December 21st, 2010 14:27:40 GMT

Crisis? What crisis?

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Eurogroup of finance ministers head Juncker says that the euro is not endangered nor in crisis.

It is incredibly important to strengthen the preventative part of the stability pact, he says on German TV.

Automatic sanctions are needed for budget breakers, he says.

Talk that the euro’s existence is threatened is “unscientific blabber”.

His proposal for euro bonds should be analytically assessed; it has its virtues, he said scientifically…

EUR/USD is at 1.3160, chopping around in thin markets.

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December 21st, 2010 14:15:44 GMT

ECB To Continue 7-Day Dollar Liquidity Ops Till Aug 1, 2011

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FRANKFURT (MNI) – The European Central Bank said Tuesday it has
decided, in coordination with the central banks of Canada, England,
Japan and Switzerland, to extend the liquidity swap arrangements with
the Federal Reserve up to 1 August 2011 and to continue to conduct US
dollar liquidity-providing operations with a maturity of seven days.

“These Eurosystem operations will continue to take the form of
repurchase operations against eligible collateral and will be carried
out as fixed-rate tenders with full allotment,” the ECB said.

The next dollar liquidity-providing operation will be carried out
this Wednesday, with settlement on Thursday, as a 14-day operation to
cover the year-end, the ECB said.

[TOPICS: M$$EC$,M$X$$$,MFX$$$,MGX$$$,M$$CR$]

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December 21st, 2010 14:15:44 GMT

US DATA: MBA Commercial Real Estate/Multifamily Q3…

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US DATA: MBA Commercial Real Estate/Multifamily Finance Q3 data
saysa “that the real estate cycle is beginning to once again exert
itself in commercial and multifamily property markets. During the third
quarter, the economy began to show (modest) growth and absorption picked
up in the face of little new space coming on line. The result has been
marginal declines in vacancy rates and a firming of asking rents.
Property sales and originations volumes picked up, but volumes were not
high enough to keep up with the mortgage debt that investors saw paying
off and paying down.”

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December 21st, 2010 14:15:43 GMT

Fed Text: Frequently Asked Questions Re Liquidity Swaps

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WASHINGTON (MNI) – The following is the text of the frequently
asked questions published by the Federal Reserve along with its
announcement of an extension of liquidity swaps with European and Asian
central banks through August:

U.S. Dollar Liquidity Swaps

Supplementary FAQs

Why has the Federal Reserve re-established temporary U.S. dollar
liquidity swap facilities with foreign central banks?

The swap facilities announced in May 2010 respond to the
re-emergence of strains in short term funding markets in Europe. They
are designed to improve liquidity conditions in global money markets and
to minimize the risk that strains abroad could spread to U.S. markets,
by providing foreign central banks with the capacity to deliver U.S.
dollar funding to institutions in their jurisdictions.

With which central banks has the Federal Reserve entered into swap
facilities?

The Federal Reserve has established swap arrangements with the Bank
of Canada (BOC), the Bank of England (BOE), the European Central Bank
(ECB), the Swiss National Bank (SNB), and the Bank of Japan (BOJ).

How will the swap facilities function?

The swap lines with the ECB, BOE, SNB and BOJ will provide these
central banks with the capacity to conduct tenders of U.S. dollars in
their local markets at fixed local rates for full allotment, similar to
arrangements that had been in place previously. The swap line with the
Bank of Canada allows for drawings of up to $30 billion. The terms,
structure, and operational mechanics of these swap agreements closely
parallel the arrangements that expired on February 1, 2010. For
reference please see the attached link.

http://www.federalreserve.gov/monetarypolicy/bst_swapfaqs.htm

For how long are the swap facilities expected to be operational?

These swap arrangements have been authorized through August 1,
2011. Central banks may request drawings on their swap lines up to the
date of expiration.

Is the Federal Reserve exposed to foreign exchange or private bank
risk in extending these lines?

No. Dollars provided through the reciprocal currency swaps are
provided by the Federal Reserve to foreign central banks, not to the
institutions obtaining the funding in these operations. The foreign
central bank receiving dollars determines the terms on which it will
lend dollars onward to institutions in its jurisdiction, including how
the foreign central bank will allocate dollar funds to financial
institutions, which institutions are eligible to borrow, and what types
of collateral they may borrow against. The terms governing these loans
of dollars are in all cases released to the public by the foreign
central banks. As the Federal Reserve’s contractual relationship is
exclusively with the foreign central bank and not with the institutions
obtaining dollar funding in these operations, the Federal Reserve does
not assume the credit risk associated with lending to financial
institutions based in these foreign jurisdictions. The provision of
dollars and receipt of foreign currency, and the receipt of dollars and
return of foreign currency at the swaps maturity date, both occur at
the same foreign exchange rate so that the Federal Reserve is not
exposed to movements in foreign exchange rates.

As of December 21, 2010

Will activity under the liquidity swap arrangements be disclosed to
the public?

Yes, swap activity will be published weekly. The Federal Reserve
has also released the underlying legal agreements with foreign central
banks.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$X$$$,MI$$$$]

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December 21st, 2010 14:05:42 GMT

ECB: Secured Lending May Continue To Exceed Pre-Crisis Level

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FRANKFURT (MNI) – New financial market regulation requiring higher
capital levels means that the shift from unsecured towards secured money
market lending may be a permanent phenomenon, the European Central Bank
said in its Euro money market study released Tuesday.

In 2010, borrowing on the unsecured market fell by 22%, the report
said. “The results of the survey show that the decline in turnover in
the unsecured market was mirrored by an increase in secured market
turnover,” the ECB said.

A “major factor” explaining this shift is the unlimited liquidity
offered by the ECB in its open market operations, resulting in abundant
surplus of liquidity as well as more risk aversion, the report said.

However, the changed capital and liquidity rules suggest that a
post-crisis demand for secured lending will continue to exceed
pre-crisis levels even after the crisis-spurred extra liquidity support
expires, the ECB suggested.

“The emphasis placed by regulators and banks on capital
preservation after the crisis also means that unsecured lending, which
is more capital-absorbing than other activities, tends to be avoided by
banks in favour of other kinds of lending (e.g. secured lending) with
lower risk. This is particularly true for unsecured lending with longer
maturities,” the central bank said.

Liquidity regulations may also have had an impact on turnover in
the unsecured market, the report said.

“Some banks, for example, reported that liquidity regulations which
require them to hold large liquidity buffers help explain the decline in
the amount of unsecured lending for overnight maturities. The reason is
that a large part of their liquidity buffers is made up of cash they
deposit overnight with central banks which they no longer lend out to
the market, the report said.

Prior to today’s report, some ECB policy-makers had already
indicated that there may be a permanent shift towards more secured
lending. “New rules are likely to impact on the markets for liquidity
and on the demand for central bank refinancing,” Executive Board member
Lorenzo Bini Smaghi said in a speech on Basel III and monetary policy.

Today’s report, which is largely backward looking, warned that “to
the extent that financial market conditions indicate that extraordinary
liquidity measures may no longer be needed to safeguard a smooth
implementation and transmission of monetary policy, and no significant
market segmentation exists,” maintaining unlimited liquidity supply
would “distort overall functioning of money markets.”

You can find the full report on the ECB’s website:

http://www.ecb.int/home/html/index.en.html

–Frankfurt bureau; +49-69-720142, jtreeck@marketnews.com

[TOPICS: M$$EC$,M$$CR$,M$X$$$,MI$$$$,MMBBE$,MGX$$$]

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December 21st, 2010 14:05:40 GMT

Fed Text: Extends Liquidity Swaps W/BoC/BoE,ECB,BoJ,SNB

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WASHINGTON (MNI) – The following announcement was issued Tuesday
morning by the Federal Reserve and the other central banks involved in
the liquidity swaps extensions:

The Federal Open Market Committee has authorized an extension
through August 1, 2011, of its temporary U.S. dollar liquidity swap
arrangements with the Bank of Canada, the Bank of England, the European
Central Bank, the Bank of Japan, and the Swiss National Bank. The swap
arrangements, established in May 2010, had been authorized through
January 2011.

Information on the actions that will be taken by other central
banks is available at the following websites:

Bank of Canada: http://www.bank-banque-canada.ca/en/index.html
Bank of England: http://www.bankofengland.co.uk/index.htm
European Central Bank: http://www.ecb.int/home/html/index.en.html
Bank of Japan: http://www.boj.or.jp/en/
Swiss National Bank: http://www.snb.ch/

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$X$$$,MI$$$$]

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December 21st, 2010 14:05:39 GMT

US Redbook: Dec Store Sales +0.1% vs Nov Through Dec 18 Wk

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WASHINGTON (MNI) – The following is the text of the weekly retail
sales report released by Johnson Redbook Tuesday, for the month-to-date
through the week-ended December 18:

The Johnson Redbook Retail Sales Index was up 3.8% in the third
week of December following a 2.5% gain the prior week. Month-to-date,
December is up 3.3% compared to December of last year (relative to a
targeted 3.2% gain). Month-over-month showed a 0.1% gain compared to
November (relative to a flat target). December is a five-week month on
the retail calendar ending on January 1st of 2011.

Cold weather nationwide stimulated sales of winter apparel and
other cold weather items. The primary focus during the week was also
holiday seasonal business, dominated by gift and holiday categories,
including toys, electronics and jewelry. By the end of the week,
retailers were gearing up for the expected pre-Christmas rush, which
includes an extra day this year. For some, a strong weekend was a
favorable omen. However, most are withholding judgment until the final
two swing weeks are over. Most retailers are extending store hours to
help shoppers beat the last minute rush before Christmas.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MAUDS$]

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December 21st, 2010 14:05:38 GMT

US DATA: Redbook sales for Dec 18 wk: “Cold weather..

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US DATA: Redbook sales for Dec 18 wk: “Cold weather nationwide
stimulated sales of winter apparel and other cold weather items. The
primary focus during the week was also holiday seasonal business,
dominated by gift and holiday categories, including toys, electronics
and jewelry. By the end of the week, retailers were gearing up for the
expected pre-Christmas rush, which includes an extra day this year.”
-
Year-over-year: Week (w/e 12/18/10 vs year-ago) 3.8%
Year-over-year: Month (December 2010 vs December 2009) 3.3%
Month-over-month: (December 2010 vs November 2010) 0.1%

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