1. TREASURIES-Prices gain after recent losses; downturn intact


    * Europe remains in focus, better U.S. data shrugged off* Bearish trend in Treasuries still seenBy Gertrude Chavez-DreyfussNEW YORK, Oct 13 (Reuters) - U.S. Treasury debt prices advanced on Thursday, with 30-year bonds snapping a six-session losing streak as a rally in stocks lost momentum after soft earnings from JPMorgan Chase & Co and concerns about Europe’s plan to recapitalize its banks.Retail buying also helped, traders said, with real money accounts spotted in the five- to seven-year sector.An auction of $13 billion in U.S. 30-year bonds attracted strong interest, with a record low yield of 3.120 percent compared with market forecasts of 3.157 percent. That propelled 30-year bond prices even higher and pushed yields to session lows.The bid-to-cover ratio, which gauges demand by comparing total bids with the amount offered, was 2.94, above the 12-month average.Many had expected robust demand at the auction anyway given how much 30-year bonds have cheapened in recent sessions. And for some, the Federal Reserve’s buying of long bonds suggested that these securities offered good value.Overall, most analysts have pinned Thursday’s gains in the Treasury market on the slide in stocks and any caution that has resurfaced could be short-lived.”What we’re seeing is a classic bond market response to modest equity market weakness,” said Jonathan Lewis, chief investment officer, at Samson Capital Advisors in New York, with assets under management of $7.7 billion.”This is a stocks down, bonds up trade, with no material economic catalyst other than we had several days of stocks run-up and bonds sell-off,” he added.Headlines in Europe, however, continued to attract attention, with the latest news suggesting euro zone banks would be given about six months to strengthen their capital under what could be hefty recapitalization schemes.On balance, though, most investors still believe the European crisis is under control and measures are being taken to avert another credit crunch.While the bounce in Treasuries could carry on, the general trend for most is still lower, with yields seen tracking higher.”The general sense and feeling is that there is hopefully positive news out of Europe. So it’s still a bearish stance out there on Treasuries,” said Suvrat Prakash, interest rate strategist at BNP Paribas in New York.”Going into last week, every few days there would be some sort of negative news and it was just one after the other. And now just the absence of that has allowed our nerves to calm down a bit.”Volume in the Treasury market was $178.486 billion after 12 p.m. Eastern time (1600 GMT), about 15 percent higher than the 20-day moving average for that time of $155.535 billion, ICAP said.The Treasury market, meanwhile, shrugged off a weekly jobless claims report that many saw as a faintly positive sign for the economy, which would normally spur selling in Treasuries.New U.S. claims for unemployment benefits edged downward last week, according to a government report on Thursday that pointed to a modest improvement in the labor market at the start of the fourth quarter.In late afternoon trading, the benchmark 10-year Treasury note was up 11/32 in price, last yielding 2.18 percent, down 4 basis points from Wednesday.The 30-year bond rose 1-3/32 in price, yielding 3.14 percent, down five basis points from 3.19 percent at Wednesday’s close.Market attention has now shifted to nearby resistance at 3.20 percent, analysts said, corresponding to a series of lows in price that formed between Sept. 6-16.RBC Capital Market’s chief technical strategist George Davis said a daily close above 3.20 percent would confirm the market’s bearish view on U.S. debt, exposing the 38.2 percent Fibonacci retracement of the July-October decline in yields at 3.35.

  2. Slough: UK town where BlackBerry problems started


    * Staff silent as company seeks to limit damageBy Peter GriffithsSLOUGH, England, Oct 13 (Reuters) - The closest most people can get to where millions of BlackBerrys stopped working is a grey office block, over the road from a discount golf superstore and a mobile hamburger van, in the town of Slough, an hour’s drive from London.Inside the three-storey building, engineers have been racing against the clock to fix an outage that left customers on five continents without email or instant messaging for days. This is the European headquarters of Research in Motion, the Canadian company that makes the smartphones.Stephen Bates, head of its British arm, made an appearance in the office car park to update the media on Thursday, speaking over the roar of buses, trucks and cars passing by on the main road to Heathrow Airport.He paused as a passing truck driver wound down his window and shouted “BlackBerrys are rubbish.” An aide stepped in to say: “We’ve had a lot of that this week.”“Thousands of people are working around the clock,” Bates told Reuters.But with blinds down to keep out the early autumn sun and visitors barred from the reception area, little could be seen of their efforts in the company’s headquarters.Tight-lipped staff used a side entrance away from waiting television crews. Security guards patrolled the neatly clipped beech hedges. The few BlackBerry staff who ventured out for lunch declined to speak to the media.Requests to visit the computer data centre at the core of the crisis were firmly rebuffed. A RIM spokesman said the servers were not housed in the headquarters building and visitors could not see the site where the problems began.”We won’t let people into the building. We have to protect the privacy of all employees,” the spokesman said, refusing for security reasons to even identify which of the large warehouses in the area houses their computers.OFFICE JOKESBlackBerry’s European hub is flanked by two pharmaceutical companies in near-identical buildings. It sits on a trading estate known to many Britons as the setting for the BBC comedy “The Office”.The series, starring Ricky Gervais as a hapless manager in a paper-making company, mocked the tedium of corporate life in a town known for its many roundabouts and concrete car parks.In one of thousands of Twitter messages poking fun at RIM, British technology entrepreneur Alan Sugar said: “If the BB server fault is in Slough they need Ricky Gervais to sort it.”Slough is the butt of many jokes among Britons. For example, comedian Jimmy Carr said of his hometown: “I grew up in Slough in the 1970s. If you want to know what Slough was like in the 1970s, go there now.”Yet the town houses many multinationals’ European headquarters. Taiwanese smartphone maker HTC opened a European HQ in June. According to tech news website The Register, personal computer maker Dell also just decided to invest in a new data centre in the town.Nonetheless, Twitter users lamenting the interruption of their BlackBerry services swapped updated versions of a 1937 verse by English poet John Betjeman in which he denounced Slough’s industrialisation with the line “Come, friendly bombs, and fall on Slough! It isn’t fit for humans now.”One of the 21st century versions said: “Come friendly bombs, and fall on Slough, I can’t get Blackberry Messenger now.”

  3. MONEY MARKETS-Longer-term funding markets tentatively reopen


    * But banks continue to hoard cash in new maintenance periodBy Kirsten DonovanLONDON, Oct 13 (Reuters) - Steps by the European Central Bank last week to improve banks’ access to funding are showing signs of fruition with the covered bond market reopening but much more is needed to restore confidence in the sector.The ECB said last week it would buy up to 40 billion euros of covered bonds, adding to the 60 billion euros it bought through 2009-2010 after fears over exposure to sovereign debt left many banks unable to access funding — from money markets to longer-term bond markets.Although the smaller amount targeted by the ECB disappointed some, it has led to a batch of issuance ahead of the start of the programme in November, from issuers such as DnB Nor and Credit Suisse.”The European primary market in financials is seeing a progressive reopening, with new deals well received,” Societe Generale strategists said in a note.”The door is now open for the smaller and more peripheral issuers.”Senior bond issuance is proving slower to pick up although Standard Chartered and Svenska Handelsbanken are set to price five- and 10-year trades later on Thursday following on from deals from Rabobank and SEB .That will make this the busiest week in Europe for senior bank debt since June. Indeed, there was a three-month period without a single deal over the summer as spreads gapped wider.”It’s all about confidence, and restoring it to investors so they are prepared to buy senior debt from banks, and indeed from sovereigns,” said Gary Jenkins, head of fixed income at Evolution Securities.And there is a long way to go, with for example, around 130 billion euros just of Spanish bank debt falling due next year, according to Thomson Reuters figures.German Chancellor Angela Merkel and President Nicolas Sarkozy have promised a plan by month-end to tackle the euro zone debt crisis, saying it would cover bank recapitalisation, closer euro zone integration and steps to tackle Greece’s debt mountain.The prospect of a comprehensive plan has improved risk sentiment in markets, even though previous similar promises have ultimately disappointed.The Markit iTraxx senior financials index based on credit default swap prices has narrowed around 50 basis points in the last two weeks to 236 basis points, while the equivalent subordinated index has narrowed over 70 basis points to 468 basis points.But Evolution’s Jenkins says a bank recap may not be the panacea the market needs.”Recapping the banks is close to being a red herring,” he said.”If they could fix the sovereign crisis, they’d go a long way to fixing the banks, imagine if people were lending to the sovereigns, then banks wouldn’t be having a problem getting finance.”At the start of a new ECB maintenance period banks continued to hoard cash and front-load their reserve requirements, putting over 125 billion euros more in their reserve accounts than the average needed, the most since May 2010 when Greece first needed a bailout.The excess liquidity in the banking system was also evident as institutions also left over 100 billion euros in the central banks deposit account.