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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
US SEC delays decision on Grayscale, BlackRock's spot Ethereum ETFs
January 25, 2024--The U.S. Securities and Exchange Commission (SEC) delayed on Thursday its decision on an application by crypto asset manager Grayscale Investments to convert its Ethereum trust product into a spot exchange-traded fund (ETF).
The U.S. markets regulator also on Wednesday delayed its decision on finance industry heavyweight BlackRock's (BLK.N)
, opens new tab application to launch a similar product, exchange filings showed.
A spot crypto ETF tracks the market price of the underlying digital asset, giving investors exposure to the token without having to buy the currency.
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Source: reuters.com
SEC Adopts Rules to Enhance Investor Protections Relating to SPACs, Shell Companies, and Projections
January 24, 2024--The Securities and Exchange Commission today adopted new rules and amendments to enhance disclosures and provide additional investor protection in initial public offerings (IPOs) by special purpose acquisition companies (SPACs) and in subsequent business combination transactions between SPACs and target companies (de-SPAC transactions).
SPAC IPOs and de-SPAC transactions can be used as a means for private companies to enter the public markets. Given the complexity of these transactions, the Commission seeks to enhance investor protection in SPAC IPOs and de-SPAC transactions with respect to the adequacy of disclosure and the responsible use of projections. The rules also address investor protection concerns more broadly with respect to shell companies and blank check companies, including SPACs.
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Source: SEC.gov
What Do Bitcoin ETFs Mean For the Future of Crypto? Regulators and Investors Weigh In
January 22, 2024--"Now you have these big names like Fidelity and BlackRock with these products, and that provides comfort to investors who may have been nervous."
On Jan. 10, the SEC approved 11 spot Bitcoin exchange-traded funds (ETFs), unprecedentedly allowing crypto-backed ETFs to trade on public markets.
Within 24 hours, Bitcoin ETF trading volume ballooned to $4.6 billion, and Bitcoin price rose above $48,000 at one point. But the hype fizzled out quickly, with Bitcoin dropping more than 8 percent two days after the SEC's milestone decision.
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Source: observer.com
Passive eclipses active in US fund market as assets swell to $13.3t
January 19, 2024--Passively managed US mutual funds and ETFs have, for the first time, amassed more money than their actively managed counterparts. Investors have poured a net $2.5t into passive ETFs from 2019 to 2023, far more than the nearly $400b absorbed by passive mutual funds.
A decade ago passive funds held about a quarter of the US mutual fund and ETF market, according to Cerulli Associates, a financial research firm. Despite occasional periods of outperformance, active managers have largely fallen short of passive counterparts in recent years.
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Source: news.fintech.io
