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Eurozone new inflation record adds pressure on ECB
July 1, 2022--Scorching rise continues to be primarily driven by energy prices.
Eurozone inflation surged to a record high of 8.6 percent in June, racing ahead of expectations once again and adding pressure on the European Central Bank to step up its fight against spiralling prices, flash Eurostat data showed today.
A Reuters poll of analysts had pointed to a record 8.4 percent jump in June, up from 8.1 percent in May.
Scorching inflation continues to be primarily driven by energy prices, which were up 41.9 percent in June compared with 39.1 percent in May. That's followed by food, alcohol and tobacco prices, which were up 8.9 percent in June compared with 7.5 percent in the previous month.
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Source: politico.eu
The implications for public debt of high inflation and monetary tightening
June 29, 2022--Expected increases in interest rates and reductions in real GDP growth rates will result in relatively small increases in public debt-to-GDP ratios, but inflation will reduce debt ratios very substantially
Rising inflation has triggered monetary tightening in several countries. The Federal Reserve and the Bank of England have already increased their key interest rates, while the European Central Bank will start to hike rates soon.
Higher interest rates raise concerns about public debt sustainability in countries with high public debt. In the euro area, government bond yields have already started to increase in anticipation of ECB monetary tightening. The increase has been higher in higher-debt countries, such as Greece and Italy, than in lowe-debt such as Germany and the Netherlands. Economic slowdown in the wake of the Russian invasion of Ukraine might aggravate debt sustainability concerns.view more
Source: bruegel.org
ECB-Monetary developments in the euro area: May 2022
June 29, 2022-- Annual growth rate of broad monetary aggregate M3 decreased to 5.6% in May 2022 from 6.1% in April (revised from 6.0%)
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, decreased to 7.8% in May from 8.2% in April
Annual growth rate of adjusted loans to households stood at 4.6% in May-unchanged from previous month
Annual growth rate of adjusted loans to non-financial corporations increased to 5.8% in May from 5.2% in April
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 decreased to 5.6% in May 2022 from 6.1% in April, averaging 6.0% in the three months up to May. The components of M3 showed the following developments.
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Source: ECB
Franklin Templeton launches Catholic EM sovereign debt ETF
June 29, 2022--This new Article 8 Smart Beta ETF will be managed by John Beck, senior vice president and director of global fixed income and will be based on the ICE BofA Diversified Emerging Markets External Debt Sovereign Bond index.
The index excludes bonds issued by countries that score poorly on criteria identified by the index provider as Roman Catholic principles, such as governments' moral integrity or social justice. The ETF also adjusts its security weightings to reduce its overall carbon footprint relative to the index.
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Source: publicnewstime.com
Citi tech tweaks halt UK online ETF purchases
June 28, 2022--Customers forced to place orders by phone as US bank suffers another systems issue
Citigroup has halted the online purchase of exchange traded funds for UK customers pending system enhancements, the latest in a string of technology issues to affect the US bank's business.
Over the weekend customers holding wealth management accounts were informed they could no longer make purchases of low-cost funds online for "operational reasons", according to a client notice seen by the Financial Times.
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Source: ft.com
How can the European Union adapt to climate change?
June 28, 2022--A stronger adaptation governance framework would benefit adaptation efforts.
Europe must increasingly deal with the harmful impacts of climate change, regardless of its success in reducing emissions. These impacts have significant cross-border effects and threaten to deepen existing divisions.
Cooperation on adaptation, which is mostly seen as requiring local or regional efforts, may be useful, but the role of the European Union is ill-defined.
We give an overview of how climate change might change Europe and how it might affect people and the economy. We also discuss what sort of adaptation policies are being pursued at EU level and on what grounds. We argue that a stronger adaptation governance framework would benefit adaptation efforts.
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Source: bruegel.org
AFME warns Mifir review could harm liquidity
June 27, 2022--Instead, the association has laid out its own recommendations which it predicts will protect the role of a market maker as a liquidity provider and banks as shock absorbers.
The Association for Financial Markets in Europe (AFME) has suggested that proposed changes to Mifir regulation as part of the ongoing review could damage existing liquidity pools.
AFME has claimed proposed changes could harm the role of market makers as liquidity providers who dedicate balance sheets to provide pricing and immediacy of execution, as well as the role of banks as shock absorbers who limit detrimental price impacts on investors moving in and out of large positions.
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Source: thetradenews.com
ESMA publishes results of its Call for Evidence on ESG ratings
June 27, 2022--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, today publishes a letter to the European Commission (EC) providing its findings from the Call for Evidence to gather information on the market structure for ESG rating providers in the European Union (EU).
Key findings
ESMA received a total of 154 responses and found 59 ESG rating providers currently active in the EU. The analysis of the responses further indicated several characteristics and trends as follows:
ESG rating providersthe structure of the market shows that there is a small number of very large nonEU providers, and a large number of significantly smaller EU entities.
While the legal entities of respondents are spread out across almost half of the EU Member States, a large number of these are clustered in a small number of Member States;
Users of ESG ratings are typically contracting for these products on an investor-pays basis from several providers simultaneously. Their reasons for selecting several providers are to increase coverage, either by asset class or geographically, or in order to receive different nature of ESG assessments. The most common shortcomings identified by the users were a lack of coverage of a specific industry or a type of entity, insufficient granularity of data, and a lack of transparency around methodologies used by ESG rating providers.
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Source: ESMA
BNP Paribas Asset Management announces results of first European ESG ETF Barometer, confirming optimistic outlook
June 23, 2022--The results of the BNP Paribas Asset Management ('BNPP AM') European ESG ETF Barometer[1] revealed that most investors surveyed expect further expansion of the European ESG[2] ETF[3] market over the next year.
The biannual barometer, conducted for the first time in April this year, monitors how European investors' sustainable investment outlook and practices are changing over time.
It canvasses the views of 250 investment executives at insurers, pension funds, asset managers and wealth managers in France, Germany, Italy, Switzerland and the UK. It assesses their perspectives on the evolving ETF landscape, as well as on ESG integration, thematic opportunities, the regulatory environment and ESG investment risks. The key findings from the first survey include:
With ESG ETFs currently accounting for 16%[4] of all European ETF assets, 91% of survey respondents expect this level to remain stable or increase over the coming 12 months.
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Source: BNP Paribas Asset Management
Eurex launches first futures on thematic indices
June 22, 2022--Contracts are based on STOXX Thematic Indices
New segment extends Eurex' leading role in sector and ESG derivatives
Complementing the eco-system for thematic investing
Eurex, one of the world's leading derivatives exchanges, has introduced a new segment with the launch of its first thematic index futures.
The new contracts are based on three indices from the STOXX Thematic Indices family, which are calculated by sister company Qontigo. Eurex is thus responding to the growing demand from many asset managers to align their investments with projected long-term structural trends that are transforming modern economies and societies.
The three contracts started trading on 20 June and are based on the following indices: STOXX(R) Global Breakthrough Healthcare, STOXX(R) Global Digitalisation, and STOXX(R) Global Digital Security.
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Source: Eurex
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