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☆ Multiple data points suggest inflation is falling, says Cantor Fitzgerald's Eric Johnston
▼ + stars: | 2022-10-27 | 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 EmailMultiple data points suggest inflation is falling, says Cantor Fitzgerald's Eric JohnstonEric Johnston, Cantor Fitzgerald's head of equity derivatives and cross-asset strategy, joins 'Closing Bell' to discuss market repricing the chances of a soft landing, the ability for markets to maintain the current rally, and signs of inflation falling in pockets of the economy.

☆ Mediobanca open to talks on Banca Generali buyout if asked
▼ + stars: | 2022-10-27 | by ( ) www.reuters.com time to read: +2 min

Last month a source said insurer Generali (GASI.MI) could sell Banca Generali (BGN.MI) to Mediobanca to raise cash for a potential big deal of its own in the United States. If we are contacted, we are willing to talk about it," Nagel told a briefing call when asked about a possible interest in Banca Generali. "This applies to every asset," he added, not only to Banca Generali. To grow Mediobanca's wealth management operations, Nagel in 2020 considered swapping the group's 13% stake in Generali with Banca Generali. Net income in the quarter came in at 263 million euros ($264.2 million), above an analyst consensus provided by the bank of 230 million euros.

Goldman Sachs analysts predict gross finance costs for the listed UK real estate firms it covers may rise by 75% over the next five years. UK REITs are using less leverage now than before the financial crisis. Leisure and retail property vacancy rates also remain above pre-pandemic levels, Local Data Company figures show, at 10.6% and 15.4% respectively. The stock market also signals growing investor caution around UK commercial property, with an index of 15 UK REITs down 44% so far in 2022 (.TRXFLDGBPREIC) compared with a 9.8% fall in the wider FTSE 350 (.FTLC) . UK REITs index vs 30-year gilt yield($1 = 0.8906 pounds)Register now for FREE unlimited access to Reuters.com RegisterEditing by Tomasz JanowskiOur Standards: The Thomson Reuters Trust Principles.

☆ Northwestern Mutual's chief strategist says the Fed could push the economy off a deflation cliff if it doesn't slow its pace — and shares 4 ways to hedge against declining earnings
▼ + stars: | 2022-10-21 | by ( Lisa Kailai Han | ) www.businessinsider.com time to read: +6 min

Brent Schutte believes that the Fed risks pushing the US economy into a deflationary environment. He shared four asset classes to hedge against the earnings decline that many analysts anticipate. While stubbornly persistent inflation has been top of mind recently for most investors, lately Brent Schutte has been growing increasingly worried about the opposite case — deflation. "2014 to 2020, we all were worried about deflation; that's what everybody wanted to talk about. But once the economy has reached a downturn, Schutte thinks that inflation won't continue to persist.

☆ Analysis: Foreign banks amass reserves at the Fed, bracing for funding stress
▼ + stars: | 2022-10-17 | by ( Gertrude Chavez-Dreyfuss | ) www.reuters.com time to read: +5 min

So when the Fed embarked on QT, the expectation was that bank reserves held at the Fed would decline. But the decline in bank reserves has been more rapid than what some had anticipated. As of Oct. 5, bank reserves at the Fed fell under $3 trillion to $2.972 trillion, down roughly $1.3 trillion from a peak of $4.3 trillion in December 2021. As domestic bank reserves diminish, those held by FBOs at the Fed have gotten more scrutiny. "If there are structural reasons that make foreign banks more eager to hold reserves while large domestic banks' reserves declined, then there may be a risk of another inadvertent case of gridlock," said Lou Crandall, chief economist, at money market research firm Wrightson.

☆ UK housing market shows strains from "mini-budget": Rightmove
▼ + stars: | 2022-10-16 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Britain's housing market lost momentum this month after Prime Minister Liz Truss's economic plans upset financial markets and triggered a repricing of the mortgage market, data from property website Rightmove showed on Monday. Asking prices for homes coming to the market rose by 7.8% year-on-year in October, the smallest increase since January. The turmoil meant some institutions temporarily stopped selling mortgages to new customers, while others ramped up repayment rates for new loans. Rightmove reported a rush of buyers trying to complete sales before mortgage offers fixed at prior lower repayment rates expired. Register now for FREE unlimited access to Reuters.com RegisterReporting by Andy Bruce Editing by William SchombergOur Standards: The Thomson Reuters Trust Principles.

☆ Global equity, bond funds see outflows for eighth successive week
▼ + stars: | 2022-10-14 | by ( ) www.reuters.com time to read: +2 min

Oct 14 (Reuters) - Global equity and bond funds faced outflows for the eighth time in a row in the week ended Oct. 12, Refinitiv Lipper data showed, undermined by worries over a recession as global interest rates surged further. According to the data, investors dumped $7.3 billion worth global equity funds and $14.27 billion worth bond funds. The equity outflows were focused on European equity funds, which witnessed net sales worth $7 billion, while U.S. equity funds had outflows of $2 billion. Register now for FREE unlimited access to Reuters.com RegisterGlobal fund outflowsAmong bond funds, European funds again led with outflows worth $8.8 billion, while U.S. bond funds had an outgo of $4.9 billion. EM flowsAmong commodity funds, precious metal funds had a small inflow of $83.2 million, while energy and industrial metal funds witnessed outflows.

Earlier in the day the British central bank said it would continue to buy bonds this week. The pan-European STOXX 600 index (.STOXX) lost 0.56% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.97%. Emerging market stocks (.MSCIEF) lost 2.28% after hitting an April 2020 low and were set for a near-30% tumble year-to-date, their biggest decline since 2008. read moreGILT RESPITEBonds globally have been sideswiped by the rout in UK government bonds, known as gilts, pushing yields on U.S. Treasuries up sharply. Bond market trading was volatile with longer-dated U.S. Treasury yields hitting multi-year highs.

Investors were also digesting the latest moves by the Bank of England, which continued to support its bond market. read moreIn addition, the International Monetary Fund on Tuesday warned of a disorderly repricing in markets, saying global financial stability risks have increased. "Nothing has happened," to cause the rebound said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. The pan-European STOXX 600 index (.STOXX) lost 0.56% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.79%. 1/5 A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 11, 2022.

☆ Factbox: Ticking bomb: The risks the IMF sees to financial stability
▼ + stars: | 2022-10-11 | by ( ) www.reuters.com time to read: +3 min

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 potential of contagion and spillovers of stress between markets. The IMF's Global Financial Stability Report, which warned of the risks to markets, came as the Fund also cut its growth outlook in its latest World Economic Outlook. read moreHere are key indicators of stress and risks the IMF sees to financial stability:Register now for FREE unlimited access to Reuters.com Register* LIQUIDITYDeteriorating market liquidity conditions may poserisks to financial stability, the IMF said. * CURRENCY SWAPSInternational short-term dollar funding markets have begun to show signs of concern with a widening of the cross-currency basis swap spreads, a proxy for the marginal cost of offshore US dollar funding, the IMF said. * LEVERAGE LOAN MARKET CREDIT CRUNCHTighter financial conditions, mounting liquidity strains, and decelerating earnings growth could presage ratings downgrades and eventual defaults and lower returns for collateralized loan obligations (CLO) investors, the IMF said.

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."

☆ Bank of England intervenes in bond markets again, warns of 'material risk' to UK financial stability
▼ + stars: | 2022-10-11 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

LONDON — The Bank of England on Tuesday announced an expansion of its emergency bond buying operation as it looks to restore order to the country's chaotic bond market. The central bank said it will "widen the scope" of its purchases of U.K. government bonds — known as gilts — to include index-linked gilts from Oct. 11 until Oct. 14. Index-linked gilts are bonds where payouts to bondholders are benchmarked in line with the U.K. retail price index. "The beginning of this week has seen a further significant repricing of UK government debt, particularly index-linked gilts. Dysfunction in this market, and the prospect of self-reinforcing 'fire sale' dynamics pose a material risk to UK financial stability," the bank warned.

☆ BoE drawn into risky game of financial whac-a-mole
▼ + stars: | 2022-10-11 | by ( Neil Unmack | ) www.reuters.com time to read: +5 min

On Tuesday, the UK central bank said it would buy more bonds to avert a fire sale by pension funds. But its plan to end such support on Friday is hampered by a distressed bond market, and wayward government. Prime Minister Liz Truss’s unfunded plan to cut taxes had triggered a surge in government bond yields, which in turn forced indebted pension funds to sell assets. Register now for FREE unlimited access to Reuters.com RegisterThere are plenty of signs that the bond market remains distressed. Without a credible fiscal strategy, investors may continue to steer clear of UK gilts.

☆ Fire-fighting Bank of England forced to buy inflation-linked bonds
▼ + stars: | 2022-10-11 | by ( Andy Bruce | ) www.reuters.com time to read: +3 min

Citing a "material risk" to financial stability arising from a rout in British government bonds - known as gilts - the BoE said it would buy up to 5 billion pounds ($5.51 billion) of index-linked debt per day, starting Tuesday. Rather than increase the existing commitment to buy up to 10 billion pounds of gilts each day, as announced on Monday, the purchases will run alongside existing purchases of long-dated conventional bonds, now worth up to 5 billion pounds. British inflation-linked gilts - known as linkers - suffered a massive sell-off on Monday, despite the BoE doubling the maximum size of its buy-backs of conventional long-dated gilts. "Dysfunction in this market, and the prospect of self-reinforcing 'fire sale' dynamics pose a material risk to UK financial stability." To halt freefalling prices, the BoE was forced to pledge to buy as much as 65 billion pounds ($73.63 billion) of long-dated government bonds, known as gilts.

☆ Interest rate delusion may be biggest error of all
▼ + stars: | 2022-10-06 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

The false idea exposed by the current bear market is that interest rates would remain low indefinitely. The belief that interest rates would remain at permanently low levels could prove the most costly error of all. The lowest-ever interest rates gave us the “Everything Bubble”. Now that interest rates are rising, everything is at risk. The pension funds faced margin calls on their loans, and the bond market seized up as they scrambled to raise cash.

☆ Pension fund panic led to Bank of England's emergency intervention: Here's what you need to know
▼ + stars: | 2022-09-29 | by ( Elliot Smith | ) www.cnbc.com time to read: +7 min

A central narrative emerging from the U.K.'s precarious economic position is the apparent tension between a government loosening fiscal policy while the central bank tightens to try to contain sky-high inflation. Monetary policy is trying to mop-up after the milk was spilt," Turner said. Anything less, and there will likely be more turbulence for the gilt market, and the pound, in the coming weeks," he added. Following the Bank's bond market intervention, ING's economists expect a little more sterling stability, but noted that market conditions remain "febrile." She suggested the market would have benefitted from the government "blinking first" in the face of the market backlash to its policy agenda, rather than the central bank.

☆ Premarket stocks: The bond market is crumbling
▼ + stars: | 2022-09-29 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +7 min

New York CNN Business —The global bond market is having a historically awful year. Vanguard’s $514.5 billion Total Bond Market Index, the largest US bond fund, is down more than 15% so far this year. The iShares 20+ Year Treasury bond fund (TLT) (TLT) is down nearly 30% for the year. What’s next: The bond market may face fresh volatility on Friday with the release of the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index for August. If the report comes in above expectations, expect bond yields to move even higher.

Higher interest rates are coming, and they are likely to remain in place for a long time. The Fed last week raised rates by three-quarters of a percentage point, the third consecutive hike of that size. 'RESET' UNDERWAYTo some degree, in fact, the thrust of Fed policy is to force just such a reevaluation. According to one index maintained by the Chicago Fed, overall financial conditions remain below their historical average, or slightly on the "loose" side, a signal that Fed officials may still have, as many of them put it, "work to do." Rising interest rates paid on safe investments like short-term U.S. Treasuries help that effort by changing the prices of a broad array of other assets.

☆ Bank of England to buy 65 billion pounds of UK bonds to stem rout
▼ + stars: | 2022-09-28 | by ( David Milliken | ) www.reuters.com time to read: +4 min

Citing potential risks to UK financial stability, the BoE also said it would delay the start of a programme to sell down its 838 billion pounds ($891 billion) of government bond holdings, which had been due to begin next week. "Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the BoE said. "This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy." "There are schemes running out of cash at the moment," one pensions consultant said before the BoE intervention. The BoE's intervention reduced long-dated bond yields back to their level at the end of Friday - after the initial negative reaction to Kwarteng's statement - but shorter-dated yields were still higher.

Markets fear the plan will drive up inflation, forcing the Bank of England to push interest rates as high as 6% next spring, from 2.25% at present. “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. To prevent that happening, the central bank said it would buy long-dated UK government bonds until October 14. Yields on 10-year UK government bonds fell sharply after the Bank of England’s announcement on Wednesday but remain elevated. UK interest rates have risen seven times since December 2021.

☆ Bank of England intervenes in bond market after historic sell-off
▼ + stars: | 2022-09-28 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

LONDON — The Bank of England will suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market chaos unleashed by the new government's so-called mini-budget. In a statement Wednesday, the central bank said it was monitoring the "significant repricing" of U.K. and global assets in recent days, which has hit long-dated U.K. government debt particularly hard. "Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. "In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses." As of Wednesday, the bank will begin temporary purchases of long-dated U.K. government bonds in order to "restore orderly market conditions," and said these will be carried out "on whatever scale necessary" to soothe markets.

☆ Breakingviews: BoE’s bond-buying U-turn is worth the risk
▼ + stars: | 2022-09-28 | by ( Neil Unmack | ) www.reuters.com time to read: +5 min

The fallout makes it even harder for Governor Andrew Bailey to convince markets he can tighten monetary policy. His decision on Wednesday to buy UK government debt and delay plans to sell down its 857 billion pound ($915 billion) bond portfolio carries big risks. Bailey’s goal is to cut holdings by 80 billion pounds over the next year. UBS analysts reckon issuance of gilts, after factoring in sales and redemptions from QT, will reach 355 billion pounds in the year ending March 2024. If Bailey can now tighten monetary policy without freaking out investors, his U-turn will have been worth the risk.

☆ Bank of England statement on purchase of long-dated bonds
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +3 min

Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. "In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses. "To achieve this, the Bank will carry out temporary purchases of long-dated UK government bonds from 28 September. "On 28 September, the Bank of England’s Financial Policy Committee noted the risks to UK financial stability from dysfunction in the gilt market. "The Monetary Policy Committee has been informed of these temporary and targeted financial stability operations.

☆ Bullard: Recession a risk, but more on a global than U.S. basis
▼ + stars: | 2022-09-27 | by ( ) www.reuters.com time to read: +2 min

St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015. But with strong U.S. job growth and strong household balance sheets, "talk about the recession story should be more on a global basis than a U.S. basis," he said, with the possibility of Europe and China pulling the rest of the world into a downturn. Those high rates will, Bullard said, have to be maintained for "some time," a fact that has triggered a fast repricing of financial assets in recent weeks and raised concerns that Fed policy is heightening risks for the global economy. "We certainly do internalize the spillover effects" of Fed policy, Bullard said. Register now for FREE unlimited access to Reuters.com RegisterReporting by Howard SchneiderOur Standards: The Thomson Reuters Trust Principles.

☆ UK finance minister will meet with Wall Street banks after the newly unveiled mini-budget sparked panic in markets and sent the pound plummeting
▼ + stars: | 2022-09-27 | by ( Carla Mozée | ) www.businessinsider.com time to read: +2 min

The UK Chancellor of the Exchequer Kwasi Kwarteng is scheduled to meet with Wall Street execs, Wednesday. Kwarteng is conducting outreach about the UK's newly announced mini-budget, Bloomberg reported. The pound dropped to a record low with investors spooked by the plan that includes £45 billion in tax cuts. The pound hit a low of $1.0350 on Monday but has since recovered some ground, trading at $1.0671 on Tuesday. Bank of England Governor Andrew Bailey said Monday the central bank was monitoring repricing in financial markets but didn't announce an emergency meeting.

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