Friday, June 12, 2009

Quick Notes for the Day - June 12

Consumer Sentiment Rises - U.S. consumer sentiment rose in June, but remained at relatively low levels, according to a survey by the University of Michigan and Reuters. The consumer sentiment index rose to 69 in mid-June from 68.7 in May. The index hit a 28-year low of 55.3 in November, and has averaged 88.2 over the last 10 years. Recent readings have been boosted by consumers' expectations that the end of the recession is approaching.

BlackRock Buys BGI from Barclays' - Reduced Worries About Barclays' Capital - BlackRock late Thursday agreed to buy Barclays' BGI unit (Barclays Global Investors) in a $13.5 billion cash-and-shares deal. The deal will make BlackRock the world's largest asset manager, and Barclays will receive $6.6 billion in cash and 37.8 million shares of BlackRock.

The deal trumps an earlier agreement for Barclays to sell just the iShares exchange-traded-funds business of BGI to private equity group CVC Capital and will give the U.K. bank a 19.9% stake in the enlarged business, to be called BlackRock Global Investors.

Analysts generally agreed the deal is positive for Barclays because it helps relieve worries over the group's capital position, although it will reduce earnings at least in the short-term. From BlackRock's point of view, the deal is likely to generate significant cost savings, though analysts added the sheer scale of its funds under management could hurt its ability to capital on some investments.

Treasurys Up After Consumer Sentiment - Treasury prices remained higher Friday, pushing yields down, after a report on consumer sentiment showed Americans' outlook improved. Yields on 10-year notes declined 6 basis points to 3.80%. Treasurys were higher in earlier trading amid signals that overseas investors are still comfortable buying Treasurys.

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