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Bond Market's Safest Space Beckons in $6.8 Billion Haven Rush
March 3, 2020--As market volatility goes through the roof, investors are ducking for cover in exchange-traded funds tracking short-term bonds.
BlackRock Inc.'s $18 billion iShares 1-3 Year Treasury Bond ETF, ticker SHY, attracted nearly $660 million on Monday, the fund’s biggest one-day inflow since 2015, according to data compiled by Bloomberg.
Roughly $6.8 billion has flowed into short-dated debt ETFs--which feature bonds maturing in three years or less--so far in 2020, while longer-term funds have drawn in $4 billion during the same period.
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Source: bnnbloomberg.ca
Federal Reserve issues FOMC statement
March 3, 2020--The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1-1/4 percent.
The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.
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Source: federalreserve.gov
SEC Requests Comment on Fund Names Rule; Seeks to Eliminate Misleading Fund Names
March 2, 2020--The Securities and Exchange Commission requests public comment on its current requirements that restrict the use of potentially misleading fund names. Fund names are often the first piece of information investors see and they can have a significant impact on an investment decision.
The request seeks feedback on whether the current requirements are effective and whether there are viable alternatives that the Commission should consider. The request is the latest in the Commission's ongoing efforts to review and improve our existing rules to better inform and protect investors.
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Source: SEC.gov
SEC Requests Comment on Fund Names Rule; Seeks to Eliminate Misleading Fund Names
March 2, 2020--The Securities and Exchange Commission requests public comment on its current requirements that restrict the use of potentially misleading fund names. Fund names are often the first piece of information investors see and they can have a significant impact on an investment decision. The request seeks feedback on whether the current requirements are effective and whether there are viable alternatives that the Commission should consider.
The request is the latest in the Commission's ongoing efforts to review and improve our existing rules to better inform and protect investors.
"This request for comment is another important step in our efforts to better inform and protect Main Street investors and improve the investor experience," said SEC Chairman Jay Clayton.
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Source: SEC.gov
Fee Rate Advisory #3 For Fiscal Year 2020
February 28, 2020--Pursuant to Section 31(j)(2) of the Securities Exchange Act of 1934, the Commission has determined that a mid-year adjustment to the Section 31 fee rate for fiscal year 2020 is not required. These adjustments do not directly affect the amount of funding available to the SEC.
The Section 31 fee rate for fiscal 2020 will remain at the current rate of $22.10 per million, as previously announced on Jan. 9, 2020. This rate will remain in place until Sept. 30, 2020, or 60 days after the enactment of a regular FY 2021 appropriation, whichever is later. The Section 31 assessment on round turn transactions in security futures also will remain at $0.0042 per transaction.
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Source: SEC.gov
IMF Working Paper-Foreign Demand and Local House Prices: Evidence from the US
February 28, 2020--Summary:
We test whether foreign demand matters for local house prices in the US using an identification strategy based on the existence of "home bias abroad" in international real estate markets. Following an extreme political crisis event abroad, a proxy for a strong and exogenous shift in foreign demand, we show that house prices rise disproportionately more in neighbourhoods with a high concentration of population originating from the crisis country.
This effect is strong, persistent, and robust to the exclusion of major cities. We also show that areas that were already expensive in the late 1990s have experienced the strongest foreign demand shocks and the biggest drop in affordability between 2000 and 2017. Our findings suggest a non-trivial causal effect of foreign demand shocks on local house prices over the last 20 years, especially in neighbourhoods that were already rather unaffordable for the median household.
view the IMF Working Paper-Foreign Demand and Local House Prices: Evidence from the US
Source: IMF
Volatility index hits highest level since 2015
February 27, 2020--Wall Street's 'fear gauge' is eyeing its biggest weekly rise since the 2008 crisis
The Cboe volatility index-known as Wall Street's "fear gauge"-jumped to its highest level since August 2015, reflecting the heightened volatility in US stocks at a time of growing concerns over the coronavirus outbreak.
After a tumultuous run for the market, the Vix is staring down its second-biggest weekly rise on record, having gained 22.1 percentage points since Friday’s close. The biggest weekly rise was 24.8 percentage points for the week ended October 10, 2008, during the depths of the financial crisis.
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Source: FT.com
Franklin Templeton Expands Active ETF Lineup with Three Thematic Funds Focused on Dynamic Innovation
February 27, 2020--Franklin Templeton today announced the expansion of its active ETF lineup with the addition of three thematic ETFs: Franklin Disruptive Commerce ETF (BUYZ), Franklin Genomic Advancements ETF (HELX) and Franklin Intelligent Machines ETF (IQM).
"We are thrilled to bring our first thematic ETFs to market. BUYZ, HELX and IQM are focused on investing in innovative companies within each theme-e-commerce, genomics and intelligent machines," said Patrick O'Connor, global head of ETFs for Franklin Templeton.
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Source: Franklin Templeton
SEC Rejects Latest Bitcoin ETF Bid
February 26, 2020--The U.S. Securities and Exchange Commission (SEC) rejected Wilshire Phoenix's bid for a bitcoin-based exchange-traded fund (ETF).
In a filing posted Wednesday, the securities regulator wrote the New York-based Wilshire Phoenix had not proven the bitcoin (BTC) market is sufficiently resistant to market manipulation.
Wilshire, a newcomer to the financial services industry, first applied for the ETF last summer with NYSE Arca.
"The Commission concludes that NYSE Arca has not met its burden under the Exchange Act and the Commission's Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be 'designed to prevent fraudulent and manipulative acts and practices' and 'to protect investors and the public interest,'" the filing said
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Source:coindesk.com
FRBSF Economic Letter-Is the Risk of the Lower Bound Reducing Inflation
February 24, 2020--U.S. inflation has remained below the Fed's 2% goal for over 10 years, averaging about 1.5%. One contributing factor may be the impact from a higher probability of future monetary policy being constrained by the effective lower bound on interest rates.
Model simulations suggest that this higher risk of hitting the lower bound may lead to lower expectations for future inflation, which in turn reduces inflation compensation for investors. The higher risk may also change household and business spending and pricing behavior. Taken together, these effects contribute to weaker inflation.
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Source: Robert Amano, Thomas J. Carter, and Sylvain Leduc-Federal Reserve Bank of San Francisco
