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US ETF Weekly Update-Morgan Stanley
October 18, 2010--Weekly Flows: $6.1 Billion Net Inflows
ETFs Traded $325 Billion Last Week
Launches: 1 New ETF
iSharesSemiconductor ETF Undergoes Changes
First Trust Ownership Transitioning
US-Listed ETFs: Estimated Flows by Market Segment
For the seventh week in a row, ETFs generated net inflows —$6.1 blnlast week
Weekly net inflows driven by US Large-Cap & Emerging Market Equities ($4.2 blnfor the week combined)
ETF assets stand at $928 bln; up 19% YTD
13-week flows were mostly positive among asset classes
$44.3 bln net inflows into ETFs over 13 weeks (41% into EM Equities)
We estimate ETFs have posted net inflows 29 out of 41 weeks YTD
US-Listed ETFs: Estimated Largest Flows by Individual ETF
SPY posted net inflows of $1.8 blnlast week, the most of any ETF
Despite SPY’snet inflows last week, we estimate YTD the fund has posted net outflows of $5.7 bln
Over 13-wk period, EM Equity ETF (VWO) has taken in most new money ($7.3bln)
US-Listed ETFs: ETF Dollar Volume
Market share of mthly ETF volume as % of listed volume has more than doubled over 5 yrs
US Large-Cap accounts for 43% weekly ETF volume, but only has 21% of market cap
Fixed Income accounts for only 3% weekly ETF volume, but has 15% of market cap
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Source: ETF Research-Morgan Stanley
Treasury International Capital data for August 2010.
October 18, 2010-- The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for August 2010. The next release, which will report on data for September 2010, is scheduled for November 16, 2010.
Net foreign purchases of long-term securities were $128.7 billion.
Net foreign purchases of long-term U.S. securities were $136.6 billion. Of this, net purchases by private foreign investors were $113.1 billion, and net purchases by foreign official institutions were $23.5 billion.
U.S. residents purchased a net $7.9 billion of long-term foreign securities.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $111.8 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $29.7 billion. Foreign holdings of Treasury bills increased $29.1 billion.
Banks' own net dollar-denominated liabilities to foreign residents decreased $102.6 billion.
Monthly net TIC flows were $38.9 billion. Of this, net foreign private flows were $5.3 billion, and net foreign official flows were $33.6 billion.
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Source: U.S. Department of the Treasury
CME Group Begins Clearing OTC Interest Rate Swaps
October 18, 2010-- CME Group, the world's leading and most diverse derivatives marketplace, announced today that it has begun clearing over-the-counter (OTC) interest rate swaps through CME Clearing.
In conjunction with a group of premier swap dealers, clearing firms, and buy-side market participants, CME Group has developed a new clearing solution for OTC interest rate swaps. The buy-side participants are BlackRock, Citadel, Fannie Mae, Freddie Mac, and PIMCO. The sell-side participants are BofA Merrill Lynch, Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley, Nomura and UBS.
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Source: CME Group
Treasury Department Statement Regarding Decision to Delay The International Economic and Exchange Rate Policies Report to Congress
October 15, 2010-- Secretary of the Treasury Timothy Geithner recognized China's actions since early September to accelerate the pace of currency appreciation, while noting it is important to sustain this course.
Since June 19, 2010, when China announced it would renew the reform of its exchange rate and allow the exchange rate to move higher in response to market forces, the Chinese currency has appreciated by roughly 3 percent against the U.S. dollar. Since September 2, 2010, the pace of appreciation has accelerated to a rate of more than 1 percent per month. If sustained over time, this would help correct what the IMF has concluded is a significantly undervalued currency.
By continuing to implement reforms to strengthen domestic demand and by allowing the exchange rate to move higher to reflect fundamental economic forces, China will make a significant positive contribution to the global rebalancing effort, help reduce pressure on those emerging market economies that have more flexible exchange rates, and provide a more level playing field for trading partners around the world.
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Source: U.S. Department of the Treasury
Joint Statement of Timothy Geithner, Secretary of the Treasury, and Jeffrey Zients, Acting Director of the Office of Management and Budget, on Budget Results for Fiscal Year 2010
October 15, 2010--– U.S. Treasury Secretary Tim Geithner and Office of Management and Budget (OMB) Acting Director Jeffrey Zients today released details of the final fiscal year (FY) 2010 budget results.
In making the announcement, Geithner and Zients underscored the Administration's commitment to getting Federal finances back on a sustainable path and ending emergency programs that proved instrumental to reviving growth while beginning the process of bringing down our deficit. As a result, our fiscal outlook, which remains challenging, has improved over the past year.
Due to careful stewardship of the emergency programs, their effect on the deficit was much smaller than previously estimated. The Troubled Asset Relief Program (TARP) had outlays of just $9.0 billion in FY 2010, which was $25.9 billion or 74 percent below previous estimates from July 2010. Aid to Fannie Mae and Freddie Mac was $52.6 billion in FY 2010 – $16.4 billion or 24 percent less than the most recent forecast. This played a large part in reducing the deficit, which as a percentage of gross domestic product (GDP) fell to 8.9 percent, down from 10.0 percent of GDP in FY 2009. This improvement – 1.1 percent of GDP – was the most rapid one-year improvement since FY 1987.
view 2010 Budget Receipts by Source (table 2) and 2010 Budget Outlays by Agency (table 3)
Source: U.S. Department of the Treasury
Morgan Stanley Fixed Income ETF Asset Report
October 15, 2010--Morgan Stanley Smith Barney’s (MSSB) Fixed
Income Strategists maintain four sector-based asset allocation models. This report focuses on changes to the moderate asset allocation model.
MSSB’s strategists reduced their allocations to federal agency and mortgage-backed securities
(MBS) by 5% and added 5% to both certificates of deposit (CDs) and non-USD sovereign bonds.
The moderate model now has the following allocations: 40% investment grade credit, 15% federal agencies, 15% CDs, 10% non-USD sovereign debt, and 5% each in preferreds, MBS, TIPS, and high yield bonds.
MSSB’s strategists remain overweight on the corporate credit markets. Although they see the potential for a sell-off between now and year-end, the team believes a number of factors will keep any sell-off both shallow and short-lived.
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Source: ETF Research-Morgan Stanley
U.S. Department of the Treasury Economic Statistics - Monthly Data Update
October 15, 2010--U.S. Department of the Treasury Economic Statistics - Monthly Data has been updated and is now available.
view updates
Source: U.S. Department of the Treasury
CFTC.gov Commitments of Traders Reports Update
October 15, 2010--The CFTC.gov Commitments of Traders Reports has been updated for the week of October 12, 2010 and are now available.
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Source: CFTC.gov
Administration Announces Amtrak Refinancing Plan to Save Taxpayers More Than $160 Million
October 15, 2010-- A refinancing agreement between the U.S. government and Amtrak will save taxpayers approximately $162 million, the U.S. Departments of Transportation and Treasury announced today.
"This announcement is good for taxpayers and important for the future of rail service in America," said U.S. Treasury Secretary Tim Geithner.
"Refinancing these leases will save taxpayers money while continuing the President's vision of improving passenger rail service across the country at a lower cost."
"This is a great opportunity to help Amtrak and save money for the taxpayer," said U.S. Transportation Secretary Ray LaHood. "These savings also represent funds that could be used to support the development of high-speed rail."
Over the years, Amtrak has incurred a large amount of debt paid by the government through an annual appropriation to the railroad. The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) permitted the Treasury Department to study ways to repay or restructure Amtrak's debt that would save money for the taxpayer and the railroad, and to take action on its findings if this would produce substantial savings. Today's action is based on the government's findings.
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Source: U.S. Department of the Treasury
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
October 15, 2010--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Friday, October 15, 2010:
Whitecap Resources Inc. (TSXVN:WCP) will be removed from the index.
The company will graduate to trade on TSX under the same ticker symbol.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Source: Standard & Poors