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US Short term interest rates turned negative Thursday as banks stockpiled government securities in order to polish their balance sheets for the end of the year. The growing appetite for short-term government debt reflects an effort by banks to present pristine year-end balance sheets to regulators and investors, a practice known as “window dressing” on Wall Street. With the US Federal Reserve maintaining an overnight target rate of zero to 0.25%, investors are demonstrating a willingness to completely forgo interest income, or even to take a small loss, to own securities that are seen as safe. This action has been exacerbated by the fact that all leading US banks, many sitting on big trading profits, will this year close their books at the same time, at the end of December. In past years, investment banks such as Goldman Sachs and Morgan Stanley reported annual results in November. Late Thursday, US T-bills maturing in January traded below zero %, traders said. Three month T-bills traded at 1 bp and six-month T-bills fell to a record low of 13 bp, compared with 14bp at the height of the crisis last year. Read more

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Simon Property, a US shopping mall owner and property investment trust, has hired advisers to explore a possible bid for rival General Growth Properties which is operating under Chapter 11 bankruptcy protection, people familiar with the matter said Wednesday. If Simon decides to bid for GGP’s entire mall portfolio, the transaction value could be up to US$30B, according to one person familiar with the potential deal. As Simon considers its options, its interest might trigger other potential bids, a savvy sector observer told Live Trading News. Reports suggesting Simon was interested led to higher prices for General Growth debt. General Growth shares, which trade over the counter, also gained. Commercial Real Estate has not so far respond to the Federal Reserve’s low interest rate policy. A bid for General Growth would fuel hopes that the market is setting up for a sector recovery on Simon’s strategic investment. Analysts sense that Simon would be interested in General Growth’s more high-quality malls. Read more

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Air France is set to lift up its 1st A380 Friday from Roissy airport on the Paris/New York route, becoming the first European airway company to put the SuperJumbo Jet into service. The inaugural flight is expected to begin from Paris at 11:45 local time and arrive at New York at 13:20 local time, with 538 passengers on board. Among the passengers are those who bid for seats through eBay, and others who are guests invited by Air France plus executives of the company. Air France’s 1st A380 will fly back from New York this Saturday, a symbolic gesture to reopen the Paris-New York course since its Concorde flight quit the routte in 2003. Air France has ordered 12 of the giant jets from Airbus, each with a capacity of 538 passengers, 9 1st Class, 80 Business Class and 449 Economy Class. The double-decked Airbus A380 made its maiden flight on April 27, 2005 from Toulouse, France, and made its first commercial flight on Oct. 25, 2007 from Singapore to Sydney with Singapore Airlines. Read more

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Gold futures on the New York Merc’s COMEX hit a fresh record high above US$1,150 Wednesday as the USD weakened. Silver finished a plus a bit, but platinum finished off a bit. The most active Gold contract for December delivery rose US$1.80 to finish at US$1,141.20 oz. Earlier in the session, the precious metal soared above US$1,150 for the 1st time and touched US$1,153.40 on the high. The USD declined Wednesday as a US Fed official said that interest rates may not rise until 2012 from the record low level near zero. The Dollar index, a gauge measuring the Greenback’s value against other major currencies, lost more than 0.3% to 75.205 when Gold pit trading closed, but the USD’s recovery in late session forced the yellow metal South. December Silver was up 2.8 cents to US$18.415 oz. and January Platinum lost US$10.50 to end the trading session at US$1,452 oz. Read more

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US Treasury Secretary Timothy Geithner said Tuesday in Washington D.C. that the current international financial system must be reformed to address 21st Century challenges. “After the experiences of the Great Depression and World War II, the United States led in the creation of the international financial system that anchored prosperity and stability for more than 60 years,” Geithner said in testimony prepared for the Senate Foreign Relations Committee. “Today, that system must be reformed to address 21st Century challenges,” he said. “The United States again faces an opportunity to help shape a system that ensures better economic potential for future generations in America and around the world.” He said that the current financial crisis clearly demonstrated the central role that the IMF plays in the global system as a crisis responder. “Looking ahead, the IMF will have a critical role in supporting balanced growth and financial stability,” said the Treasury chief.” What we ask of the IMF, and frankly what is needed, is candid, transparent, and independent surveillance to support this process.” Read more

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US carmaker General Motors Co. will soon announce that it will begin repaying its US$6.7B in government loans ahead of schedule, official sources said Monday. The repayment is a sign that the Detroit automaker’s finances are improving since its exit from bankruptcy protection on July 10. But GM officials admitted the company also will continue to face significant challenges, especially in North America and Europe, where it continues losing money. GM’s board of directors and the US Treasury approved the repayment plan that will begin with a US$1B payment on Dec. 31, a knowledgeable source said of the plan. GM will make payments of about US$1B every Q, at least until the 2nd half of 2010, the earliest that it plans an initial public stock offering. GM also will make US$200M of quarterly payments to the Canadian national and Ontario provincial governments against its 1.4-billion CA$ debt. The schedule means that at a minimum, GM will have repaid about half of its debt before it goes public. Read more

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