US markets closed up nicely after spending the morning and early afternoon in the red (SPY +0.5%). WTI crude prices rebounded to 47.40 before settling in the high 46 handle. The US dollar was volatile today and it slipped off its session highs (95.66) to a low 95 support. Indicators are neutral to bullish, but one can expect a repeat tomorrow.
ALGIERS (Reuters) - OPEC agreed on Wednesday to cut its oil output for the first time since 2008, with the group's leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.
NEW YORK (Reuters) - Oil prices settled up nearly 6 percent on Wednesday after OPEC sources said the group has struck a deal to limit crude output at its policy meeting in November, its first agreement to cut production since the market crashed two years ago on oversupply.
WASHINGTON (Reuters) - Federal Reserve Chair Janet Yellen was thrust into the election-year boxing ring during a congressional committee hearing on Wednesday, defending the central bank's regulatory role, taking and landing punches on Wells Fargo and other banks considered too big to fail, and addressing accusations of political conflicts of interest.
(Reuters) - Embattled Wells Fargo & Co plans to eliminate sales goals for its retail banking business sooner than planned, according to prepared remarks its chief executive officer will deliver at a congressional hearing on Thursday.
(Reuters) - Apple Inc and Deloitte LLP announced a partnership on Wednesday in which the consultant will open a new practice to help corporate clients work with Apple products, the tech firm's latest attempt to boost enterprise sales as its key product, the iPhone, shows signs of maturation.
NEW YORK (Reuters) - Och-Ziff Capital Management Group LLC will pay $400 million and a subsidiary will plead guilty to resolve U.S. probes into its involvement in bribes paid to African officials, two people familiar with the matter said on Wednesday.In a deal expected to be announced on Thursday, the largest publicly traded U.S. hedge fund firm will enter a deferred-prosecution agreement with the U.S. Department of Justice while a subsidiary will plead guilty, the sources said.
CHICAGO (Reuters) - International Monetary Fund Managing Director Christine Lagarde said on Wednesday the institution would lower its 2016 U.S. growth forecast again and called policies that restrict trade "economic malpractice" that would choke off growth.
BERLIN (Reuters) - The U.S. government has approved $7 billion in sales of Boeing Co fighter jets to Kuwait and Qatar, and has begun an informal notification process with U.S. lawmakers, two sources familiar with the decision said on Wednesday.
In what may be an indication of a major collateral shortage, but most likely is simply a case of quarter-end "window dressing", the overnight general collateral rate soared to 0.82% this morning, its highest print in nearly seven years, and roughly where it would trade if the Fed had hiked in September. GC soared to 0.85% yesterday afternoon yesterday after opening at around 0.68%.
As SMRA points out, the GC rate often spikes as quarter end approaches. The early morning fed funds rate is at 0.40% this morning, unchanged from 0.40% yesterday. Both the effective fed funds rate and overnight bank funding rate were in line with the fed funds rate at 0.40% on Monday, unchanged from the prior couple weeks.
It wasn't just general collateral surging. As the Fed announced eariler today, in today's fixed-rate reverse repo, 59 counterparties parked $272.3bn in cash in exchange for with the Fed in what by Sept 30 - or quarter end - will likely be the highest reverse repo use of the year by the final day of Q3 as the cumulative totals typically peak on the last day of the month and, in this case, quarter.
This is how Wedbush's Scott Skyrm explains the surge in both GC and RRP:
With Deutsche Bank crashing and burning for the second time in 2016, with its stock taking out all time lows and CDS spiking to record levels not seen even during the financial crisis, the ECB - which earlier denied its policies are at fault for the German lender's woes - has realized that in addition to bond buyers (if not so much sellers), it needs to beef up its staffing in one critical area: banking supervision.
In a very ironic job posting announced on the ECB's twitter feed, the ECB announced a job alert according to which it is now (or, perhaps at long last) hiring a banking supervision analyst.
While the ECB did not explicitly name Deutsche Bank in the posting, it detailed what the central bank is looking for in a qualfied candidate, one which the ECB probably should have hired years ago, as follows:
Banking Supervision Analyst
Functional area: Micro-Prudential Supervision III
Function: The European Central Bank (ECB) is seeking professionals with experience in the prudential supervision of credit institutions, in supervisory policies, standards and principles, and/or in financial policy development with a supervisory authority, commercial bank or related consulting services, to fill the position of Supervision Analyst within its Directorate General Microprudential Supervision III (DG/MS III), in the Analysis and Methodological Support Division.
The main tasks of the Analysis and Methodological Support Division include: establishing and updating methodologies for risk assessment systems and supervisory review processes f ...
As was leaked earlier today by Reuters, which reported that OPEC could announce an output-freeze deal on Wednesday in Algeria, although full details are unlikely to be firmed up before a formal meeting of the Organization of the Petroleum Exporting Countries in November, moments ago Reuters blasted that a production cut - the organization's first in 8 years - is precisely what OPEC has agreed on (citing a source so don't be surprised if everything is denied in a few minutes) at its Algiers meeting, when it announced that a deal to limit oil production has been reached, however the execution won't take place for another two months.
OPEC REACHES DEAL TO LIMIT OIL PRODUCTION, EXECUTION IN NOV - OPEC SOURCE
AFTER REACHING TARGET, OPEC WILL GO TO NON-OPEC FOR OUTPUT SUPPORT - ONE OPEC SOURCE
We also learned what the output cap would be: 32.5 mmbpd, or about 1.2mmbpd below the August production record of 33.7 million:
OPEC AGREES TO LIMIT OIL PRODUCTION TO 32.5 MLN BPD - TWO OPEC SOURCES
Amusingly, the "cap" would put OPEC production at about the highest it has ever been.
That said, as the WSJ carefully phrased it, "OPEC Has Reached and Understanding on Output Cut" adding that:
OPEC on Wednesday reached an understanding that a crude-oil-production cut is needed to lift petroleum prices, people familiar with the matter said, but the cart ...
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