Global ETF News Older than One Year
BIS: Effects Of Fed Policy Rate Forecasts On Real Yields And Inflation Expectations At The Zero Lower Bound
July 21, 2020--Focus
Long-term real interest rates play an important part in the transmission of monetary policy measures to aggregate demand. But there are concerns that the unconventional monetary policy tool of forward guidance may not be effective when policy rates fall to zero, ie reach their zero lower bound (ZLB). A further concern is that the publication of policy rate forecasts at the ZLB may be perceived as an unconditional commitment, thus undermining the credibility of monetary policy.
We investigate both these concerns for the policy rate forecasts made by the Federal Reserve in its Summary of Economic Projections (SEP).
Contribution
We study how surprises in the Fed's SEP policy rate forecasts made at the ZLB affect real yields and breakeven inflation rates across the yield curve. We use forward rates with horizons from two to 10 years ahead derived from nominal and index-linked US government bonds.
Findings
We find that surprises in the SEP policy rate forecasts significantly affect real yields in the expected direction across the yield curve. By contrast, breakeven inflation rates are little affected, including five-year breakeven inflation rates five years ahead, a common measure of monetary policy credibility. This suggests that policy rate forecasts by the Fed at the ZLB managed to affect real yields without adversely affecting monetary policy credibility.
Source: BIS
Dominant Currencies and the Limits of Exchange Rate Flexibility
July 20, 2020--Faced with an unprecedented shock of collapsing global demand and commodity prices, capital outflows, major supply chain disruptions and a generalized drop in global trade, many emerging markets and developing economies' (EMDEs) currencies have weakened sharply. Will these currency movements support the recovery of these economies?
Building on a new dataset, research laid out in a new IMF Staff Discussion Note indicates that the short-term gains from weaker currencies may be limited. This is especially true for EMDEs where firms price their international sales and finance themselves in a few foreign currencies, notably the US dollar-so-called Dominant Currency Pricing and Dominant Currency Financing.
Source: IMF
Big banks look to the cloud to accelerate digital shift
July 20, 2020--Goldman Sachs, Deutsche Bank and HSBC sign partnership deals in tech awakening
As their booming share prices testify, technology companies have been brimming over with new business during the coronavirus pandemic.For banks, there has been a special tech awakening: to the merits of cloud computing.
After years of foot-dragging, many have been abandoning their cautious approach to cloud-based services and signing up with gusto to outsource their storage of data and other activities that demand high-intensity computing power.
Source: FT.com
IMF Working Paper-COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows
July 17, 2020--Summary:
We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and demand shocks with credit card purchases.
Both shocks are also affected from changing infection rates under different lockdown scenarios. Being an open economy amplifies the economic costs through two main channels. First, the demand shock has domestic and external components. Second, the initial shock is magnified due to domestic and international input-output linkages.
Source: IMF
Fixed-income ETFs AUM surged to US$1.3tn in June
July 16, 2020--During the worst fits of coronavirus-driven turbulence that hit financial markets earlier this year, critics were quick to lambast fixed-income ETFs, seizing on the large differentials between the funds and their underlying holdings as evidence of their failure.
But according to new figures from BlackRock, the ETFs have emerged from the crisis with more appeal than ever.
In its latest global survey of fixed-income ETFs, the global asset manager found that global fixed income ETFs grew 30% in the past 12 months ended in June, with a final AUM record of US$1.3 trillion. More than four fifths of the growth (84%) came from inflows, with record amounts of investor capital flowing in during the most recent quarter.
Source: wealthprofessional.ca
FSB sets out action to maintain financial stability during COVID
July 15, 2020--The Financial Stability Board (FSB) today published a letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on 18 July 2020. The FSB also delivered to the G20 a report on the financial stability implications of, and policy measures taken in response to, the COVID-19 pandemic.
The Chair's letter sets out a number of areas of focus for the FSB during the COVID Event:
Assessing vulnerabilities during the current crisis. Volatility in markets has decreased but may well return. The FSB has identified a number of priority areas that require further analysis, including, among others, risks related to liquidity stress; the debt burden of non-financial corporates; and effects of credit rating downgrades. The FSB's monitoring provides essential and near real-time input for policymakers to anticipate and address developing risks in the financial system.
Source: FSB
New ETF launches show resilience in face of pandemic
July 15, 2020--Analysts disagree over whether sector is due for a setback as Covid-19 effects are felt more deeply
Covid-19 has paralysed business activity across the globe, but the ETF industry appears to be made of sterner stuff. The pandemic has, so far at least, had a limited impact on the pace of listings of shiny new exchange traded funds.
A lively debate is afoot, however, as to whether the sector has delayed its day of reckoning or whether or not even the worst pandemic for a century can meaningfully disrupt the seemingly endless conveyor belt of new products dreamt up by the industry.
Source: FT.com
World Gold Council-Gold mid-year outlook 2020: Recovery paths and impact on performance
July 14, 2020--Investors have embraced gold in 2020 as a key portfolio hedging strategy. Looking ahead, expectations for a faster recovery (V-shaped) from COVID-19 are shifting towards slower recovery (U-shaped), or potential setbacks from additional waves of infections (W-shaped).
Regardless of the recovery type, the pandemic will likely have a lasting effect on asset allocation. It will also continue to reinforce the role of gold as a strategic asset.
Our new gold market outlook examines how the combination of high risk, low opportunity cost and positive price momentum looks set to support gold investment and offset weakness in consumption from an economic contraction.
Source: gold.org
Investors must prepare portfolios for Covid-19 debt crunch
July 14, 2020--The monetary stress attributable to Covid-19 is much from over. Investors ought to brace for non-payments to unfold far past essentially the most susceptible company and sovereign debtors, in a reckoning that threatens to tug costs decrease.
There remains to be time to get forward of this pattern. Rather than shopping for belongings at valuations stunningly decoupled from underlying company and financial fundamentals, buyers ought to assume much more concerning the restoration worth of their belongings and alter their portfolios accordingly.
Source: universalpersonality.com
BlackRock punishes 53 high-emissions companies over climate inaction, puts 191 more on watch
July 14, 2020--BlackRock has revealed that it took voting action against 53 companies on climate grounds in the first half of 2020, including ExxonMobil and Air Liquide.
The asset manager provided clients with a new report on Tuesday (14 July), outlining how it is ramping up its climate-related engagements with businesses this year.
BlackRock notably changed its investment stewardship targets and processes earlier this year, after joining Climate Action 100+.According to the report, 244 of the companies in BlackRock's portfolios are making insufficient progress integrating climate risks into their business models and/or disclosures.
Of these companies, 53 were found to have repeatedly ignored the climate-related demands of investors. As such, BlackRock took voting action against them, either by calling for executive accountability or backing new shareholder proposals which would lead to stricter environmental requirements.
Source: edie.net
