USA dollars  (from Bloomberg)

 

China Will Back Europe, Euro With Currency Reserves, Official Yi Pledges

By Bloomberg News - Jan 7, 2011 4:20 AM ET Fri Jan 07 09:20:57 GMT 2011

People's Bank of China Deputy Governor Yi Gang

People's Bank of China Deputy Governor Yi Gang. Photographer: Qilai Shen/Bloomberg

Europe and the euro will remain among the most important areas of investment for China’s world-record $2.65 trillion of foreign-exchange reserves, a central bank official said in the nation’s latest show of support.

"The euro and the European financial markets are an important part of the global financial system and were, are and will be one of the most important investment areas for China’s foreign-exchange reserves," Deputy Governor Yi Gang said in a statement on the central bank’s website.

China’s statements of support have included Vice Premier Li Keqiang this week expressing confidence inSpain’s financial markets and pledging more purchases of that nation’s debt. In backing European economies, China may help to prop up demand in the region that is its biggest market for exports and also the value of its euro-denominated assets.

"In the short term, the market will take this as supportive to the euro," said Mark Williams, a London-based economist at Capital Economics Ltd. "The problems of the euro zone are structurally deep-rooted and not something that China will be able to solve."

The euro was today headed for a weekly loss versus 15 of its 16 major counterparts amid concern that European governments will struggle to raise funds as the region’s fiscal crisis lingers. The euro depreciated for a fifth day to $1.2983 as of 7:55 a.m. in London, after earlier falling to $1.2968, the weakest since Sept. 15.

‘Safeguard’ Stability

Yi is head of China’s State Administration of Foreign Exchange, which oversees the currency reserves, and was commenting on the vice premier’s visit to Europe.

"Based on the principle of diversification, investing foreign-exchange reserves into euro zone government debt will not only help safeguard Europe’s financial stability as well as the global market, but will also yield reasonable investment returns, thus help ensure overall security and increase of returns on China’s foreign-exchange reserves," Yi said.

Li’s opinion pieces in European newspapers this week also expressed China’s support.

"China supports the EU as it helps countries overcome their debt crises and contributes to broad economic recovery and stable growth by means of financial stability measures," he wrote in German newspaperSueddeutsche Zeitung.

Borrowing costs for Portugal surged at a six-month bill sale this week, the first of Europe’s high-deficit nations to test investor demand in 2011 after the threat of default forced Greece and Ireland to seek bailouts last year. Spain and Italy together need to raise 317 billion euros this year, according to BNP Paribas SA.

-END-

 

 

I think that about exhausts the major stories out there today.

I will see you Monday.

 

Have a great weekend

Harvey

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