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Money markets us rate futures fall after fomc minutes


´╗┐* US rate futures fall as Fed backs off from more stimulus* Repo rates rise on worries about sterilized Fed program* Three-month dollar Libor edges up but Euribor dips* Strong bids for 1-mo T-bills, cool demand for 1-yr billsBy Richard LeongNEW YORK, April 3 Short-term U.S. interest-rate futures fell on Tuesday after the minutes from the Federal Reserve's last policy meeting suggested policymakers are not ready to embark on more bond purchases to tweak rates lower in a bid to stimulate the economy. While the high unemployment rate and Europe's debt troubles could hamper U.S. growth, fewer members of the Federal Open Market Committee seem keen to engage in a third large bout of quantitative easing, also known as QE3."I believe there might be no QE3 immediately. They are more on the fence now about keeping rates exceptionally low through at least late 2014. This is not what the market is looking for," said Robbert Van Batenburg, head of global research at Louis Capital Markets in New York. Indeed, the perceived hawkish tone of the minutes of the FOMC's March 13th meeting fueled speculation whether policymakers might begin to discuss raising the Fed's policy rate target when the U.S. economy gains more traction. The Fed has held its target for the federal funds rate in a range of zero to 0.25 percent since December 2008.

Nearby Eurodollar and federal funds futures turned negative in reaction to the FOMC minutes, while deferred contracts added to earlier losses. The December 2014 Eurodollar contract was down 8.5 basis points - on track for its biggest one-day drop in two weeks - at 98.605. Still, rate futures implied traders are not fully pricing in a Fed rate increase to happen until early 2014.

DOLLAR CASH RATES RISE Before the release of the FOMC minutes, the overnight interest rates on fed funds and repurchase agreements hovered at their highest levels since last summer on worries that the FOMC minutes show discussions on "sterilized" bond programs as an option to hold down long-term borrowing costs, analysts said. Moreover, they reckoned the loans to fund the purchases of the U.S. Treasury Department's combined $99 billion in coupon bond supply have not been fully unwound. The Wall Street Journal reported, citing people familiar with the matter, on March 7 that should the Fed decide to buy more bonds to boost growth, it could borrow back the money it used to buy those bonds for short periods of time at low interest rates. Doing so would take that money out of circulation, or "sterilize" it, exerting upward pressure on short-term interest rates. In repo trading, what banks and bond dealers charge each other for overnight loans secured by Treasuries was last quoted at 0.23 percent mid-market, down from 0.26 percent on Monday, but up from about 0.05 percent at the end of 2011.

In the fed funds market, whose rates the Fed monitors closely, the cost for banks to borrow excess reserves from each other overnight was last bid at 0.25 percent, up from 0.09 percent late on Monday. In the unsecured dollar sector, the benchmark London interbank offered rate for three-month dollars edged up to 0.46915 percent from Monday's fixing of 0.46815 percent. But for the dollar Euribor, which made its debut on Monday , the three-month rate in that index series increased to 0.95643 percent from 0.95714 percent. At Tuesday's Treasury bill auctions, data showed strong demand for the latest one-month supply, but reduced appetite for this month's one-year offering. The bid-to-cover ratio at the $30 billion sale of one-month bills came in at 4.75, which was the highest since the auction held on Jan. 24. The Treasury sold the latest one-month bills at an interest rate of 0.055 percent, the lowest level since the ones sold on Jan. 31. On the other hand, the bid-to-cover at the $26 billion auction of one-year bills was 4.31, the lowest since August 2011. The drop-off in appetite for one-year bills resulted in a rise in the clearing rate on them. They were sold at 0.185 percent, up from 0.170 percent at the March auction and the highest since July 2011.

Press digest australian business news march 13


´╗┐Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)The failure of Richard Chandler Corporation to invest A$150 million into timber firm Gunns has been placed at the foot of the company's largest shareholders, who reportedly declined to sell off a major portion of the group cheaply. Greg L'Estrange, chief executive of Gunns, said he was "disappointed" about Richard Chandler's decision to no longer invest in Gunns, admitting that shareholders were "being significantly diluted in this process so it was not a slam dunk". Page 17.-- Governance experts yesterday said David Gonski, chairman of Investec Australia, Coca-Cola Amatil and the Australian Securities Exchange (ASX), should resign from some of his board roles if he is elected as the next chairman of the Federal Government's A$73 billion Future Fund. Mr Gonski is one of the most prominent businessman in the country, but observers believe he will quit his role at the ASX should he be appointed to the sovereign wealth fund. Page 17.-- Ken MacKenzie, chief executive of flexible grocery and food packaging maker Amcor, yesterday said grocery and food retailers and manufacturers should be allowed to pass on higher costs driven by the carbon tax to consumers. "If we're not passing the impact of the carbon tax through to our customers and if the customers aren't passing it onto the retailers and the retailers aren't passing it onto consumers, then how does the consumer even get a price signal from higher-emitting carbon industries?" Mr MacKenzie asked. Page 19.-- The chief executive of paper manufacturer PaperlinX , Toby Marchant, yesterday said the company's decision to sell its Italian business Polyedra for A$55.9 million was not designed to boost the image of the board ahead of a shareholder vote later this month on chairman Harry Boon's position. "This deal is not connected to the [upcoming meeting] at all  it is a substantial sale in its own right, it does reduce debt and give us the bulk of the funds required for the restructuring," Mr Marchant said. Page 19.-- THE AUSTRALIAN (this site)Mining magnate Gina Rinehart this week will attempt to head off rumours that her Hancock Prospecting's A$7 billion Roy Hill iron ore project has been delayed in the aftermath of an acrimonious family lawsuit. The company is tipped to announce that Korean steel manufacturer Posco has injected A$1.5 billion into the venture, a deal that will see its ownership of the mine increase to 15 percent from 3.75 percent. Page 21.

-- South Korean telecommunications giant SK Telecoms is set to acquire up to 40 percent of local miner Cockatoo Coal in a deal that will also provide Cockatoo with a new debt facility. "This will ensure that Cockatoo is well-positioned to secure capacity for rail and port infrastructure for its Surat Basin assets and will provide capital to support the expansion of Baralaba and Cockatoo's broader portfolio of exploration and development assets," the miner said. Page 21.-- Reserve Bank of Australia subsidiaries Note Printing Australia and Securency International will not be investigated by the Australian Securities and Investments Commission (ASIC) for allegations of bribery, the corporate regulator confirmed yesterday. "ASIC has reviewed this material from the [Australian Federal Police] for possible directors' duty breaches of the Corporations Act and has decided not to proceed to a formal investigation," the regulator said in a statement. Page 21.-- Shares in grain handler GrainCorp reached their highest point since the global financial crisis yesterday after it was revealed that United States agricultural conglomerate Cargill was interested in acquiring Canadian peer Viterra . Tim Mitchell, analyst at diversified financial firm Citigroup, said "the attraction of GrainCorp as a takeover candidate should be enhanced by the bid for Viterra". Page 21.--

THE SYDNEY MORNING HERALD (this site)The release of international e-mails from travel agency Flight Centre has revealed that the business was urging major airlines to reduce the amount of bargain airfares available on their websites. The Australian Competition and Consumer Commission is claiming in the Federal Court of Brisbane that Flight Centre attempted to collude with Emirates, Malaysia Airlines and Singapore Airlines between 2005 and 2009 to illegally set airfares. Page B1.-- The executive chairman and co-founder of snowboard, skate and surf wear retailer Quiksilver, Robert McKnight, yesterday told analysts in the United States that the company's Australian and New Zealand divisions were still battling tough conditions. "Australia's economic recession created a highly promotional selling environment  In addition, a cooler-than-normal beginning to the summer season there has only compounded matters," Mr McKnight said. Page B1.-- An employee of Hanlong Mining, the Australian division of Chinese conglomerate Sichuan Hanlong, is demanding the company issue an apology and explanation to him after he was wrongly embroiled in an investigation by the corporate regulator into alleged insider trading at the firm. Fan Zhang is an accountant at Hanlong Mining and was responsible for opening a Commonwealth Bank of Australia trading account which went on to generate almost A$1.3 million in profit. "I may be the most miserable manager in mining investment  you ever met," Mr Zhang said. Page B2.

-- Internal briefing documents from Federal Treasury have revealed that officials at the department believed it was "highly uncertain" that Europe would remain a combined currency union and that the region's heads of state were "consistently behind the curve" in responding to the debt crisis. "Policymakers have been slow to respond to developments; with efforts to contain the crisis consistently falling short of expectations," the memo says. Page B3.-- THE AGE (this site)Federal independent senator Nick Xenophon is formulating a bill that would provide fund members more details about their superannuation, including more information about the remuneration of fund managers. "The transparency framework for super funds hasn't caught up with their exponential growth or their critical importance to the savings of millions of Australians," the Senator said. Page B3.-- The Australian Prudential Regulation Authority yesterday said there needed to be greater ties between risk management and the remuneration of executive pay at some of the country's largest banks. "Our concern is to make sure that the remuneration practices adopted by regulated financial institutions are sound and do not embed 'risk time bombs' in the balance sheet which could undermine future viability," David Lewis, general manager of the banking regulator, said. Page B3.-- The National Rugby League, Australian Football League and Telstra will resume their court battle against Optus today in a bid to overturn a decision by Justice Steven Rares to allow the latter to sell TV Now, a product that allows users to record and playback free-to-air television on laptops, tablet devices and smartphones. The football codes say TV Now's 90-second delay violates their exclusive online broadcast rights agreement with Telstra. Page B4.-- The S&P/ASX 200 Index fell 15.3 points to close at 4196.7 points yesterday after investors remained wary about China's largest trade deficit since 1989 and the prospect that the Asian economy could begin cutting interest rates. "People don't know which way to look at it  in the longer term it does raise concerns about China's overall growth rate," David Liu, head of research at boutique equities manager ATI Asset Management, said. Page B8.