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ESMA sees prevailing market uncertainty as downside risks rise
August 31, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, today publishes the second Trends, Risks and Vulnerabilities (TRV) Report of 2023.
ESMA sees that financial markets are adapting to the new economic environment of durably higher inflation and interest rates, however risks remain high in ESMA's remit. Markets are set to remain very sensitive to potential deteriorations in economic fundamentals or risks in the financial sector.
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Source: ESMA
ECB-Account of the monetary policy meeting of the Governing Council of the European Central Bank
August 31, 2023-- Held in Frankfurt am Main on Wednesday and Thursday, 26-27 July 2023
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel noted that, since the Governing Council's previous monetary policy meeting on 14-15 June 2023, the narrative in global financial markets had shifted from a "higher-for-longer" scenario for inflation to growing optimism on a disinflation scenario.
The increasing divergence of economic data between the euro area and the United States and the elevated sensitivity of euro area asset prices, especially to US data surprises, made the interpretation of market data challenging and could cause rapid shifts in market narratives.
Following the previous monetary policy meeting, central bank communication, high UK inflation releases and strong US economic data had initially driven the euro short-term rate (€STR) forward curve higher. This upward shift had then been partly reversed in the euro area in response to the release of the US Consumer Price Index (CPI) on 12 July as well as lower than expected Purchasing Managers' Indices (PMIs) for the euro area.
Looking through this volatility, the latest €STR forward curve still stood above the levels observed before the Governing Council's previous monetary policy meeting. The market was pricing in one more 25 basis point rate hike at the present meeting, a 56% probability of an additional 25 basis point hike in September 2023 and a peak deposit facility rate of 3.94% by the end of the year.
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Source: ECB
The dangers of leveraged ETFs
August 31, 2023--The BoE is taking an interest
Most ETFs are big, broad, boring and cheap beta. But there's now probably close to $200bn in leveraged and inverse ETFs, and their market impact is growing.
Leveraged and inverse ETFs use derivatives and margin loans to either deliver extra juice to investors - say, three times the daily return of the underlying index-or the opposite of what the index does.
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Source: ft.com
JPMorgan AM to switch smart beta ETF to an active strategy
August 30, 2023--Rising demand for active ETFs could prompt more asset managers to make similar moves, experts say
JPMorgan Asset Management has revamped a smart beta exchange traded fund into an actively managed product, with experts suggesting more firms will follow suit.
Shareholders recently approved the transition of the $170mn JPMorgan Global High Yield Corporate Bond Multi-Factor Ucits ETF into an active strategy, with the changes expected to take effect before the end of August. The fund is part of the firm's Ireland-domiciled Icav ETF range.
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Source: ft.com
ECB-Monetary developments in the euro area: July 2023
August 28, 2023--Annual growth rate of broad monetary aggregate M3 decreased to-0.4% in July 2023 from 0.6% in June
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, was-9.2% in July, compared with-8.0% in June
Annual growth rate of adjusted loans to households decreased to 1.3% in July from 1.7% in June
>Annual growth rate of adjusted loans to non-financial corporations decreased to 2.2% in July from 3.0% in June
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 decreased to-0.4% in July 2023 from 0.6% in June, averaging 0.4% in the three months up to July. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, was-9.2% in July, compared with-8.0% in June.
The annual growth rate of short-term deposits other than overnight deposits (M2-M1) stood at 23.9% in July, compared with 24.0% in June. The annual growth rate of marketable instruments (M3-M2) decreased to 20.6% in July from 22.8% in June.
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Source: ECB
Official Statistics: Forecasts for the UK economy: August 2023
August 24, 2023--A comparison of independent forecasts for the UK economy in August 2023.
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Source: gov.uk
European crypto ETP inflows rise after BlackRock bitcoin filing
August 23, 2023--Trend follows similar influx of money to crypto ETPs globally
European crypto-related exchange traded products have seen a boost in flows after BlackRock applied to launch a bitcoin fund in the US.
Europe-domiciled ETPs with crypto-related names had net inflows of €150mn in June, their best month since March 2022, Morningstar data shows.
The inflows came after €100mn of outflows in May and were followed by a further €60mn of inflows in July.
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Source: ft.com
New active ETFs from J.P. Morgan on Xetra: climate-conscious active investment strategy with access to companies from the USA and worldwide
August 17, 2023--Since Thursday, seven new active exchange-traded funds issued by J.P. Morgan Asset Management have been tradable on Xetra and via Börse Frankfurt. J.P. Morgan is thus further expanding its Research Enhanced Index series, taking into account the Paris Climate Agreement.
The JPM Global Research Enhanced Index Equity SRI Paris Aligned UCITS ETF portfolio offers the opportunity to invest in an active and sustainable investment strategy targeting companies from around the world. The fund considers large and mid-cap companies from developed and emerging markets in line with the MSCI World Index.
An accumulation share class is available in the base currency euro and US dollar, as well as a currency-hedged variant against the euro. In addition, a distributing share class is offered in the base currency of the US dollar.
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Source: Xetra
New crypto ETN from Valour on Xetra: access to Ethereum cryptocurrency with staking premium
August 17, 2023--Since Thursday, another crypto ETN from Valour Digital Securities has been tradable on Xetra and via Börse Frankfurt.
The ETN 1Valour Ethereum Physical Staking enables investors to participate in the performance of Ethereum and the staking of the cryptocurrency.
Staking is the process of depositing the respective crypto assets on the blockchain to validate transactions.
In return, a premium is paid. In this way, investors can participate not only in the performance of the cryptocurrency, but also in the respective staking returns.
The product is physically secured by the crypto asset.
Name: 1Valour Ethereum Physical Staking
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Source: Xetra
Euro area investment fund statistics: second quarter of 2023
August 17, 2023--In second quarter of 2023, outstanding amount of shares/units issued by investment funds other than money market funds rose to €15,302 billion, up €304 billion on previous quarter
Net issuances in quarter amounted to €11 billion, with €953 billion in gross issuances and €942 billion in gross redemptions
Outstanding amount of shares/units issued by money market funds rose to €1,507 billion, up €18 billion on previous quarter
In the second quarter of 2023, the outstanding amount of shares/units issued by investment funds other than money market funds stood at €15,302 billion. Net issuances during this period were €11 billion, with gross issuances amounting to €953 billion and gross redemptions to €942 billion (see Chart 1). The annual growth rate of shares/units issued by investment funds other than money market funds, calculated on the basis of transactions, was 0.3% in the second quarter of 2023.
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Source: ECB
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