Global ETF News Older than One Year
IMF Working paper-Non-Defaultable Debt and Sovereign Risk
October 28, 2014--Summary: We quantify gains from introducing non-defaultable debt as a limited additional financing option into a model of equilibrium sovereign risk.
We find that, for an initial (defaultable) sovereign debt level equal to 66 percent of trend aggregate income and a sovereign spread of 2.9 percent, introducing the possibility of issuing non-defaultable debt for up to 10 percent of aggregate income reduces immediately the spread to 1.4 percent, and implies a welfare gain equivalent to a permanent consumption increase of 0.9 percent. The spread reduction would be only 0.1 (0.2) percentage points higher if the government uses nondefaultable debt to buy back (finance a "voluntary" debt exchange for) previously issued defaultable debt. Without restrictions to defaultable debt issuances in the future, the spread reduction achieved by the introduction of non-defaultable debt is short lived. We also show that allowing governments in default to increase non-defaultable debt is damaging at the time non-defaultable debt is introduced and inconsequential in the medium term. These findings shed light on different aspects of proposals to introduce common euro-area sovereign bonds that could be virtually non-defaultable.
view the IMF Working paper-Non-Defaultable Debt and Sovereign Risk
Source: IMF
Middle East and Central Asia region--Regional Economic Outlook-October 2014
October 27, 2014--Economic developments in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) continue to reflect the diversity of conditions prevailing across the region. Most high-income oil exporters, primarily in the GCC, continue to record steady growth and solid economic and financial fundamentals, albeit with medium-term challenges that need to be addressed.
In contrast, other countries-Iraq, Libya, Syria-are mired in conflicts with not just humanitarian but also economic consequences. And yet other countries, mostly oil importers, are making continued but uneven progress in advancing their economic agenda, often in tandem with political transitions and amidst difficult social conditions. In most of these countries, without extensive economic and structural reforms, economic prospects for the medium term remain insufficient to reduce high unemployment and improve living standards.
view the
Source: IMF
ETFS Precious Metals Weekly-Precious Metals Await The Fed With News Of Increasing Physical Demand
China's gold imports from Hong Kong reached a six-month
high, contributing to a tighter physical market. Physical tightness is also manifesting in
GOFO rates moving into negative territory for the first time since June. In US dollar terms,
gold ended the week with a year-to-date (YTD) gain of 2.4% compared to the 6.3% YTD
increase in the S&P 500 index and despite a 7.1% increase in the US dollar index. The chart
below depicts the inverse relationship between gold and the S&P 500 since the beginning of
2013. Extending to new stock market highs would likely be a more immediate risk factor for
the price of gold. With the precious metals trading at or below their costs of production and
the potential for the new information (mentioned above) to raise the floor, we believe they
offer good value, with gold and silver well placed to benefit from further market volatility.
Source: ETF Securities
IMF Working paper-The Impact of the Global Financial Crisis on Banking Globalization
Especially advanced countries hit by a systemic crisis reduced their presence abroad, with far flung and relatively small investments more likely to be sold. Poorer and slower growing countries host fewer banks today, while large investments less likely expanded. Conversely, faster host countries’ growth and closeness to potential investors meant more entry. Lending by foreign banks locally grew more than cross-border bank claims did for the same home-host country combination, and each was driven by different factors. Altogether, our evidence shows that global banking is not becoming more fragmented, but rather is going through some important structural transformations with a greater variety of players and a more regional focus.
view the IMF Working paper-The Impact of the Global Financial Crisis on Banking Globalization
Source: IMF
FSB publishes report on cross-border consistencies and global financial stability implications of structural banking reforms
Source: FSB
World Gold Council: Investment Commentary: Looking into Q4 2014
What does the current macroeconomic environment mean for gold?
Positive economic growth is supportive of gold's long-term demand
Rising interest rates do not necessarily push gold prices down
Gold’s cost effectiveness makes it an attractive portfolio hedge compared to other strategies
Constraints in mine production and falling gold recycling have kept the market in balance.
Source: World Gold Council (WGC)
IMF Working paper-Global Risks and Collective Action Failures: What Can the International Community Do?
Yet, as many public goods, provision of global public goods suffer from collective action failures that undermine international coordination. This paper discusses the obstacles to addresing these global risks effectively, highlighting their implications for the current juncture. It claims that remaining gaps in information, resources, and capacity hamper accumulation and use of knowledge to triger appropriate action, but diverging national interests remain the key impediment to cooperation and effectiveness of global efforts, even when knowledge on the risks and their consequences are well understood. The paper argues that managing global risks requires a cohesive international community that enables its stakeholders to work collectively around common goals by facilitating sharing of knowledge, devoting resources to capacity building, and protecting the vulnerable. When some countries fail to cooperate, the international community can still forge cooperation, including by realigning incentives and demonstrating benefit from incremental steps toward full cooperation.
Source: IMF
Natural Gas: The New Gold
What's cooking
Source: IMF
IMF Working paper-Are Non-Euro Area EU Countries Importing Low Inflation from the Euro Area?
Regression results suggest that falling food and energy prices have been the main disinflationary driver. But low core inflation in the euro area has also had a clear and significant impact. Countries with more rigid exchange-rate regimes and higher share of foreign value added in domestic demand have been more affected. The scope for monetary response to low inflation in non-euro area EU countries depends on concerns about financial stability and unanchoring of inflationary expectations, as well as on exchange rate regime and capital flows dynamics.
Source: IMF
Citi buys Deutsche commodities trading book in expansion push
Citi won Deutsche's oil, metals and power books this summer and autumn, the source said, after a bidding round that saw several Wall Street firms and trading houses chasing the opportunity to take on the positions of a once top-five commodities bank.
Source: Reuters
October 27, 2014-Gold supported by physical market tightness. Despite the sharp recovery in the stock
indices, strength in the US dollar and increase in bond yields, precious metals ended last week mostly flat in anticipation of the FOMC meeting this week. While the Fed is expected
to announce the end of its quantitative easing program, with potentially negative implications
for gold, the latest polling results from Switzerland showed an increasing probability for passing the Swiss Gold referendum which would force the Swiss National Bank to purchase
significant quantities of gold.
October 27, 2014-- Summary: Although cross-border bank lending has fallen sharply since the crisis, extending our bank ownership database from 1995-2009 up to 2013 shows only limited retrenchment in foreign bank presence. While banks from OECD countries reduced their foreign presence (but still represent 89% of foreign bank assets), those from emerging markets and developing countries expanded abroad and doubled their presence.
October 27, 2014--The report published on 27 October 2014 responds to a call from the G20 for the FSB, in collaboration with the IMF and the OECD, to assess cross-border consistencies and global financial stability implications of structural banking reforms, taking into account country-specific circumstances.
October 27, 2014-- Gold is up, defying expectations
The gold price is up 3.4% year-to-date (as of 20 October 2014) amid record low volatility. The fact that gold has been above its 2013-end price for all but two days this year has defied predictions from market analysts, who have generally been expecting lower prices.
In our view, there are four main reasons investors should view gold as a valuable portfolio component today:
October 24, 2014-- Summary: Abstract What do climate change, global financial crises, pandemics, and fragility and conflict have in common? They are all examples of global risks that can cross geographical and generational boundaries and whose mismanagement can reverse gains in development and jeopardize the well-being of generations. Managing risks such as these becomes a global public good, whose benefits also cross boundaries, providing a rationale for collective action facilitated by the international community.
October 22, 2014--Natural gas is creating a new reality for economies around the world. Three major developments of the past few years have thrust natural gas into the spotlight: the shale gas revolution in the United States, the reduction in nuclear power supply following the Fukushima disaster in Japan, and geopolitical tensions between Russia and Ukraine.
Over the last decade, the discovery of massive quantities of unconventional gas resources around the world has transformed global energy markets, and reshaped the geography of global energy trade. Consumption of natural gas now accounts for nearly 25 percent of global primary energy consumption. Meanwhile, the share of oil has declined from 50 percent in 1970 to about 30 percent today.
October 22, 2014--Summary: The synchronized disinflation across Europe since end-2011 raises the question of whether non-euro area EU countries are affected by the undershooting of the euro area inflation target. To shed light on this issue, we estimate an open-economy, New Keynsian Phillips curve, in which we control for imported inflation.
October 20, 2014--Citigroup Inc has bought Deutsche Bank AG's energy and metals book, a source familiar with the matter said, in the latest sign of expansion from the U.S. firm in commodities trading as rivals retrench.
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