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JPMorgan, State Street leave major investor climate group
January 15, 2024--The investment divisions of JPMorgan Chase and State Street are leaving a climate-friendly investment initiative, sparking cheers from Republicans.
A spokesperson for the group, Climate Action 100+, confirmed via email that "JP Morgan Asset Management and State Street Global Advisors have left the initiative."
The spokesperson also said BlackRock transferred its participation from its U.S. division to BlackRock International.
The changes come after the group last summer announced its next phase that would call on participants to "move from words to action" by "taking action to actively reduce greenhouse gas emissions across the value chain."
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Source: thehill.com
Morgan Stanley IM files to replicate Vanguard's multi-share class structure in ETF rivalry race
February 12, 2024--Fifth firm to file
Morgan Stanley Investment Management has applied for permission to house an ETF multi-share class structure, becoming the fifth asset manager to seek approval on the move.
In a filing for ETF Operational Relief with the Securities and Exchange Commission on January 29, Morgan Stanley IM said it was pursuing "multi-class structure" open-ended products, which would see the firm add an ETF share class to its existing mutual funds.
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Source: investmentweek.co.uk
IMF Working Paper-U.S. Inflation Expectations During the Pandemic
February 9, 2024--Summary:
This paper studies how and why inflation expectations have changed since the emergence of Covid-19. Using micro-level data from the University of Michigan Survey of Consumers, we show that the distribution of consumer expectations at one-year and five-ten year horizons has widened since the surge of inflation during 2021, along with the mean. Persistently high and heterogeneous expectations of consumers with less education and lower income are mainly responsible.
A simple model of adaptive learning is able to mimic the change in inflation expectations over time for different demographic groups.
The inflation expectations of low income and female consumers are consistent with using less complex forecasting models and are more backward-looking. A medium-scale DSGE model with adaptive learning, estimated during 1965-2022, has a time-varying solution that produces lower forecast errors for inflation than a variant with rational expectations. The estimated model interprets the surge of inflation in 2021 mainly as the result of a price markup shock, which is more persistent and requires a larger and more persistent monetary policy response than under rational expectations.
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Source: imf.org
CBO-How CBO Projects Inflation
February 9, 2024--Summary
The Congressional Budget Office projects consumer price inflation by making projections for individual types of goods and services and then aggregating them into forecasts for economywide consumer price inflation. Each projection accounts for variation across economic sectors in price sensitivity to cyclicality, persistence, and global and supply-side factors.
For instance, many services are more sensitive to cyclical fluctuations than many goods, and many goods are more sensitive to supply-side factors than many services. The approach aims to flexibly incorporate shocks to prices of specific goods and services into CBO's macroeconomic forecast and to produce disaggregated forecasts of prices for use in the agency's budgetary analyses.
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Source: CBO (Congressional Budget Office)
CBO-Monthly Budget Review: January 2024
February 8, 2024--The federal budget deficit totaled $531 billion in the first four months of fiscal year 2024, CBO estimates-$71 billion more than the deficit recorded during the same period last fiscal year.
Summary
The federal budget deficit totaled $531 billion in the first four months of fiscal year 2024, the Congressional Budget Office estimates.
That amount is $71 billion more than the deficit recorded during the same period last fiscal year: Although revenues this year were $112 billion (or 8 percent) higher, outlays rose more-by $183 billion (or 9 percent).
Outlays in the first four months of each year were reduced by shifts of certain payments that otherwise would have been due on October 1, which fell on a weekend. (Those payments were made in September 2022 and September 2023, respectively.) If not for those shifts, the deficit thus far would have been $604 billion, $80 billion more than the shortfall for the same period in fiscal year 2023.
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Source: CBO (Congressional Budget Office)
Treasury 30-Year Bond Sale Finds Buyers to Crown Good Refunding
February 8, 2024--Auction for $25 billion awarded at 4.36%, below pre-sale rate
Sale of 30-year bonds follows strong demand for 10-year notes
The US government sold $25 billion of 30-year bonds at a lower-than-anticipated yield, soothing investor nerves about demand for longer-dated debt.
Yields on US Treasuries briefly retreated from the day's highs after the solid auction result, though resumed climbing later in the trading day. The 30-year sale-the largest in more than two years- was the last of three Treasury note and bond auctions this week.
The new bonds found receptive buyers, even as investors remain uncertain on when exactly the Federal Reserve will start cutting interest rates this year.
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Source: bloomberg.com
Morgan Stanley Investment Management Expands ETF Platform with Eaton Vance Floating-Rate Strategy
February 8, 2024--Morgan Stanley Investment Management (“MSIM”) today announced the launch of its latest ETF, Eaton Vance Floating-Rate ETF (Ticker: "EVLN"), an actively managed senior loan strategy. EVLN is the twelfth ETF strategy brought to market since the launch of MSIM’s ETF platform in February 2023 and is listed on the NYSE.
"We are pleased to expand MSIM's ETF Platform with EVLN and continue to deepen our offering with strategies that reflect our differentiated investment capabilities and client-focused approach," said Anthony Rochte, Global of Head of ETFs at MSIM. "A pioneer in senior loan investment management, the industry-leading team established its loan platform thirty-five years ago and today manages over $30 billion in client assets globally. This strategy makes use of that deep loan market expertise and the in-demand ETF structure to meet the needs of a broader range of income clients.”
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Source: morganstanley.com
New ETF offers leveraged exposure to emerging markets but excludes China
February 7, 2024--Direxion, a U.S. asset manager specializing in leveraged exchange-traded funds (ETFs), on Wednesday rolled out a new product allowing investors to bet on gains in the MSCI Emerging Markets ex-China Index.
As China's stock market has struggled to emerge from a years-long slump, investor appetite for emerging markets funds that exclude exposure to the world's second-largest economy has surged. According to data from LSEG Lipper, China-focused funds domiciled outside of that country saw outflows of $1.54 billion in 2023 alone, and an 18.8% drop in assets under management.
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Source: reuters.com
CBO-The Budget and Economic Outlook: 2024 to 2034
February 7, 2024--In CBO's projections, federal budget deficits total $20 trillion over the 2025-2034 period and federal debt held by the public reaches 116 percent of GDP. Economic growth slows to 1.5 percent in 2024 and then continues at a moderate pace.
The Federal Budget
The deficit totals $1.6 trillion in fiscal year 2024, grows to $1.8 trillion in 2025, and then returns to $1.6 trillion by 2027. Thereafter, deficits steadily mount, reaching $2.6 trillion in 2034. Measured in relation to gross domestic product (GDP), the deficit amounts to 5.6 percent in 2024, grows to 6.1 percent in 2025, and then shrinks to 5.2 percent in 2027 and 2028. After 2028, deficits climb as a percentage of GDP, returning to 6.1 percent in 2034. Since the Great Depression, deficits have exceeded that level only during and shortly after World War II, the 2007-2009 financial crisis, and the coronavirus pandemic.
Debt held by the public increases from 99 percent of GDP at the end of 2024 to 116 percent of GDP-the highest level ever recorded-by the end of 2034. After 2034, debt would continue to grow if current laws generally remained unchanged.
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Source: CBO (Congressional Budget Office)
What lies ahead for active ETFs?
February 6, 2024--Report highlights tailwinds from growing advisor awareness and cost benefits, as well as regulatory areas to watch.
Despite its limited profile in the investment fund landscape, the active ETF industry has seen remarkable growth in recent years- and the near term could prove to be a pivotal chapter in this Cinderella story.
According to a new report from ISS Market Intelligence, active exchange-traded funds have witnessed a surge in interest, reaching $422 billion in assets by mid-year 2023. This represents a significant jump, with these ETFs attracting $47 billion in net new flows in the first half of 2023 alone.
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Source: investmentnews.com
