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Daily Agenda: Yields Rise in U.S. Treasury Markets

PBOC suspends renminbi-denominated transactions for a group of foreign banks; biotech company with ties to Shkreli collapses.

It’s looking like bond investors are going to have a rough go of it in 2016. Yesterday the spread between the benchmark Bank of America Merrill Lynch long-dated Treasury index and broad-based developed-markets equivalents rose to a multiyear high. On the other end of the credit spectrum, volatility in the high-yield segment of the corporate bond market remains volatile, with the SPDR Barclays High Yield Bond ETF up nearly 0.7 percent in trading yesterday but still showing monthly performance of –3.97 percent.

PBOC suspends forex privileges. Reuters reported today that the People’s Bank of China has suspended the ability of several foreign banks to engage in renminbi-denominated transactions as part of a crackdown on unauthorized capital outflows. The report, based on anonymous sources, indicates that the suspension will last until March for the affected institutions.

Shkreli-owned company files for bankruptcy. KaloBios Pharmaceuticals Inc., filed for Chapter 11 bankruptcy protection yesterday. The announcement comes a day after Nasdaq’s announcement that it was delisting the San Francisco–based biotechnology company’s shares. KaloBios had named Martin Shkreli as CEO after a group led by the controversial investor had bought some 70 percent of KaloBios’s shares. Shkreli was arrested December 17 on securities fraud charges.

Chinese fraud watchdog detains executive. The Central Commission for Discipline Inspection, the organization which oversees corruption investigations on behalf of the Communist Party of China, today announced that it has detained Chang Xiaobing, chair and chief executive of China Telecom Corp., as part of an ongoing unspecified probe. The move is the latest in a series of high-profile cases as Beijing continues its massive antigraft campaign.

Apple settles with Italy. Multiple media sources report that Apple Inc. has reached an agreement with tax authorities in Italy under terms which will require the tech giant to pay more than $300 million to settle claims of unpaid corporate taxes. The Italian investigation is one of many ongoing probes into the taxation of earnings by major multinational corporations inside the European Union.

Seneca Capital to close. Hedge fund firm Seneca Capital Investments became the latest casualty in asset management for 2015 when the firm notified investors this week that it will be returning all outside investor money under management. In a letter to investors fund founder Doug Hirsch cited personal exhaustion as well as challenging market conditions.

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