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☆ Central bank tests spur global instant payment hopes
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +1 min

LONDON, March 23 (Reuters) - A year of tests run by central banks in Italy, Malaysia and Singapore have spurred hopes for a global instant payments network accessible at the tap of a mobile phone. Current transfers are slowed by the patchwork of more than 60 different instant payment networks, so central banks involved in the new tests have been working on ways to improve the process. The Bank for International Settlements (BIS), the central bank umbrella body, which helped oversee the "Nexus" trials, said the three countries involved had successfully sent payments between themselves using only mobile phone numbers. Looking ahead, the BIS said further trials would be run by Indonesia, Malaysia, the Philippines, Singapore and Thailand with the hope that "Nexus could eventually be implemented globally." Reporting by Marc Jones Editing by Mark PotterOur Standards: The Thomson Reuters Trust Principles.

LONDON, March 23 (Reuters) - Credit Suisse (CSGN.S) bondholders are seeking legal advice after the Swiss regulator ordered 16 billion Swiss francs ($17.5 billion) of Additional Tier-1 (AT1) debt to be wiped out under its rescue takeover by UBS (UBSG.S). Not only did bondholders expect protection, but UBS is paying $3.23 billion to Credit Suisse shareholders. One Paris-based manager of a debt fund that held Credit Suisse AT1s said he had been "spammed" with emails from lawyers. Facing any challenge could be Credit Suisse, its new owner UBS, Swiss regulator FINMA or the Swiss government. It also cited an emergency March 19 ordinance which it said authorised FINMA to instruct Credit Suisse to write off the bonds.

☆ EU's EIB to break 4-year Turkey lending ban with earthquake aid
▼ + stars: | 2023-03-20 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

LONDON, March 20 (Reuters) - The European Union's lending arm, the European Investment Bank, is to provide 500 million euros ($540 mln) for Turkey's post-earthquake rebuilding efforts, suspending an almost-total ban on financing for Turkey. The EIB stopped virtually all lending in Turkey after a row over oil and gas drilling off Cyprus nearly four years ago. But the severity of last month's quake, which killed nearly 56,000 people in Turkey and neighbouring Syria, has prompted it to make an exception. Turkey is set to hold pivotal presidential and parliamentary elections on May 14 and EU members are wary of a resumption of EIB lending being seen as an indirect backing of incumbent president Tayyip Erdogan's re-election campaign. The EIB lent around 2 billion euros a year in Turkey between 2009 and 2016 before the concerns about Ankara's domestic crackdown first saw the bank scale back its lending in the country.

JOHANNESBURG, March 17 (Reuters) - Debt restructuring programmes in Ghana and Zambia are going in "diverging directions" due to Zambia's larger exposure to Chinese lenders and its weaker ability to cope with a large amount of debt, investment bank Citi said on Friday. Ghana was likely to get an International Monetary Fund (IMF)board sign-off for a $3 billion rescue loan in the next few weeks, while Zambia's restructuring had stalled, Citi's analysts said in a note to clients. Ghana defaulted on its external debts in December and has since sealed a domestic debt swap and requested a restructuring of its bilateral debts via the G20's Common Framework vehicle. "Our more positive view (on Ghana) is supported by a strong commitment by the IMF and Paris Club to achieve a quick breakthrough," the Citi note said. "Assuming a 12.5% exit yield... suggests an average price uptick of 10 cents" on bond prices, the note said.

☆ S&P Global says banks' unrealized losses manageable at this stage
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: 1 min

LONDON, March 16 (Reuters) - Rating agency S&P Global said on Thursday that the banks around the world that it provides credit scores for should be able handle "unrealized losses" from global interest rate rises at present. "At this stage, we view the risks from unrealized losses as manageable," S&P said in a report published on Thursday. It said it was down largely to healthy liquidity and capital, helped further in many cases by the uptick in 2022 earnings, although it would continue to monitor the situation. "We think that most banks have the capacity to hold their (nontrading) fair-valued assets to maturity, and in doing so neutralize the impact of unrealized losses over time." Reporting by Marc Jones; Editing by Amanda CooperOur Standards: The Thomson Reuters Trust Principles.

LONDON, March 16 (Reuters) - Banks should largely be able to cope with "unrealised losses" on bonds and the collapse of Silicon Valley Bank, top credit ratings agencies S&P Global and Moody's said on Thursday, although they remained guarded on Credit Suisse's woes. "At this stage, we view the risks from unrealized losses as manageable," S&P said in a report published just days after the collapse of Silicon Valley Bank, a lender it had rated as 'investment grade' until the day it fell. Rival agency Moody's also offered its balm to the Credit Suisse jitters, saying that while it would "act appropriately" with the Swiss bank's rating, Europe's lenders remain in fundamentally good health. "That kind of confidence shock that we've just seen from the U.S. is bound to have some impact," Hill said. Reporting By Marc Jones and Lawrence White Editing by Nick ZieminskiOur Standards: The Thomson Reuters Trust Principles.

☆ JPMorgan cranks up equities "underweight" after market rout
▼ + stars: | 2023-03-15 | by ( ) www.reuters.com time to read: 1 min

LONDON, March 15 (Reuters) - JPMorgan's strategists ratcheted up the investment bank's "underweight" recommendation on equities on Wednesday and urged switching into cash following the market rout caused by Silicon Valley Bank's collapse. In a note titled "There are many carry trades, and they can't all be bailed out", JPMorgan analysts said: "We maintain a defensive tilt in our model portfolio, and further increase our UW (underweight) in equities vs. raising our cash allocation." "When the (global) economy is slowing down and financing costs are rising, all these implicit or explicit carry trades are pressured to unwind, leading to an end of the cycle. We believe we are in that stage and remain negative on risky asset classes." Reporting by Marc Jones; Editing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.

☆ VIEW SVB meltdown triggers global drop in bank shares
▼ + stars: | 2023-03-10 | by ( ) www.reuters.com time to read: +2 min

March 10 (Reuters) - The failure of troubled tech-lender SVB Financial Group's (SIVB.O) efforts to raise capital through a stock sale rippled through global markets on Friday and sent shares of many banks tumbling. read moreShares of SVB, which does business as Silicon Valley Bank, were halted on Friday after tumbling as much as 66% earlier in premarket trading. The S&P 500 banks index (.SPXBK) dropped 0.63% on Friday after a 6.6% decline on Thursday, while the KBW Regional Banking index (.KRX) was down 2.3%. Europe's STOXX banking index (.SX7P) fell almost 5%, tracking toward its biggest one-day percentage slide since June 2022. If investors are concerned about deposit flow, why punish the stocks who have sticky, operational retail checking deposits?

The S&P 500 banks index (.SPXBK) dropped 6.6% on Thursday and was set to open lower again on Friday. The crisis at SVG was feeding growing investor concerns that banks will be vulnerable to the rising cost of money. In an unusual step, Commerzbank, one of Germany's largest banks, issued a statement, playing down any threat from SVB, saying it did not see "a corresponding risk for us". "The market is treating this as a potential contagion risk," said Antoine Bouvet, senior rates strategist at ING in London. A spike in interest rates has led to a sell-off in bonds, leaving banks exposed to potential losses on the securities they hold.

[1/2] European Central Bank and SVB (Silicon Valley Bank) logos are seen in this illustration taken March 10, 2023. SVB, which does business as Silicon Valley Bank, was not immediately available for comment. "Silicon Valley Bank is shedding light on vulnerabilities across the US banking sector, primarily in the bond holdings that many large institutions hold," said Karl Schamotta, Chief Market Strategist at Corpay. “The current liquidity run on Silicon Valley Bank is having a knock-on effect on the wider banking system," said Rick Seehra, Prudential Lead at Bovill. But banking experts said SVB's issues were unique and the worries about the broader sector were not warranted.

☆ Governments' energy-related support to hit $1.65 trillion by year end - S&P Global
▼ + stars: | 2023-03-09 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

LONDON, March 9 (Reuters) - The amount of money spent by governments subsidising energy costs since Russia's invasion of Ukraine is set to reach $1.65 trillion by the end of the year, credit ratings agency S&P Global has estimated. The firm calculated the total soared to $10 trillion once COVID pandemic spending was added on and that this year would see the overall stock of global sovereign debt reach a record $65 trillion in absolute terms. S&P based the figures on the 137 countries that it provides credit scores for. It forecast those countries would borrow the equivalent of $10.5 trillion this year, below the record $11.5 trillion set in 2021, but 40% higher than the pre-pandemic average. Global government debtReporting by Marc Jones; Editing by Amanda Cooper and Alison WilliamsOur Standards: The Thomson Reuters Trust Principles.

LONDON, March 2 (Reuters) - Major central banks resumed their quest to ramp up interest rates in February after a tepid start to the year with price pressures proving more sticky than markets and many policy makers had hoped for. February saw six interest rate hikes across six meetings by central banks overseeing the 10 most heavily traded currencies. January had seen just one interest rate hike of 25 bps by Canada across three meetings by G10 central banks. "This (inflation) shock came for everyone together, but it might disappear at different rates," said Gabriel Sterne at Oxford Economics. "The disinflation trend is looking surprising good in Asia now for example where services inflation has already turned a corner."

☆ Goldman warns of possible pre-election currency market turmoil in Turkey
▼ + stars: | 2023-03-02 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

LONDON, March 1 (Reuters) - Goldman Sachs has warned of the potential for foreign exchange market instability in the run up to Turkey's elections following years of currency reserve depletion and other costly measures. While not its base case, the Wall Street bank said problems could be triggered if savers and firms became worried that a shift to more orthodox economic policies under a new government would fuel short-term FX market turbulence. "The current market uncertainty poses significant risks, in our view," Goldman said in a research note published on Wednesday. If problems do take hold the lira would fall, especially given the sharp depletion of Turkey's currency reserves in recent years. That compares to a combined short FX position - or exposure - of the central bank and treasury of $260 billion.

☆ BIS urges central banks to 'get the job done'
▼ + stars: | 2023-02-27 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

LONDON, Feb 27 (Reuters) - Central banks need to "get the job done" when it comes to getting inflation back under control, the Bank for International Settlements has said, urging them to avoid the mistakes of the 1970's by declaring victory too early. The BIS, dubbed the bank for central banks, said it was vital authorities didn't repeat the stop-start cycles of the 1970s when interest rates had to be hiked to painfully high levels after attempts to lower them resulted in an inflation surge. "Central banks have been very, very clear that at this stage the most important aspect is to get the job done," the head of the BIS' Monetary and Economic Department, Claudio Borio, said as part of a quarterly report. The BIS' report also included research showing that rate rises are more likely to cause financial system stress when private debt levels are high, although tougher "prudential policies" can reduce the risk and give central banks more room for manoeuvre. Another section looks at how higher commodity prices and the U.S. dollar exchange rate significantly affects the risk of stagflation - weak growth and high inflation - especially in developing market economies.

☆ Factbox: The countries in the grip of debt crises
▼ + stars: | 2023-02-24 | by ( ) www.reuters.com time to read: +8 min

LONDON, Feb 24 (Reuters) - Meetings being held in India will see top officials from the Group of 20 leading economies discuss how to help the growing number of countries now in the grip of debt crises. Below is a list of countries that have either defaulted on their international debt or are seen at risk of doing so. Prime Minister Denys Shmyhal said this week Kyiv is hoping to clinch a $15 billion, multi-year International Monetary Fund programme. But progress with Zambia's $13 billion debt rework has been glacial. EGYPTEgypt has experienced a double whammy from COVID-19 and soaring food and energy prices, and has struggled in recent years to contain its rising debt and debt servicing burden.

☆ IMF lays out crypto action plan, recommends against legal tender status
▼ + stars: | 2023-02-24 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

LONDON, Feb 23 (Reuters) - The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies such as bitcoin legal tender status. The global lender of last resort said its Executive Board had discussed a paper, "Elements of Effective Policies for Crypto Assets," that provided "guidance to IMF member countries on key elements of an appropriate policy response to crypto assets." The top recommendation was to "safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status." Other advice on Thursday's list, which comes as G20 decision makers meet in India, included guarding against excessive capital flows, adopting unambiguous tax rules and laws around crypto assets, and developing and enforcing oversight requirements for all crypto market actors. They "generally agreed," too, that crypto assets should not be granted official currency or legal tender status, and though strict bans of assets are "not the first-best option," a few directors thought they should not be ruled out.

☆ Global debt sees first annual drop since 2015 - IIF
▼ + stars: | 2023-02-22 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

The Institute of International Finance report published on Wednesday estimated that the nominal value of global debt declined by some $4 trillion, bringing it fractionally back under the $300 trillion threshold breached in 2021. Stronger economic activity and higher inflation meanwhile, both of which erode debt levels, saw the global debt-to-GDP ratio drop over 12 percentage points to 338% of GDP, marking the second annual drop in a row. Again, though, the improvement was driven by developed markets which saw an overall 20 percentage points fall to 390%. The emerging market debt ratio rose by 2 percentage points meanwhile to 250% of GDP, largely driven by China and Singapore. the IIF said, adding that it had pushed international investor demand for local currency EM debt to multi-year lows, "with no sign of imminent recovery".

☆ Rate jitters extend February flop for stocks
▼ + stars: | 2023-02-22 | by ( Naomi Rovnick | ) www.reuters.com time to read: +4 min

[1/3] The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, February 16, 2023. "The economic data has been much more resilient than we all thought (it would be) and we have to accept that." "A bear market rally driven by expectations that inflation would drop and interest rates would peak out may be over," said Trevor Greetham, head of multi-asset at Royal London Asset Management. "The big call this year will still be (a) recession," he added, as "interest rates go higher," in a move that would eventually spark "an earnings driven bear market (that) hasn't started yet." New Zealand's central bank also raised interest rates by 50 bps on Wednesday to a more than 14-year high of 4.75%, flagging more monetary tightening to come.

☆ 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.

☆ Adani Group hires banks to hold bond investor calls after market rout
▼ + stars: | 2023-02-15 | by ( Davide Barbuscia | ) www.reuters.com time to read: +3 min

NEW YORK, Feb 15 (Reuters) - India's Adani Group and two of its main subsidiaries caught up in a short-selling storm in recent weeks are to hold calls with bond investors on Feb. 16 and Feb. 21, according to a document seen by Reuters. The planned calls follow a long-awaited credit report issued by the Indian conglomerate earlier this week that said its companies faced no material refinancing risk, or near-term liquidity issues. According to the document sent to investors the call on Thursday for Adani Group will be attended by its Chief Financial Officer (CFO) Jugeshinder Singh and head of Group Corporate Finance Anupam Misra. An Adani Green Energy call also on Thursday will involve its CFO Phuntsok Wangyal, and an Adani Transmission call next week will be attended by its CFO Rohit Soni and CFO of Adani Electricity Kunjal Mehta. Rating agencies S&P Global and Moody's this month revised their outlooks to negative from stable for some of the group's companies, while index provider MSCI said it would cut the weightings of some Adani companies in its stock indexes.

☆ Analysis: Investors see Erdogan's earthquake response as pivotal
▼ + stars: | 2023-02-09 | by ( Marc Jones | ) www.reuters.com time to read: +4 min

Kopf was referring to Turkey's 2002 election which came three years after a 7.6 magnitude earthquake in Izmit near Istanbul that killed nearly 18,000 people. The southeast region hit by Monday's disaster accounts for a much smaller 9.3% of national GDP and a modest 8.5% of exports. Erik Meyersson, a senior economist at Handelsbanken, said it was that power that voters would now need to see working. "But if he bungles the response, perhaps this is the straw that breaks the camel's back." Magnitude 7.9 earthquake hit southern Turkey on Feb. 6Reporting by Marc Jones; Editing by Susan FentonOur Standards: The Thomson Reuters Trust Principles.

/USThe dollar index fell 0.21% from one-month highs, while the Japanese yen gained 1.21% to 131.08 per dollar after unusually strong Japanese wage data. The Australian dollar bolted 1.02% higher after its central bank reiterated further increases would be needed. Asian stocks stabilized overnight after they, like most global share markets, suffered steep losses following that U.S jobs data. Oil prices climbed more than 3% after Powell eased market concerns over rate hikes, while recovering demand in China also boosted prices. Gold eked out gains, tracking a slight pullback in the dollar, as investors mulled comments by Powell and the outlook for the Fed's rate-hike policy.

U.S. and European equity markets were mixed to lower, with the euro and pound lower against the dollar. The broad pan-European STOXX 600 index (.STOXX) was up 0.04% and MSCI's gauge of global stock performance (.MIWD00000PUS) shed 0.12%. "What's been really important is that the market sees a lower likelihood of rate cuts by the end of the year." Asian stocks stabilized overnight after they, like most global share markets, suffered steep losses following that U.S jobs data. "Sentiment in markets is dominated by central banks and the repricing of rates yet again," Kerry Craig, JPMorgan Asset Management's global market strategist, said.

☆ Sell-off fizzles out ahead of Fed, ECB and BoE speeches
▼ + stars: | 2023-02-07 | by ( Marc Jones | ) www.reuters.com time to read: +4 min

[1/2] The Federal Reserve building is seen in Washington, U.S., January 26, 2022. Then comes Federal Reserve Chairman Jerome Powell at the Economic Club of Washington during U.S. trading plus U.S. President Joe Biden's State of the Union address. DEADLY QUAKEAmong the main commodities, oil jumped for a second straight session driven by optimism about recovering demand in China, and after Monday's devastating earthquake in Turkey had shut down one of the region's major oil export terminals. "Equities have had a strong run since the start of the year so seeing an air pocket emerge now is no major surprise." Additional reporting by Scoot Murdoch in Sydney; Editing by Simon Cameron-Moore and Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

☆ Post-QE bond losses rising reality for central banks - BIS
▼ + stars: | 2023-02-07 | by ( Marc Jones | ) www.reuters.com time to read: +3 min

[1/2] The building of the European Central Bank (ECB) is seen amid a fog before the monthly news conference following the ECB's monetary policy meeting in Frankfurt, Germany December 15, 2022. The ECB and a number of national central banks in Europe have issued warnings, though. There were dozens of past examples from developing economies, including Mexico, Chile, the Czech Republic and Israel, where central banks can operate without major difficulties in negative equity, it said. "To maintain the public's trust and to preserve central bank legitimacy now and in the long run, stakeholders should appreciate that central banks' policy mandates come before profits," the paper said. Central banks transfers turning to losses($1 = 0.9317 euros)Reporting by Marc Jones; Editing by Bradley PerrettOur Standards: The Thomson Reuters Trust Principles.

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