UK
RICS House Price Balance (Aug) 10.7% vs. Exp. 0.0%, (Prev. -8.1%, Rev. to -5.7%) (BBG/RTRS)
House prices in England and Wales rose for the first time in more than two years, adding to a raft of data suggesting conditions are levelling off as the economy regains its footing.
Last night it emerged, via a timely leak to the BBC, that Mr. Brown has bowed to the pressure form Darling and Lord Mandelson, business secretary and will accept the need for cuts when he addresses the Trades Union Congress conference. (FT)
Living wills ‘to be forced on banks' (FT)
Alistair Darling in planning legislation this autumn to force British banks to draw up "living wills" so that they can be dismantled more easily in any future financial crisis. The bill will also give the Financial Services Authority statutory responsibility for financial stability.
Bank of England official Andrew Haldane said the crisis has shown that big banks are less stable than smaller ones and called for a revamp of lenders' business models to make the financial system more resilient. (BBG)
Although the following news came out during yesterday's session, it is getting coverage this morning across the major U.K. papers:
Moody's fears fresh woes for U.K. banks (FT)
The troubles of U.K. banks are far from over, Moody's warned yesterday, as the rating agency forecast further losses of GBP 130bln in the next few years as bad debts rise and pressure builds on profitability.
ASIA
JGB futures fell on Tuesday, after a decline in U.S. Treasuries the previous day prompted investors to take profits. JGBs were trading at 139.06 (-0.20) at 0607 BST. (RTRS)
GLOBAL
Obama says enforcing current trade agreements such as on China tires not meant to be provocative or protective. Also, US trade official says that US confident its curbs on China tire imports "fully consistent" with WTO rules. Finally, White House says tire trade dispute not expected to cause US, China friction on other issues such as North Korea. (RTRS)
US
Treasuries were under selling pressure amid heightened tensions between the US and China, after the latter accused Washington of "rampant protectionism" for imposing heavy duties on Chinese tyres. The trend lower carried on for much of the session despite efforts by Obama to ease tensions through a major speech to mark one year since the collapse of Lehman Brothers. The closing stages saw USTs make another move lower and at the pit close T-notes finished down 14 ticks at 117.175. At 0637 BST UST's were trading 117.15+ down 2 ticks as JGB's fell over 20 ticks and the Nikkei advanced 0.3%.
Fed's Yellen says foreclosures show "no sign of turning around". (RTRS/BBG)
Fed's Yellen says US economy to "remain vulnerable to shocks" and sees "slim" odds for strong return in consumer spending. Says paying interest on reserves will be important part of tightening monetary policy, also fears that Fed will monetize government debt are growing and disruptive. In addition said the Fed needs to keep its foot on the policy acceleration for now and to tighten policy before U.S. jobless rate falls back to 5%.
Fed's Lacker says exit strategy hinges on how recovery evolves. (BBG/RTRS)
Fed's Lacker says sees "substantially" less risk of big bank failures. Says state of economy influences view on MBS and out of an abundance of caution it seems to make sense to taper end of MBS buying. Says Fed must decide if it wants to complete asset purchases, says not yet made up his mind.
Obama says he wants financial regulatory reform this year and sees his proposals passing and becoming law. (RTRS)
Obama says firms must meet stronger capital requirements and say that there is no return to days of reckless behaviour.
