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☆ High company valuations a 'worry,' IMF's capital markets chief says
▼ + stars: | 2024-04-17 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +1 min

High corporate valuations could pose a significant risk to financial stability as market optimism becomes untethered from fundamentals, the IMF's director of the Monetary and Capital Markets Department said Tuesday. Financial markets have been on a tear for much of this year, buoyed by falling inflation and hopes of forthcoming interest rate cuts. But that "optimism" has stretched company valuations to a point where that could become vulnerable to an economic shock, Tobias Adrian said. "We do worry in some segments where valuations have become quite stretched," Adrian told CNBC's Karen Tso Tuesday. Adrian, who was speaking on the side lines of the IMF's Spring Meeting in Washington, said that credit markets were a particular area of concern.

Persons: Tobias Adrian, Adrian, Karen Tso Organizations: Monetary, Capital Markets, International Monetary Fund, World Bank Group, Washington DC, Capital Markets Department, Financial Locations: Washington, United States

☆ America’s debt problem could spell higher interest rates in the rest of the world
▼ + stars: | 2024-04-17 | by ( Hanna Ziady | ) edition.cnn.com time to read: +5 min

The IMF said Wednesday that increased government spending, growing public debt and elevated interest rates in the United States had contributed to high and volatile yields — or interest rates — on Treasuries, raising the risk of higher rates elsewhere. “Loose fiscal policy in the United States exerts upward pressure on global interest rates and the dollar,” Vitor Gaspar, director of the IMF’s fiscal affairs department, told reporters. Higher interest rates make it more costly for households and businesses to service their loans, which can lead to defaults that cause losses at banks and other lenders, increasing financial instability. That means that even if the Fed cuts interest rates later this year — the IMF’s central scenario — US government funding costs may not fall by the same margin, he added. The IMF expects US public debt to continue rising, helping drive government debt worldwide to close to 100% of global gross domestic product by 2029, from 93% last year.

Persons: ” Vitor Gaspar, ”, Jerome Powell, ” Tobias Adrian, Gaspar, Pierre, Olivier Gourinchas, That’s Organizations: London CNN, International Monetary Fund, IMF, Federal Reserve, Treasury Department, Treasury, US, Federal Locations: United States, Washington

☆ IMF's Adrian: Do worry that some segments of the market are looking stretched
▼ + stars: | 2024-04-16 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailIMF's Adrian: Do worry that some segments of the market are looking stretchedTobias Adrian, the director of the Monetary and Capital Markets Department at the IMF, speaks to CNBC's Karen Tso at the IMF's Spring Meetings.

Persons: Adrian, Tobias Adrian, Karen Tso Organizations: Monetary, Capital Markets Department, IMF

[1/4] The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. The IMF adjusted this year's stress test to probe the impact of its baseline economic scenario of higher interest rates for longer, as well as the possibility of consumers yanking deposits. "Under the baseline, it's about 5% of banks that are relatively weak in terms of their capital. And in severe stress, that number goes up to 30% or sometimes higher," Adrian said. The IMF did not identify the banks that could be in trouble if those economic circumstances arose, but they included both small and large lenders.

Persons: Yuri Gripas, Tobias Adrian, Adrian, There's, Pete Schroeder, Michelle Price, Paul Simao Organizations: Monetary Fund, REUTERS, Rights, International Monetary Fund, IMF, Valley Bank, Switzerland's Credit Suisse Group, Monetary, Capital Markets Department, Palestinian, World Bank, U.S, Thomson Locations: Washington , U.S, California, Israel, Gaza, Marrakech, Morocco, Italy, Federal, U.S

☆ The IMF warns of bond market risks amid fears of a Silicon Valley Bank repeat
▼ + stars: | 2023-10-10 | by ( Filip De Mott | ) www.businessinsider.com time to read: +3 min

The IMF warned of bond market risks amid fears of a Silicon Valley Bank repeat. Sharp rises in bond yields could pose a risk to banking portfolios, as happened earlier this year. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. AdvertisementAdvertisementThe sharp rise in Treasury bond yields provoked warnings from the International Monetary Fund, which called on regulators to increase their financial markets oversight. In March, Silicon Valley Bank was forced to sell its bond holdings at a major loss, sparking a flight in deposits that triggered its collapse along with other lenders.

Persons: Tobias Adrian, Sharp, —, Adrian, Michael Barr Organizations: Financial Times, Service, International Monetary Fund, Silicon Valley Bank, Federal Reserve, American Bankers Association Locations: Silicon Valley, China, Europe, United States

The latter could slam global growth back to about 1% this year, effectively a recession on a per-capita GDP basis. 'PERILOUS' RISKSThe IMF's Global Financial Stability Report warned of a "perilous combination of vulnerabilities" in financial markets, saying that some participants had failed to adequately prepare for the impact of interest rate increases. Despite the warnings, the IMF's chief economist, Pierre-Olivier Gourinchas, said inflation is still the bigger problem and that price stability should take precedence over financial stability risks for central banks' monetary policy. Only in the event of a very severe financial crisis should those priorities be reversed, he said in a news conference. She added that the global financial system was also resilient due to reforms enacted after the 2008 financial crisis.

In its latest Global Financial Stability Report, the IMF said global financial stability risks had increased "rapidly" in the six months since its previous assessment when it was already touting hazards as being "significantly skewed" to the downside. The IMF said the bank failures "have been a powerful reminder" of the challenges wrought by tighter monetary policy - and the more stringent financial conditions it generated - and the buildup in vulnerabilities since the global financial crisis more than a decade ago. Problems at U.S. regional banks grew last year, as rapidly rising interest rates slashed the value of some banks' holdings in long-term assets such as home loans and government bonds. Going forward, regional banks could face greater scrutiny with respect to their holdings and funding structures, the IMF cautioned. Even still, authorities should be more prepared to deal with financial instability, the IMF recommended, including by strengthening their bank resolution regimes.

☆ There could be 'other stressors' in the non-bank financial sector, IMF warns
▼ + stars: | 2023-04-11 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThere could be 'other stressors' in the non-bank financial sector, IMF warnsTobias Adrian, director of the monetary and capital markets department at the International Monetary Fund, warns that there could be potential risks in the non-bank financial sector following a series of recent banking crises.

January saw just three meetings by central banks overseeing the 10 most heavily traded currencies with Canada delivering a 25 basis point hike while Norway and Japan stayed put. Policy rate hikes and cuts by central banks overseeing the 10 most traded currencies. Policy rate hikes and cuts by central banks overseeing the 10 most traded currencies. The January moves compare with five central banks hiking by 260 bps in December. "As we move through 2023, non-U.S. dollar central banks including most in emerging markets should become happier," he added.

LONDON, Feb 3 (Reuters) - For all intents and purposes, financial markets think the brutal central bank tightening cycle is done. That may seem like a leap of faith after 36 hours in which three major central banks lifted their main policy interest rates yet again - and warned of more to come. Elsewhere, the Bank of Canada already signalled last month that it's pausing its rate rises. Jason Draho, head of asset allocation Americas at UBS Global Wealth Management, reckons "there's little investment value in over-analyzing a central banker's mindset." And if the central banks themselves seemed inclined to allow markets to do their own thing this time around, then it was left to the IMF to act as head teacher.

In both the United States and Europe, the words of central bankers led investors to cut their estimates of the peak or "terminal" rate expected in the current tightening cycle. With financial conditions loosening despite rising policy rates, "central banks must...be resolute in their fight against inflation and ensure policy remains appropriately tight long enough to durably bring inflation back to target," Adrian and others wrote. The European Central Bank seems furthest from a likely stopping point. Combined, the statements mark the start of the endgame for central banks that were slow to recognize the onset of inflation last year before engaging in a record-setting round of rate increases. Central bankers long ago stopped using the word "transitory" in reference to inflation that proved faster and more persistent than any expected.

This year there's an added twist: the Swiss franc basis has blown out to levels not seen for years. Register now for FREE unlimited access to Reuters.com RegisterThis seems unusual because the Swiss franc is considered one of the safest, strongest and most stable assets. Even though Swiss franc cross-currency basis does move in times of market stress, it usually does so less than its peers. The Swiss franc basis stands out - it is notably wider than the others, and significantly wider than it usually is. Goldman Sachs' Swiss financial conditions index rose to an 11-year high above 107 bps late last month, up more than 300 bps so far this year.

☆ Analysis: As markets fret, Fed officials reject idea of rising financial stability risks
▼ + stars: | 2022-10-13 | by ( Michael S. Derby | ) www.reuters.com time to read: +6 min

Tobias Adrian, the International Monetary Fund's monetary and capital markets director,wrote on Tuesday that financial stability risks have risen "substantially." Fed officials have lifted the federal funds rate from near-zero levels in March to the current range of between 3.00% and 3.25%. Financial markets expect the Fed to raise the rate again by three-quarters of a percentage point at its next policy meeting in November. More rate rises are very likely after that, with central bankers penciling in a 4.6% federal funds rate by some point in 2023. Making financial conditions more restrictive is key to how monetary policy operates.

☆ Further 20% fall in U.S. stocks ‘certainly possible,’ says IMF director
▼ + stars: | 2022-10-12 | by ( Jenni Reid | ) www.cnbc.com time to read: +1 min

A shift in investor sentiment could see a further 20% downside for U.S. stock markets, according to the International Monetary Fund's director of monetary and capital markets. Sentiment and risk premia have held up "pretty well" so far, leading to an "orderly tightening," he said Tuesday. Asked about a recent CNBC interview with Jamie Dimon, in which the JPMorgan chief executive said the S&P 500 could easily fall by another 20%, Adrian said it was "certainly possible." The U.S. Federal Reserve raised its funds rate to 3%-3.25%, the highest it has been since early 2008, in September as it attempts to cool 8.3% year-on-year inflation. The latest U.S. inflation figures are due Thursday.

REUTERS/Brendan McDermid/File PhotoOct 12 (Reuters) - Signs of stress are growing in the global financial system, sparking worries over everything from contagion between markets to ruptures in financial products. This week alone, a gloomy report from the International Monetary Fund flagged risks of “disorderly asset repricings” and “financial market contagions” while JPMorgan chief Jamie Dimon predicted a looming recession. Global financial conditions, which reflect the availability of funding, touched their tightest since 2009 in late September, an index compiled by Goldman Sachs showed, lifted by surging interest rates, falling equities and a soaring dollar. “There are dollar funding shortages.”The IMF's Global Financial Stability Report, released Tuesday, also highlighted specific risks in open-end investment funds and the leveraged loan market. U.S. Treasury Secretary Janet Yellen on Tuesday said she has not seen signs of financial instability in U.S. financial markets despite high volatility.

Cutting its 2023 global growth forecasts further, the IMF said in its World Economic Outlook that countries representing a third of world output could be in recession next year. The global lender maintained its 2022 growth forecast at 3.2%, reflecting stronger-than-expected output in Europe but a weaker performance in the United States, after torrid 6.0% global growth last year as the COVID-19 pandemic eased. China's growth outlooks also were downgraded as it struggles with continued COVID-19 lockdowns and a weakening property sector, where a deeper downturn would slow growth further, the IMF said. The growing economic pressures, coupled with tightening liquidity, stubborn inflation and lingering financial vulnerabilities, are increasing the risks of disorderly asset repricings and financial market contagions, the IMF said in its Global Financial Stability Report. A man walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, U.S., May 10, 2018.

☆ IMF's Tobias Adrian: We're seeing pockets of dysfunction
▼ + stars: | 2022-10-11 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailIMF's Tobias Adrian: We're seeing pockets of dysfunctionTobias Adrian, director of the monetary and capital markets department at the IMF, speaks to CNBC's Geoff Cutmore.

WASHINGTON/NEW YORK, Oct 11 (Reuters) - The International Monetary Fund warned on Tuesday of a disorderly repricing in markets, saying global financial stability risks have increased, raising the risks of contagion and spillovers of stress between markets. "We have to go back decades to see so much conflict in the world, and at the same time inflation is extremely high." Register now for FREE unlimited access to Reuters.com RegisterThe combination of high inflation with central bank policy uncertainty "creates this environment of really high risk and volatility," he said. In its latest Global Financial Stability Report, the IMF warned that global financial stability risks had increased since the April 2022 edition, leaving the balance of risks "significantly skewed" to the downside. "In particular, volatility and a sudden tightening in financial conditions could interact with, and be amplified by, preexisting financial vulnerabilities."

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