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European Commission-Summer 2023 Economic Forecast: Easing growth momentum amid declining inflation and robust labour market
September 11, 2023--The European Commission has today presented the Summer 2023 Economic Forecast.
The EU economy continues to grow, albeit with reduced momentum. The forecast revises growth in the EU economy down to 0.8% in 2023, from 1% projected in the Spring Forecast, and 1.4% in 2024, from 1.7%.
It also revises growth in the euro area down to 0.8% in 2023 (from 1.1%) and 1.3% in 2024 (from 1.6%).
Inflation is expected to continue to decline over the forecast horizon. Harmonised index of consumer prices (HICP) inflation is now projected to reach 6.5% in 2023 (compared to 6.7% in the spring) and 3.2% in 2024 (compared to 3.1%) in the EU. In the euro area, inflation is forecast to be 5.6% in 2023 (compared to 5.8%) and 2.9% in 2024 (compared to 2.8%).
A reduced growth momentum
Latest data confirm that economic activity in the EU was subdued in the first half of 2023 on the back of the formidable shocks that the EU has endured. Weakness in domestic demand, in particular consumption, shows that high and still increasing consumer prices for most goods and services are taking a heavier toll than expected in the Spring Forecast.
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Source: European Commission
Amundi increases sustainable investments levels on 46 ETFs
September 7, 2023--Some funds managed by Europe's largest listed asset manager will rise from 1% to 35%
Amundi is increasing the minimum proportion of sustainable investments on 46 of its exchange traded funds following some clarifications of EU sustainability disclosure rules.
The biggest increases will see the percentage of sustainable investments in some ETFs go from 1 per cent to 35 per cent and from 10 per cent to 40 per cent, according to Europe's largest listed asset manager.
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Source: ft.com
New fixed income ETF from VanEck on Xetra: investment in high yield fallen angels corporate bonds
September 6, 2023--Since Wednesday, a new exchange-traded fund issued by VanEck has been tradable on Xetra and via the trading venue Börse Frankfurt.
The VanEck US Fallen Angel High Yield Bond UCITS ETF invests in a portfolio of high-yield corporate bonds known as fallen angels.
The U.S. dollar-denominated fixed-rate bonds issued on the U.S. market are characterised by the fact that they had an investment grade rating at the time of issuance, but no longer have it at the time of inclusion in the fund. Bonds with a residual maturity of at least one year and an outstanding volume of at least 250 million US dollars will be included.
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Source: Xetra
Research: UK official holdings of international reserves: August 2023
September 5, 2023--This release details movements in the international reserves of gold and assets held by the UK Government.
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Source: gov.uk
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
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