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☆ G20 watchdog to study Silicon Valley Bank, Credit Suisse turmoil
▼ + stars: | 2023-06-01 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

European banking stocks plunged after the collapse of Silicon Valley (SVB) bank in the U.S. in March, creating turmoil that lead to the forced takeover of ailing Credit Suisse by UBS in Switzerland. Knot, who also heads the Dutch central bank, said the FSB has begun evaluating lessons from how the U.S. and Swiss authorities had responded to these events. "Why did FINMA, the Swiss supervisor, use a market and not a resolution solution to enable this sale? After all, we have come a long way in improving crisis preparedness in the banking sector," Knot told an event held by the European Banking Federation. Social media is also having an impact on the financial sector with one tweet able to cause a bank run to create liquidity problems, Knot said.

Persons: Klaas Knot, SVB, Huw Jones, Jason Neely, Sharon Singleton Organizations: Suisse, UBS, Basel III, European Banking Federation, Regulators, Thomson Locations: Silicon, U.S, Switzerland, Basel, Swiss

☆ Morning Bid: Hot, cold and skipping a beat
▼ + stars: | 2023-06-01 | by ( ) www.reuters.com time to read: +4 min

Like a patient with a virus, incoming data appears to blow hot and cold at the same time. Private sector and full national snapshots of payroll growth for May are due later today and on Friday. But a renewed rise in U.S. staff vacancies in April showed the labor market tightening again if anything - even a Chicago manufacturing survey alarmed with a sharp contraction in factory activity last month. The central bank's "Beige Book" on economic conditions said on Wednesday that the labor market "continued to be strong" in May "with contacts reporting difficulty finding workers across a wide range of skill levels and industries." U.S. Treasury yields crept back up on Thursday after the debt ceiling vote overnight and despite the mixed economic picture.

Persons: Mike Dolan, Philip Jefferson, Larry Fink, Klaas Knot, Patrick Harker, President Biden, Emelia Sithole Organizations: Federal Reserve, Fed, BlackRock, Treasury, U.S, San, Central Bank, Philadelphia Federal, Broadcom, Dollar, Hormel, Cooper Companies, Republicans, Reuters Graphics, Thomson, Reuters Locations: U.S, Chicago, Salesforce, San Francisco

☆ Oil prices rise as US closes in on debt deal
▼ + stars: | 2023-05-26 | by ( ) www.cnbc.com time to read: +2 min

Oil prices ticked up on Friday as U.S. officials appeared close to striking a debt ceiling deal, and as the market weighed conflicting messages on supply from Russia and Saudi Arabia ahead of the next OPEC+ policy meeting. Russia was leaning towards leaving oil production volumes unchanged because Moscow is content with current prices and output, three sources with knowledge of current Russian thinking told Reuters. Bets on falling oil prices have risen. On the supply side, U.S. oil rigs fell five to 570 this week, according to a report from energy services firm Baker Hughes Co. In May, the oil count fell by 21 rigs, which was the biggest monthly drop since June 2020.

Persons: Brent, Alexander Novak, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, John Kilduff, Baker Hughes, Klaas Knot Organizations: . West Texas Intermediate, U.S, Biden, Saudi Arabian Energy Minister, Organization of Petroleum Exporting, OPEC, Again, AAA, Dutch Central Bank, European Central Bank Locations: Russia, Saudi Arabia, Vienna, Moscow, U.S, Europe

☆ European shares edge higher as energy, bank stocks gain; US inflation data eyed
▼ + stars: | 2023-05-08 | by ( Amruta Khandekar | ) www.reuters.com time to read: +3 min

The pan-European STOXX 600 (.STOXX) rose 0.2% to 466.29 points by 0805 am GMT. The index was pressured last week when, unlike the Fed, the European Central Bank signalled more rate hikes were on the table. A slump in energy shares on weakness in crude prices also added to the declines. Energy (.SXEP) was the top sectoral gainer on Monday, up 0.8% as crude prices strengthened. Dutch Central Bank President Klaas Knot on Sunday said the ECB's rate hikes are starting to have an effect, but more will be needed to contain inflation.

☆ ECB's Knot says rate hikes are working, more needed
▼ + stars: | 2023-05-07 | by ( ) www.reuters.com time to read: 1 min

AMSTERDAM, May 7 (Reuters) - The European Central Bank's interest rate hikes are starting to have an effect, but more will be needed to contain inflation, Dutch Central Bank President Klaas Knot said on Sunday. Knot, who is also on the ECB's governing council and is known as a hawk, said he had agreed with the ECB decision on Thursday to slow the speed of rate hikes to 25 basis points, or 0.25%But, speaking on Dutch television, he said he still could support the lifting of rates to 5% from the current 3.25%, or even higher - if inflation proves more persistent than he expects. "Our policy works with a certain delay, so the biggest effects of what we have done so far are still in the pipeline," Knot said in interview on the programme Buitenhof. Reporting by Toby SterlingOur Standards: The Thomson Reuters Trust Principles.

☆ Economists and policymakers were fretting about a wage-price spiral. Not any more
▼ + stars: | 2023-04-21 | by ( Jenni Reid | ) www.cnbc.com time to read: +8 min

The experts were worried about a so-called wage-price spiral. Businesses' revenues "have risen faster than costs, and so margins have room to absorb rising labor costs." "It's not that a wage-price spiral couldn't happen, but it's low on the list of concerns versus the factors we know are problematic," she said. A key mechanism that would fuel a wage-price spiral, workers' bargaining power, has been weakened because unions have less power than in the 1970s, Makszin added. "But if you let interest rates go down against inflation and in effect weaken, you have an inflation spiral.

☆ Morning Bid: Crowded bonds unnerved
▼ + stars: | 2023-04-19 | by ( ) www.reuters.com time to read: +5 min

This has some wondering if the recent dash for cash and top-rated bonds has become a bit crowded and how much more tightening central banks have to do. As we move into the weeds of the first-quarter U.S. earnings season, it's been a mixed bag so far. That clearly unnerved UK government bonds - where 10 year yields jumped 10bps - but it also jarred sovereign bonds around the world. Elsewhere, further signs of healing were evident in the global bank funding market. Japan's Sumitomo Mitsui Financial Group (8316.T) sold $1 billion of additional tier-1 debt, the first major global bank to sell the risky securities since similar bonds issued by Credit Suisse were wiped out last month.

☆ Exclusive: ECB policymakers converging on 25-bps rate hike in May - sources
▼ + stars: | 2023-04-13 | by ( Balazs Koranyi | ) www.reuters.com time to read: +3 min

The ECB has raised rates by at least 50 basis points each at six successive meetings -- the fastest pace on record -- to fight stubbornly high inflation. The sources said that some are advocating no change in May - mostly the same Southern European policymakers who did not support last month's 50 basis point increase, while others - also a small group - argue for another 50 basis point hike. Klaas Knot of the Netherlands said it was unclear whether 50 basis points would be needed or if 25 was enough. Slovakia's Peter Kazimir said the ECB could perhaps slow down the pace of its increases while Austria's Robert Holzmann meanwhile backed another 50 basis point move. Markets currently price 25 basis point hikes each in May and June, while a third such increase is fully priced in by September.

☆ Exclusive: ECB policymakers converging on 25-bps rate hike in May , sources say
▼ + stars: | 2023-04-13 | by ( Balazs Koranyi | ) www.reuters.com time to read: +3 min

☆ Premarket stocks: Inflation just reached an inflection point
▼ + stars: | 2023-04-13 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +5 min

According to some experts, inflation rates have reached an inflection point and painful interest rate hikes could soon ease. Some economists believe that this level — around 5% — is the point at which inflation is no longer considered an emergency issue. That means the Federal Reserve could feel less pressure to quickly stabilize prices through aggressive, economically painful interest rate hikes. “The Fed … will insist that their job is done when inflation hits 2%,” Ball told Before the Bell on Wednesday. The US Treasury, Federal Reserve and Federal Deposit Insurance Corporation all intervened to ensure bank customers could access all their money and to attempt to stave off future bank runs.

☆ G20 financial watchdog seeks to learn from latest banking turmoil
▼ + stars: | 2023-04-12 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

LONDON, April 12 (Reuters) - The G20's financial watchdog on Wednesday said rules it introduced after the global financial crisis had prevented contagion from the latest banking sector turmoil, but it would remain vigilant as the outlook has become more challenging. Unlike other market shocks, the latest episode originated in the financial sector, and therefore "put to the test" the G20's financial reforms, FSB Chair Klaas Knot said in a letter to G20 finance ministers and central bankers meeting in Washington. He said "rapid and effective" actions by authorities in Switzerland, the United States and other jurisidictions maintained global financial stability. "Without these reforms, the stress faced by individual banks could have led to broader contagion within the financial system," Knot said. The outlook for financial stability had become more challenging, Knot said, and the need for financial authorities to learn lessons and act upon them was "all the greater".

☆ How to avoid the next crisis? Banks may have to hold more cash
▼ + stars: | 2023-04-12 | by ( Anna Cooban | ) edition.cnn.com time to read: +4 min

London CNN —Regulators must learn “important lessons” from this year’s banking turmoil, the world’s top financial watchdog has said. Requiring banks to hold more cash to pay out depositors may be one of them. External shocks that have roiled global markets in recent years include the coronavirus pandemic and Russia’s invasion of Ukraine. In other words, banks could be told to hold more assets that can be easily converted into cash to pay back creditors in times of crisis. In the United States, the Federal Deposit Insurance Corporation said it would guarantee all deposits held within Silicon Valley Bank, including those above $250,000 per person.

☆ Terrorism experts say Trump's 'dangerous' rhetoric offers his extreme followers 'an excuse' for violence if he's indicted
▼ + stars: | 2023-03-24 | by ( John Haltiwanger | ) www.businessinsider.com time to read: +7 min

Experts on political violence are alarmed by Trump's latest rhetoric as he faces a possible indictment. They warn that Trump's words could trigger riots or assassinations. He has viciously attacked figures like Manhattan District Attorney Alvin Bragg and mocked calls for peaceful protests — leading extremism experts to warn of the potential for political violence. In one of his latest posts to Truth Social, Trump's social media platform, the former president threatened "death and destruction" if he's indicted. A number of those arrested over the insurrection have said that Trump's words drove their behavior.

☆ Analysis: End of central bank rate hikes now firmly on the horizon
▼ + stars: | 2023-03-23 | by ( Balazs Koranyi | ) www.reuters.com time to read: +5 min

The U.S. Federal Reserve, the European Central Bank and the Bank of England all raised rates as expected in the last week, but each of them signalled caution about their next move, leaving investors unsure where borrowing costs are going. Central banks have also been quick. This is lightning-fast by central banking standards and ECB's Knot said policymakers needed to have a deeper look at how it is affecting lenders. Combined, these factors suggest that big central banks are nearly done, and that upcoming rate moves may be their last. If so, our view is that it could indeed substitute for further rate hikes," Michael Gapen at Bank of America said.

☆ Italy's Visco raps ECB colleagues in widening hawk-dove divide
▼ + stars: | 2023-03-08 | by ( Gavin Jones | ) www.reuters.com time to read: +2 min

ROME, March 8 (Reuters) - European Central Bank governing council member Ignazio Visco on Wednesday criticized some fellow policymakers for comments on future interest rates that diverged from what had been agreed at ECB meetings. "For this reason I don't appreciate comments by my colleagues regarding future and prolonged increases in rates," Visco added, in unusually blunt remarks that highlight a widening rift at the Frankfurt-based ECB. Visco said that while the ECB had managed to stabilise inflation expectations, geopolitical uncertainties meant economic developments were hard to predict. Other governing council members, considered policy hawks who attach overriding importance to curbing inflation even if it means hurting growth and employment, have gone further. The ECB has no policy meeting in April.

☆ Analysis: Traders relaxed as ECB starts running down massive bond holdings
▼ + stars: | 2023-03-01 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +6 min

So far traders are optimistic, comforted by an initially small pace of bond sales and a predictable structure. U.S. and UK central banks have started QT, although the Bank of England was forced to delay its plans following turmoil in British bond markets last year. said DZ Bank's head of government bond trading Dalibor Jarnevic. If APP reinvestments stop before the end of 2024, ECB market presence would rely on reinvestments under the more flexible Pandemic Emergency Purchase Programme (PEPP). Whatever the size or pace, traders are seeking opportunities as the ECB makes the shift to QT.

"For energy, food and goods, there’s a lot of forward-looking indicators saying that inflation pressures in all of those categories should come down quite a bit." Other policymakers, including board member Isabel Schnabel and Dutch central bank chief Klaas Knot, have expressed concern core inflation could get stuck and perpetuate inflation. For the ECB to end rate hikes, Lane outlined three criteria. The bank needs lower inflation projections through its three-year forecasting horizon and to make progress in lowering actual underlying inflation. "Actual goods retail prices are still very strong, but the intermediate stage has been a good predictor of price pressures," Lane said.

☆ G20 watchdog says commodity market concentration poses threat to wider economy
▼ + stars: | 2023-02-20 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

The FSB, which coordinates financial rules for G20 economies, said that forced governments to offer liquidity to some cash-strapped market participants. But fallout from the surge in nickel prices echoed concerns over large, concentrated positions and opacity in commodities more generally. The commodities market adapted to stress by switching to opaque over-the-counter (OTC) or off-exchange contracts where margin requirements are less strict, making ties between commodities and banks more complex, the report said. FSB Commodities Graphic 1The FSB said vulnerabilities in commodities are similar to those in non-bank financial intermediaries as economies went into COVID-19 lockdowns, and are now being addressed. FSB Commodities Graphic 2Reporting by Huw Jones; Editing by Kirsten DonovanOur Standards: The Thomson Reuters Trust Principles.

☆ Factbox: Key ECB policymaker comments since Feb rate hike
▼ + stars: | 2023-02-17 | by ( ) www.reuters.com time to read: +4 min

By smoothing our policy rate hikes – that is, moving in small steps – we can ensure that we calibrate (policy) more precisely. Boris Vujcic, Croatian central bank governor, Feb. 10"I would agree that we are likely to see more rate action beyond March." Joachim Nagel, German central bank chief, Feb. 7"From where I stand today we need further, significant rate hikes." Pierre Wunsch, Belgian central bank chief, Feb. 3"I don’t think we're going to move from 50 basis points (in March) to zero. Gediminas Simkus, Lithuanian central bank chief, Feb. 3"The March rate hike is not the last one.

☆ ECB's Panetta calls for small rate hikes as inflation falls
▼ + stars: | 2023-02-16 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 16 (Reuters) - The European Central bank should start raising its interest rates in smaller increments and avoid committing to future moves as inflation in the euro zone falls, ECB board member Fabio Panetta said on Thursday. "With rates now moving into restrictive territory, it is the extent and duration of monetary policy restriction that matters," Panetta told an event in London. Financial markets expect the ECB to increase the rate it pays on bank deposits to at least 3.5% by the summer, from 2.5% currently. Panetta also predicted that core inflation, which has become the key variable in the ECB's debate, "would eventually follow" headline inflation in falling and there was no evidence of price expectations getting out of control despite rising wages. He also called for a "a measured approach" to the ECB's unwinding of its bond holdings, which Knot and Nagel, among others, want to accelerate.

☆ G20 watchdog homes in on decentralised finance after FTX crash
▼ + stars: | 2023-02-16 | by ( Huw Jones | ) www.reuters.com time to read: +4 min

FSB member countries will now "proactively" analyse vulnerabilities from DeFi as part of regular monitoring of crypto markets, the report said. The collapse of FTX last November exposed vulnerabilities in intermediaries and DeFi, the report said. FSB DeFi Graphic 1SUPERVISION GAPSThe most worrying vulnerability in DeFi relates to "mismatches" in liquidity from different maturities in liabilities and assets, the report said. Until the sharp retreat in bitcoin prices and the FTX crash, regulators had largely focused on cryptoassets rather than related technology. FSB DeFi Graphic 2Reporting by Huw Jones Editing by Helen PopperOur Standards: The Thomson Reuters Trust Principles.

☆ Analysis: ECB faces new communication challenge as inflation falls
▼ + stars: | 2023-02-16 | by ( Balazs Koranyi | ) www.reuters.com time to read: +5 min

But core inflation is proving stubborn and could still rise from last month's 5.2%. "We have to continue to emphasize that we have this medium term perspective," Klaas Knot, the Dutch central bank chief said. It has oscillated between focusing on current inflation, future inflation and core inflation. Wages are the biggest factor in that sector's prices and services inflation is still just above 4%. So wage growth of the magnitude of 5% or more could push services inflation even higher.

☆ ECB must keep raising rate despite public sacrifice, Vujcic says
▼ + stars: | 2023-02-10 | by ( Balazs Koranyi | ) www.reuters.com time to read: +4 min

Euro zone core inflation could drop below headline price gorwth in 2023Still, that is not a signal that the ECB's job is done, the Croatian argued. "There is a possibility that headline inflation will fall to 2% much sooner than expected due to various factors ... (that) bring the headline figure down sharply, below core inflation," Vujcic said. Dutch central bank chief Klaas Knot has also warned that headline inflation could fall below underlying prices. Economists call sacrifice ratio the loss suffered in order to achieve a reduction in the long-run inflation rate. "We would have to explain to public why we are keeping restrictive monetary policy stance if headline inflation already fell," Vujcic said.

☆ European shares hit fresh nine-month high on earnings boost
▼ + stars: | 2023-02-09 | by ( Ankika Biswas | ) www.reuters.com time to read: +3 min

The pan-European STOXX 600 (.STOXX) was up 0.8% at 0920 GMT, extending gains for a third straight session. Shares of Sweco AB (SWECb.ST), a Swedish construction and engineering company, jumped 11% to top the STOXX 600 following its upbeat fourth-quarter earnings. An over 5% gain in AstraZeneca (AZN.L) on 2023 earnings and revenue growth forecast boosted the healthcare sub-index (.SXDP). Of the 93 STOXX 600 companies that have reported earnings so far, more than half have beaten market expectations, Refinitiv data showed on Tuesday. Signs of economic resilience and better-than-feared corporate earnings have helped European stocks outperform their U.S. counterparts so far this year.

☆ ECB's Knot sees big May rate hike if core inflation doesn't fall: MNI
▼ + stars: | 2023-02-08 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, Feb 8 (Reuters) - The European Central Bank may extend its streak of large interest hikes into May if core inflation doesn't ease by then, ECB policymaker Klaas Knot said on Wednesday. "Once we see a clear and decisive turn in underlying inflation dynamics, I...expect us to move to smaller steps." He expected inflation in core goods to start falling too, also thanks to easing supply constraints. But he warned that inflation in core services may prove sticker and may get a further boost from rising wages. He expected workers to gain more bargaining power in salary negotiations as the economy holds up better than the ECB expected only a few weeks ago.

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