Week of December 11, 2011 thru December 17, 2011

ECB Bini Smaghi: China FX Pol Global Impact Graver Over Time

ROME (MNI) - China's foreign exchange policy is likely to have an ever more serious impact on the global economy, European Central Bank Executive Board member Lorenzo Bini Smaghi said Friday.

Speaking at a conference here, Bini Smaghi said that China, which he identified by name in delivering his speech, had essentially anchored its monetary policy to that of the United States.

"The distinctions between large and small economies, and floating and managed currencies, are particularly revealing at the present time, when we are seeing a large anomaly," he said, according to his speech text.

Bank of Mexico: Future Policy Moves Could Be In Any Direction

--Minutes of Dec 2 Meeting Reveals More Concern on Potential Infl Risks

MEXICO CITY (MNI) - Bank of Mexico board members are concerned enough about the potential risk for a resurgence of inflation to say future monetary policy moves could go in any direction, despite previous statements indicating they were prepared to ease, according to the minutes of the Dec. 2 policy meeting released Friday.

The minutes said members agreed to keep monetary policy in neutral, even though the statement released after the meeting earlier this month repeated language saying the central bank would be ready to ease if the global economy continued to deteriorate.

The minutes said "all the board members considered the current monetary policy posture adequate.

US Swaps: 2Y Lead Tightening, Spds Still Out 3-4 Bps For Wk

CHICAGO, Dec 16 (MNI) - Spreads drifted in a narrow range Friday, steady to marginally tighter with the front end leading the move as rates markets traded higher, curves initially steeper.

US's Reid: Senate To Vote On Final FY' 12 Omnibus Spend Package

--Senate Majority Leader Reid: Senate Vote In Next 24-36 Hours
--Talks Continue On Payroll Tax Cut Plan
--Sen. Durbin: 'Moving Forward' On FY'12 Spending Bill
--House To Vote On FY'12 Omnibus Early Friday Afternoon

WASHINGTON (MNI) - Senate Majority Leader Harry Reid confirmed Friday that an agreement has been reached on a massive $900 billion omnibus spending bill for the 2012 fiscal year and added that work continues on a package to extend the payroll tax cut and unemployment insurance benefits.

In brief remarks on the Senate floor, Reid said the Senate will take up the omnibus spending bill soon and predicted a vote within the "next 24 or 36 hours."

The current stop-gap bill funding the government expires Friday at midnight.

EFSF's Regling: We Will Go To Bond Market Again In January

ROME (MNI) - The European Financial Stability Facility will return to the bond market again, in particular in January, Chief Executive Officer Klaus Regling said Friday.

Speaking at a conference in the Italian capital, Regling observed that funding for the U.S. program in response to the financial crisis, TARP was also not completely clear when the program was announced.

Money for TARP "had to be raised as time went by," he said. "As we will do here." Regling said he had "no doubt" that the necessary funds would be found.

"We will be able to go to the bond market again," he pointed out. Indeed, "we will do that in January," when the program for Ireland will require that the EFSF do so.

US$ CREDIT SUPPLY PIPELINE - December 16, 2011

Investment-grade $250M+ Deals Announced/Launched(#)/Priced(*)/Pass(X)

Date $MM Issuer/CR/Descr Mat Yield Lead(s) 12/15 1250 *JPM (Aa3/A) 30 T+250 JPM 12/15 6000 *Freddie Mac Reference Note 3 T+34 BNP/DB/UBS US/N.Am 66%, Asia 11%, Other 23% Invest Mgrs 55%, CBs 32% 12/14 500 *BAX (A3/A) 5 T+100 BAML/C/JPM 12/14 850 *GE Capital Corp (Aa2/AA+) 1.5 3mL+60 BAML FRN 12/13 500 *PPL Energy (Baa2/BBB) 10 T+262.5 DB/RBS/SCO/WFS


EFSF Regling: Substantial Resources To Fight Debt Crisis

ROME (MNI) - Klaus Regling, chief executive of the European Financial Stability Facility, said Friday that the EFSF had substantial firepower to counter the debt crisis.

Speaking at a conference here, Regling said that with Greece, Portugal and Ireland already in bailout programs, the EFSF still had unused resources of E400 billion. In addition, he said, "there's the IMF that made the political commitment to come up with one third" of the amount of any program.

Thus, he said, if the EFSF were to commit its remaining E400 billion, "I would expect that the IMF would also come with E200 billion."

Moreover, he noted, "we have been working on leveraging these resources ... we don't know how much leverage will be possible, but there will be some.

Hopes for ECB-Driven Demand Push Eurozone Yields Lower

PARIS (MNI) - The European Central Bank has not yet launched its first ultra-long, three-year financing operation, but the move has already given a downward push to Eurozone bond yields.

Rates tumbled Friday in Italy, Spain, Portugal and other peripheral markets, partly in response Spain's auction on Thursday, in which the government was able to sell nearly twice the amount of debt it expected at levels well below where secondary market bonds were trading.

That the newly auctioned Spanish debt will be eligible to be used as collateral in next week's three-year LTRO was not lost on analysts.

Statcan:Foreign Investment in Canadian Securities Slows In Oct

OTTAWA (MNI) Foreigners added C$2.028 billion worth of Canadian securities to their portfolios in October, marking the fourth consecutive investment, Statistics Canada reported Friday.

However, the pace has slowed, compared to an average acquisition of C$9.2 billion over the past three months. On the other hand, foreign securities were acquired at a slightly higher pace than the three months prior, with residents adding C$2.224 billion worth in October.

October's increase brings total acquisitions of Canadian securities to C$70.812 billion, a 28.5% decline from the same period last year.

Non-residents purchased C$1.218 billion in Canadian bonds in October, led by investment in federal bonds.

Statcan: Employment Insurance Edges Lower in October

OTTAWA (MNI) The number of Canadians receiving regular Employment Insurance benefits (EI) declined by 5,400 (-1.0%) to 541,200 in October, Statistics Canada reported on Friday. This is despite the fact that Service Canada received a higher volume of claims during the month.

The number of initial and renewal claims increased by 9,600 (4.2%) to 240,700 in October, with the largest increases seen in Ontario (7.7%), Quebec (4.8%), Alberta (4.7%) and British Columbia (4.4%). Alternatively, Nova Scotia, Prince Edward Island as well as Newfoundland and Labrador all saw a decrease in the number of claims received by approximately 1%.