Reuters – World stocks pushed up to 9-month highs on Friday, cutting demand for government bonds as euro zone manufacturing and services reports beat expectations, fuelling optimism about economic recovery.

The euro hit a session high against the dollar and European shares reversed earlier losses to climb for a 10th session running after a better-than-expected German sentiment survey and improved data on the euro zone services and manufacturing sectors.

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Tags: economic recovery, euro zone, european shares, government bonds, losses, manufacturing sectors, optimism, reuters, sentiment, world stocks

West Palm Beach (HedgeCo.net) – Morningstar reported a summary of hedge fund performance for January 2009 as well as asset flows for 2008. As stocks and government bonds got clobbered in January, hedge funds held up relatively well, the report said.

The Morningstar 1000 Hedge Fund Index declined only 1.2% and the currency-hedged Morningstar with MSCI Hedge Fund Composite Asset-Weighted Index rose 1.2%, against the MSCI World Index’s 8.9% drop and the BarCap Global Aggregate Index’s 3.3% decline.

"Some liquidity returned to the credit markets in January, helping certain hedge fund strategies, but even hedge funds trading equities persevered through January’s tough markets," said Morningstar Hedge Fund Analyst Nadia Papagiannis. "Overall, hedge funds held their own in January."

The rise in the U.S. dollar created profits for some price-trend-following and global-macro non-trend funds in January, but volatility across equity, government bond, and commodity markets throughout the month led to trading losses. The Morningstar Global Non-Trend Hedge Fund Index rose 0.1% while the Morningstar Global Trend Hedge Fund Index declined 1.6%.

Investors continued to pull out of hedge funds, withdrawing $26 billion in December and $70 billion for the year. Europe- and U.S.-equity hedge funds saw the largest redemptions, losing $14.8 and $18.3 billion respectively in 2008.

Alex Akesson

Editor for HedgeCo.Net
Email: alex@hedgeco.net

Tags: accredited-investors, commodity-markets, credit markets, equity hedge, global macro, global trend, government bond, government bonds, hedge fund performance, hedge fund strategies, hedge-fund-index, hedgeco, morningstar, msci-world-index, price trend, redemptions, trading-losses, weighted index

Chicago Tribune – Government attempts to revive the economy could decide what happens to trading volumes at CME Group Inc.

A $1 trillion federal deficit could flood the market with enough government bonds to stabilize volumes, while a Federal Reserve policy to spur borrowing by keeping interest rates near zero could slice further into volumes at the Chicago-based exchange operator.

U.S. Treasury bonds and other interest rate futures represent about 40 percent of the 7.63 million contracts traded daily this month at the CME Group’s Chicago Mercantile Exchange and Chicago Board of Trade.

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Tags: chicago board of trade, chicago mercantile exchange, chicago tribune, contracts, economy, exchange operator, federal deficit, federal reserve policy, federal-reserve, government bonds, interest rate futures, interest rates, trillion, u s treasury bonds, u-s-treasury