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ESMA publishes data for quarterly bond liquidity assessment, the systematic internaliser calculations and the CTP calculations
August 2, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published the new quarterly liquidity assessment of bonds, the data for the quarterly systematic internaliser calculations for equity, equity-like instruments, bonds and for other non-equity instruments and the consolidated tape provider (CTP) under MiFID II and MiFIR.
Bonds quarterly liquidity assessment
ESMA has published the latest quarterly liquidity assessment for bonds available for trading on EU trading venues. For this period, there are currently 1,105 liquid bonds subject to MiFID II transparency requirements.
ESMA's liquidity assessment for bonds is based on a quarterly assessment of quantitative liquidity criteria, which includes the daily average trading activity (trades and notional amount) and the percentage of days traded per quarter. ESMA updates the bond market liquidity assessments quarterly. However, additional data and corrections submitted to ESMA may result in further updates within each quarter, published in ESMA's Financial Instruments Transparency System (FITRS), which shall be applicable the day following publication.
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Source: ESMA
New ETFs by Fidelity on Xetra: access to government bonds in alignment with the Paris Climate Objectives and active investment in Japanese companies
August 2, 2023--Since Wednesday, two new exchange traded funds issued by Fidelity are tradable on Xetra and via Börse Frankfurt.
The Fidelity Global Government Bond Climate Aware UCITS ETF gives investors access to government bonds worldwide, which are noted in local currencies and have an investment grade rating.
The fund aims for a 14 per cent lower carbon intensity and an annual decarbonization of 7 per cent. This is a currency-hedged asset class, in which exchange rate fluctuations against the euro are minimized.
The Fidelity Sustainable Research Enhanced Japan Equity UCITS ETF pursues an active investment strategy and mainly invest in a selection of Japanese companies that have a good ESG rating. The selection of companies considers ecological and social requirements, among which are CO2 intensity, CO2 emissions, energy efficiency, water and waste management, biodiversity, product security, health, and security as well as human rights.
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Source: Xetra
ECB-Euro area bank interest rate statistics: June 2023
July 2, 2023--Composite cost-of-borrowing indicator for new loans to corporations increased by 22 basis points to 4.79%; indicator for new loans to households for house purchase increased by 12 basis points to 3.70%; both driven by interest rate effect
Composite interest rate for new deposits with agreed maturity from corporations increased by 20 basis points to 3.16%; interest rate for overnight deposits from corporations increased by 6 basis points to 0.55%; both driven by interest rate effect
Composite interest rate for new deposits with agreed maturity from households increased by 23 basis points to 2.70%, mainly driven by interest rate effect; interest rate for overnight deposits from households broadly unchanged at 0.23%
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Source: ECB
Euro area economic and financial developments by institutional sector: first quarter of 2023
July 27, 2023--Euro area net saving was broadly unchanged at €633 billion in four quarters to first quarter of 2023
Household debt-to-income ratio decreased to 91.3% in first quarter of 2023 from 95.5% one year earlier
Non-financial corporations' debt-to-GDP ratio (consolidated measure) declined to 70.2% in first quarter of 2023 from 75.3% one year earlier
Total euro area economy
Euro area net saving was broadly unchanged at €633 billion (5.8% of euro area net disposable income) in the four quarters to the first quarter of 2023, as compared with €632 billion in the four-quarter period ending in the fourth quarter of 2022. Euro area net non-financial investment decreased to €609 billion (5.6% of net disposable income), due to decreased investment by non-financial corporations, while net investment by households, financial corporations and general government were broadly stable (see Chart 1).
Euro area net lending to the rest of the world increased to €68 billion (from €47 billion in the previous quarter), reflecting the decreased net non-financial investment and broadly unchanged net saving.
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Source: ECB
Why European investors are rushing into some bond ETFs
July 27, 2023--First half fund flows into fixed income vehicles demonstrate investor expectations about interest rates, analysts say
The appetite for equity exposure may have faltered in Europe in the first half, but the picture is markedly different for some bonds.
While inflation-linked bond funds have admittedly failed to attract much interest, fixed-income exchange traded funds in aggregate took in €15.9bn in the second quarter, up slightly from €15.1bn in the first three months-a record level of demand.
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Source: ft.com
Eurozone interest rates reach joint record high
July 27, 2023--The European Central Bank (ECB) has raised interest rates in the eurozone once again, taking its key rate to a record high last seen in late 2000.
The bank raised the deposit rate in the 20-nation bloc for the ninth time in a row - to 3.75%, up from 3.5%.
The ECB said inflation continued to ease, but was still expected to remain "too high for too long".
On Wednesday, the US central bank raised rates to their highest level in 22 years in its bid to control prices.
In the UK, where inflation fell to 7.9% in June, the Bank of England's base rate is at 5%, At its next decision on 3 August, the Bank is widely expected to raise rates to 5.25%.
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Source: bbc.com
ECB-Monetary developments in the euro area: June 2023
July 26, 2023--Annual growth rate of broad monetary aggregate M3 decreased to 0.6% in June 2023 from 1.0% in May (revised from 1.4%)
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, was -8.0% in June, compared with -7.0% in May
Annual growth rate of adjusted loans to households decreased to 1.7% in June from 2.1% in May
Annual growth rate of adjusted loans to non-financial corporations decreased to 3.0% in June from 4.0% in May
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 decreased to 0.6% in June 2023 from 1.0% in May, averaging 1.0% in the three months up to June. 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 -8.0% in June, compared with -7.0% in May.
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Source: ECB
IMF Staff Country Report-Italy: Selected Issues
July 26, 2023--POPULATION AGING IN ITALY: ECONOMIC CHALLENGES AND OPTIONS FOR OVERCOMING THE DEMOGRAPHIC DRAG1
Italy's population is shrinking and aging rapidly. To counteract the effect of demographic decline on GDP, a coherent strategy is needed to significantly boost productivity and raise active employment. Ample scope for catchup exists on both fronts.
The Demographic Challenge
1. The Italian economy faces a daunting demographic challenge. The country's workforce is beginning to shrink due to rapid population aging, an extended period of very low fertility, and unfavorable net migration dynamics in the context of low female and youth labor participation. The outlook is set to worsen: projections by the United Nations Population Division indicate that Italy's working age population will decrease by nearly 30 percent over the next 25 years (Figure 1)2.
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Source: imf.org
New Equity ETF by HANetf on Xetra: access to companies in line with the objectives of the European Green Deal
July 25, 2023--Since Tuesday, a new exchange-traded fund issued by HANetf has been tradable on Xetra and via Börse Frankfurt.
The European Green Deal UCITS ETF offers investors a sustainable investment in around 50 equally weighted companies that can potentially benefit from the European Green Deal.
The selected companies must generate at least 20 per cent of their turnover in Europe in one or more of the four business areas: clean energy, sustainable mobility, refurbished, energy-efficient buildings or circular economy. In addition, they must have a market capitalisation of at least 500 million euros and be among the two-thirds best companies based on environmental scoring.
The European Green Deal is a concept of the European Commission with the aim of achieving climate neutrality by 2050.
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Source: Xetra
3x Tesla ETP fails to deliver promised returns in June
July 25, 2023--Leverage Shares' $320mn vehicle was unable to deliver the full three times returns on six trading days during the month
Investors have been left out of pocket by what appears to be an unprecedented technical glitch at one of Europe's largest leveraged exchange traded products
Leverage Shares' highly popular $320mn 3x Tesla ETP (TSL3), which aims to provide returns equal to three times the daily movement in the share price of the electric-vehicle manufacturer, before fees, ran into trouble last month.
For six trading days it was unable to provide the full three times leverage due to "technical issues with the margin loan provider", it said in filings to the London Stock Exchange, one of four European bourses on which it is listed.
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Source: ft.com