World Bank Stocks Trade Lower As The Fed Announces It Will Extend Operation Twist Through Year’s End … German Foreign Minister Sets Out Plans For European Political Union

Financial Market Report for June 20, 2012

Martin Crutsinger of AP reports The US central bank will continue a program called Operation Twist through year’s end. Under the program, the Fed has been selling $400 billion in short-term Treasurys since September and buying longer-term Treasurys. The Federal Reserve said it will extend the program through December using $267 billion in securities.

The National Bank of Greece, NBG, and Brazil’s ITUB, and BBD, led World Banks, IXG, lower today.

Stocks trading lower included XLU, -1.8%, with SO, -2.1%, DVY, -.5%, REM, -.4%, REZ, -2%, PSP, -.1%.

Commodities, DBC, traded lower. The ratio of US Stocks, VTI, relative to US Commodities, USCI, DBC:USCI, rose higher near an all time high,.

The 30 Year US Government Bond, EDV, fell lower towards support at 125.

The US Dollar, $USD, UUP, traded unchanged at support of $81.25.

In today’s news

Open Europe reports German Foreign Minister sets out plans for European political union. A group of ten EU Foreign Ministers, chaired by Germany’s Guido Westerwelle, have put forward proposals to use the eurozone crisis as a stepping stone towards establishing a ‘political union’ by transferring more power to the EU, including the creation of a European monetary fund, a European army and a European finance minister. The proposals were strongly criticised by Frank Schäffler, an MP with Westerwelle’s liberal FDP party, who argued that the plan was incompatible with liberal principles and that Europe “doesn’t need a centralised and planned economy.” FT Bloomberg Handelsblatt Welt

WSJ reports Farm Bill Holds Windfall for Foreign Insurers. Several foreign insurers stand to collect millions of dollars in new U.S. taxpayer-funded subsidies as part of a proposed shift in farm policy. A Senate bill would expand the federal crop-insurance program while eliminating direct subsidy payments to farmers. Such an expansion would benefit numerous U.S. insurance companies—as well as several based in Australia, Bermuda and Switzerland that in recent years acquired five of the nine largest U.S. crop-insurance companies. (Hat Tip to Gary of Between The Hedges)

Dollar Collapse reports

Abandon ship – Peak Prosperity
Gerald Celente: this thing (financial system) is coming down – ETF Daily News
Banking industry must reinvent itself — Whitney – Bloomberg
Fed gave $4 trillion in loans to its own institutions – Daily Bell
Banks’ borrowing at ECBS rises as Spanish stress grows – Reuters
Crisis barely begun, says GLG hedge fund manager – Reuters