- On the bank aid plan, which now is entitled 'Capital Assistance Program', US government officials will implement the stress tests starting from 25 Feb 09.
- In response to speculation on nationalization of Citi and BOA in the Wall Street Journal yesterday, government officials rejected that saying previous TARP injections into the banks will only be converted into common equity only as needed to keep banks well capitalized.
- CNBC reported yesterday that AIG is expected to post USD60bn in write downs on assets including commercial real estate - and that AIG will meet government officials this Sunday to request for aid, causing a sharp sell off in the stock markets.
** I think massive commercial real estate defaults is really going to be the next shoe to drop. The US government will have to pay close attention to this and support the CMBS market so as to ensure all their previous efforts to save the financial sector will be successful **
- The Dow and S&P500 both closed more than 3.4% lower on Mon 23 Feb, now trading at Oct '07 levels.
- USDJPY touched a high of 94.95 yesterday as Japanese non bank lender SCFG filed for bankruptcy as investors fled to safe haven USD.
- EURUSD's recovery to 1.29 in London trade was shortlived as ECB Barroso, in response to media speculation, says that there's 'no chance' of joint bond issues by richer nations to aid financially weaker states. Austria's AAA rating being scrutinized also compounded the EUR and the pair closed lower in the 1.26 handle.
- Meanwhile, GBPUSD was traded higher into the 1.44 handle on announcements that nationalized Northern Rock will resume mortgage lending in '09.
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