Global ETF News Older than One Year
FSB and Basel Committee set out supervisory recommendations for benchmark transition
July 9, 2020--Continued reliance of financial markets on LIBOR poses clear risks to global financial stability.
Transition away from LIBOR by end-2021 requires significant commitment and sustained effort from both financial and non-financial institutions.
Report includes three sets of recommendations to support LIBOR transition.
The Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS) today published a report on Supervisory issues associated with benchmark transition. Continued reliance of financial markets on LIBOR poses clear risks to global financial stability. Transition away from LIBOR by end-2021 requires significant commitment and sustained effort from both financial and non-financial institutions across many jurisdictions. The report includes insights on remaining challenges to transition based on surveys undertaken by the FSB, the BCBS and the International Association of Insurance Supervisors (IAIS). It sets out recommendations for authorities to support financial institutions' and their clients' progress in transitioning away from LIBOR.
Source: BIS
S&P Global predicts global credit losses of $2.1T
July 9, 2020--Credit ratings agency S&P Global forecasted on Thursday that the COVID-19 pandemic caused credit losses for world banks of around $2.1 trillion. Compared to 2019, losses will double to $1.3 trillion in 2020.
Agency said 60% of the forecast credit losses will arise in Asia-Pacific but that the highest relative increases will occur in North America and Western Europe.
Source: teletrader.com
Gold rallies to $1 800 an ounce
July 8, 2020-- Gold's allure is only getting stronger as 2020 unfolds. Spot prices reached $1 800 an ounce and year-to-date inflows into bullion-backed exchange-traded funds have topped the record full-year total set in 2009.
Investors have favoured havens this year as the coronavirus pandemic rips through economies, spurring sustained inflows into gold-backed ETFs as central banks and governments unleash vast stimulus programs. States across the US recorded new highs in cases and deaths on Tuesday, and Federal Reserve Bank of Atlanta President Raphael Bostic said the resurgence of the virus may be threatening the pace of America's recovery.
Source: FIN24
Why ESG investing makes fund managers more money
July 8, 2020--In recent years, some investors have felt so irritated by the pious tone of the environment, social and governance sector they have joked that the ESG acronym should stand for "eye-roll, sneer and groan".
Such laughter is looking hollow now.
Among the many long-held assumptions turned upside down by Covid-19 is the notion held by many investors that ESG investing implies lower returns. Instead, 2020 suggests that virtue pays.
Consider the first four months of this year, when Covid-19 caused global markets to swoon. Over this period, the S&P 500 ESG index, which tracks big US companies with high ESG ratings, beat the normal S&P index by 0.6 per cent.
Source: FT.com
Negative interest rates can be a doom loop for pension investors
July 8, 2020--Fixed income is turning into fixed expense for those who seek haven assets for capital conservation
"On the whole, negative interest rates, no ...not an area I would want to go to,” said Bank of England governor Andrew Bailey to members of the UK parliament in March. Two months later Britain sold a government bond with a negative yield for the first time, as Covid-19 created the dystopian reality of deserted airports and traffic-free highways.
Source: FT.com
Basel Committee publishes final revisions to the credit valuation adjustment risk framework
July 8, 2020--The Basel Committee on Banking Supervision today published an updated standard for the regulatory capital treatment of credit valuation adjustment (CVA) risk for derivatives and securities financing transactions.
The revisions for the regulatory capital treatment of CVA risk include:
recalibrated risk weights;
different treatment of certain client cleared derivatives; and
an overall recalibration of the standardised and basic approach.
In November 2019 the Committee consulted on a set of targeted, final revisions to the CVA risk framework published in December 2017. The changes finalised today bring the revised CVA risk framework into alignment with the market risk framework.
Source: BIS
Implications of financial market development for financial stability in emerging market economies
July 7, 2020--Note submitted to the G20 International Financial Architecture Working Group
Introduction
Over the past two decades, financial markets in emerging market economies (EMEs) have grown bigger, broader and more liquid. Their development has strengthened the financial system's overall resilience, not least by helping EMEs realise the benefits of capital flows while addressing the challenges associated with their volatility.
The expansion of local currency bond markets in particular has enabled governments to borrow in their own currency rather than foreign ones, thus reducing the currency mismatches that exacerbated earlier EME crises. That said, financial market development has altered rather than eliminated EMEs’ vulnerability to large swings in capital flows and exchange rates. The changed nature of EMEs' vulnerability was forcefully exposed in early 2020, when the Covid-19 outbreak sparked a global retreat from risk. Portfolio rebalancing by investors led to sharp currency depreciations, which amplified portfolio outflows and falls in EME asset prices.
Source: BIS
The Long Economic Hangover of Pandemics-History shows COVID-19's economic fallout may be with us for decades
July 7, 2020--The COVID-19 pandemic's toll on economic activity in recent months is only the beginning of the story. While the rapid and unprecedented collapse of production, trade, and employment may be reversed as the pandemic eases, historical data suggest that long-term economic consequences could persist for a generation or more.
Among these are a prolonged period of depressed real interest rates-akin to secular stagnation-that may linger for two decades or more. Still,one piece of good news is that these sustained periods of low borrowing costs are associated with higher real wages and create ample room for governments to finance stimulus measures to counteract economic damage caused by the pandemic.
Source: IMF
Cboe Global Markets Reports June 2020 Trading Volume
July 6, 2020--Options ADV up 50 percent, U.S. Equities ADV up 83 percent and Global FX up 5 percent over June 2019
Cboe's four options exchanges combined set a new single day volume record with more than 16 million contracts traded
Cboe EDGX Options Exchange monthly ADV of more than one million contracts a new all-time high
Cboe EDGX Equities Exchange new monthly ADV record with more than 431 million shares traded per day
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world's largest exchange holding companies, today reported June monthly trading volume.
The data sheet contains an overview of June and year-to-date trading statistics and market share by business segment, volume in select index products, and RPC, which is reported on a one-month lag, across business lines.
Source: Cboe Global Markets, Inc.
Bassanese Bites: Range trade
Equities bounced and the $US weakened, though bond yields held remarkably steady and gold also held up well. In terms of data, June readings on U.S. manufacturing, consumer confidence and employment were all better than expected, and May existing home sales also surged back after sharp falls in March and April.
Source: betashares.com.au
July 6, 2020-Equities remain range bound as the virus spoils the re-opening party.
Global markets
Global equities managed to shrug off mounting U.S. virus concerns last week and instead focus on better than expected 're-opening' economic data. Of course, the Fed chipped in with further "whatever it takes" supportive comments, and another drug company announced early promising vaccine results.
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