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☆ Morning Bid: Dollar on the jobs line
▼ + stars: | 2022-12-02 | by ( ) www.reuters.com time to read: +2 min

Tracking yields lower, the dollar is heading towards the weekend down heavily on the yen for the week and eyeing smaller losses on the euro and most other currencies. The next test is Friday morning's U.S. jobs report, where a downside surprise could rip the dollar down further. Stock buying, rocketing local rates and the retreat in the dollar also seem to have finally given a bid to the Hong Kong dollar , which has bounced from the weak end to the middle of its trading band. Limits on withdrawals from a $69 billion unlisted Blackstone trust after large redemptions hint at losses and stresses in global portfolios. People familiar with the matter said most of the redemptions came from Asian investors needing the cash.

☆ ECB's Schnabel pushes back on smaller rate hikes
▼ + stars: | 2022-11-24 | by ( ) www.reuters.com time to read: +3 min

However Schnabel, the most influential voice in the hawkish camp, said this was premature and could even prove counter-productive. "Incoming data so far suggest that the room for slowing down the pace of interest rate adjustments remains limited, even as we are approaching estimates of the 'neutral' rate," she told an event in London. "The extraordinarily large degree of uncertainty surrounding such estimates implies that they cannot serve as a yardstick to inform the appropriate pace of interest rate adjustments. Dutch governor Knot expressed doubts over market expectations for the ECB's deposit rate, currently at 1.5%, to peak at 3%. In all honesty, I'm not sure about that," Knot told a hearing at the Dutch parliament.

☆ Swedish c.bank raises policy rate to 2.5%, will keep hiking
▼ + stars: | 2022-11-24 | by ( ) www.reuters.com time to read: +2 min

STOCKHOLM, Nov 24 (Reuters) - Sweden's central bank raised its key rate by three-quarters of a percentage point on Thursday to 2.5% and signalled it would tighten policy further next year to fight surging inflation. "The forecast shows that the policy rate will probably be raised further at the beginning of next year and then be just below 3 per cent." Analysts in a Reuters poll had forecast a 75 basis point hike and that the central bank would raise its rate-path forecast. In the United States, the Federal Reserve may soon scale back the pace of its interest rate rises after four consecutive 75 basis point increases. In Europe, some rate-setters at the European Central Bank argue there is a risk of inflation becoming entrenched.

☆ Euro zone growth will likely be negative in Q4, inflation high, ECB's De Guindos Says
▼ + stars: | 2022-11-23 | by ( ) www.reuters.com time to read: 1 min

MADRID, Nov 23 (Reuters) - The euro zone economy will likely show negative growth rates in the fourth quarter while inflation will still remain high before starting to slow down in the first quarter, European Central Bank Vice-President Luis de Guindos said on Wednesday. Reporting by Jesús Aguado; editing by Emma PinedoOur Standards: The Thomson Reuters Trust Principles.

☆ Italy’s bank lobby warns ECB of risk of attending board meetings
▼ + stars: | 2022-11-21 | by ( ) www.reuters.com time to read: +3 min

[1/2] Head of Italian Banking Association (ABI) Antonio Patuelli is seen during a meeting in Rome, Italy, October 31, 2017. REUTERS/Remo CasilliFLORENCE, Italy, Nov 21 (Reuters) - The head of Italy's banking lobby urged the European Central Bank (ECB) to consider whether its representatives could find themselves sharing responsibility for lenders’ mistakes if they attend banks’ board meetings. Speaking at a banking seminar, Italian Banking Association President Antonio Patuelli weighed in on the tensions brewing between euro zone banks and ECB supervisors. Patuelli said it should not come at a surprise if Italian banks bought fewer domestic government bonds following the ECB's decision. Touching on the issue of ECB representatives' presence at banks' board meetings, Patuelli said this could get them in trouble if they proved unable to stop what later emerged as misdeeds.

☆ Swedish c.bank set to hike policy rate to 2.5% this week, poll shows
▼ + stars: | 2022-11-21 | by ( Simon Johnson | ) www.reuters.com time to read: +3 min

But core inflation continues to pick up speed and thirteen of sixteen analysts in the poll forecast a hike to 2.5% when the central bank announces it policy decision on Nov. 24. "After high inflation in October, most indications point to a rate hike by at least 75 bps," banking group SEB said. The central bank forecast rates would peak at 2.5%. Households are already struggling with a cost-of-living crisis and the economy is expected to slow sharply - banking group Nordea expects a 2% contraction in GDP and the central bank a 0.7% fall in 2023. Furthermore, the European Central Bank (ECB) doubled its deposit rate to 1.5% at the end of October and promised more tightening in the months to come.

☆ ECB must raise rates decisively; let bonds expire from start of 2023, Nagel says
▼ + stars: | 2022-11-18 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, Nov 18 (Reuters) - The European Central Bank must continue to raise interest rates decisively and should start letting its oversized holding of government debt expire from the start of 2023, Bundesbank President Joachim Nagel said on Friday. "We must resolutely raise our key rates further and adopt a restrictive stance," Nagel, a powerful conservative, or policy hawk, said in a speech. Complementing rate hikes, the ECB needs to start running down the trillion of euros worth of government debt it hoovered up over the past decade, when inflation was still too low. "We should start reducing the size of our bond holdings at the beginning of next year by no longer fully reinvesting all maturing bonds," Nagel said. The ECB holds around 5 trillion euros worth of bonds and said it would start talks in December on how and when to run down the 3.3 trillion euros in its Asset Purchase Programme.

☆ ECB may have to restrict growth to control inflation, Lagarde says
▼ + stars: | 2022-11-18 | by ( ) www.cnbc.com time to read: +2 min

The ECB is dealing with both record-high inflation and a slowing economy, with many economists predicting a recession in the region before the end of the year. The European Central Bank will keep raising interest rates and may even need to restrict economic activity to tame inflation, ECB President Christine Lagarde said on Friday, singling out rates as the bank's key instrument over balance sheet reduction. "We expect to raise rates further – and withdrawing accommodation may not be enough," Lagarde said in a speech at a conference. The ECB will outline plans for balance sheet reduction in December and the process is expected to start with the bank allowing some, but not all, bonds to expire. "The ECB will ensure that a phase of high inflation does not feed into inflation expectations, allowing too-high inflation to become entrenched," Lagarde said.

☆ Collapse of FTX should serve as reminder of risks of crypto assets, ECB's De Cos says
▼ + stars: | 2022-11-16 | by ( ) www.reuters.com time to read: 1 min

MADRID, Nov 16 (Reuters) - The collapse of crypto exchange platform FTX should serve as a reminder for clients of the risks crypto assets entail, European Central Bank policymaker Pablo Hernandez de Cos said on Wednesday. "We hope that the events we have recently experienced will make citizens aware of the risks associated with these cyrpto assets," De Cos said when asked about FTX's collapse. The exchange, which had been among the world's largest, filed for bankruptcy protection on Friday in one of the highest-profile crypto blowups after panicked traders withdrew $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a rescue deal. Reporting by Jesús Aguado and Emma Pinedo; editing by David LatonaOur Standards: The Thomson Reuters Trust Principles.

☆ Analysis: Investors face expensive quest for year-end cash and safe assets
▼ + stars: | 2022-11-14 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +6 min

Money markets too suggest securing cash and quality assets investors need to make a smooth transition into 2023 will be expensive. But analysts noted year-end is still 1-1/2 months away and the spread tends to widen in late November as demand for cash rises. The risk is any unexpected news emerging as liquidity thins further in December, requiring investors to reconsider positioning. BofA said it now sees year-end German repo 6 percentage points below the overnight rate, which it said would still make it the most expensive on record for investors borrowing bonds then. "It's still early days, but (last year's repo pricing) would probably be the best case already in terms of year-end pricing," Commerzbank's Leister said.

☆ ECB will likely need to raise rates to level that curbs growth-Schnabel
▼ + stars: | 2022-11-10 | by ( ) www.reuters.com time to read: +2 min

LJUBLJANA, Nov 10 (Reuters) - The European Central Bank will probably need to raise interest rates to a level that weakens growth to curb high inflation that is at a growing risk of taking hold in the euro zone, ECB board member Isabel Schnabel said on Thursday. With euro zone inflation running in double digits, the ECB has been raising rates at a record pace even as the euro zone economy heads for recession. read moreBut Schnabel, the leader among ECB hawks who favour higher borrowing costs, said the central bank should press ahead, likely reaching "restrictive territory", or a level of rates that curbs economic growth. "We will need to raise rates further, probably into restrictive territory." "This is currently unlikely, not least due to the robust labour market, large excess savings and the massive fiscal support."

The European Central Bank (ECB), which supervises euro zone banks, believes some lenders have overly optimistic assumptions about the economy, based on models that cannot fully capture the damage from the current bout of inflation, the sources say. Source: S&P Global-EBAMorgan Stanley estimates euro zone banks will pay out 40 billion euros ($40 billion) in 2022 dividends plus an additional 60 billion euros in share buybacks between this year and next - an outsized return by recent standards. "It's not a good idea to pay out capital during a recession," Intesa's Chief Executive Carlo Messina told analysts last week. "With the economy entering recession, the time of massive bank payouts is over," Marco Troiano, a managing director at Scope Ratings, said. "Running down capital cushions would weaken banks."

☆ European shares rise ahead of Fed, Novo Nordisk boosts healthcare stocks
▼ + stars: | 2022-11-02 | by ( Shreyashi Sanyal | ) www.reuters.com time to read: +3 min

The pan-European STOXX 600 index (.STOXX) rose 0.3% by 0858 GMT, hovering near seven-week highs. Novo Nordisk (NOVOb.CO) jumped 5.4% as it raised its full-year earnings outlook on strong sales of diabetes treatment Ozempic and reported a better-than-expected profit. European healthcare stocks (.SXDP) led sectoral gains with a 1.2% rise, while banks (.SX7P) advanced 0.3% ahead of what is expected to be the Fed's fourth straight 75-basis-point increase to interest rates. "There are high hopes that he will signal that there could be some softening in the U.S. central bank's aggressive approach to taming inflation." Danish hearing aid maker Demant (DEMANT.CO) tumbled 13.6% to the bottom of the STOXX 600, after it cut its full-year revenue and profit guidance for the second time in the year.

☆ Euro zone inflation soars past forecasts to new record high
▼ + stars: | 2022-10-31 | by ( ) www.reuters.com time to read: +3 min

FRANKFURT, Oct 31 (Reuters) - Euro zone inflation surged past expectations yet again this month to hit a record high, pointing to further interest rate hikes from the European Central Bank as price pressures appear to be broadening. Energy prices continued to drive inflation but food and imported industrial goods all pushed prices sharply higher even as services played only a marginal role this time. But markets have started to anticipate a slowdown in rate hikes as a recession looms and gas prices have come down from record highs. Reuters GraphicsBut policymakers are likely to be concerned that underlying price growth, which filters out volatile food and fuel prices, continued to accelerate, pointing to broadening price pressures, which raises the risk that high inflation will get entrenched. But the weak euro is adding to price pressures while wage growth is also inching up, a key worry as a wage-price spiral would make inflation even more difficult to break.

For these reasons, the ECB said banks would have to start paying going rates on their TLTRO credit, rather than the average rate over the whole duration of the loans. But the rate the ECB pays commercial banks is now back in positive territory and is likely to rise further. Analysts have warned changing the terms of loans already outstanding could deter banks from tapping similar loans in future downturns. The TLTRO cash also creates additional demand for low-risk securities, limiting the rise in rates on repurchase agreements and short-dated government bond yields. , Lagarde said that also factored into the ECB's decision.

☆ ECB hikes rates by 75 basis points and scales back support for European banks
▼ + stars: | 2022-10-27 | by ( Silvia Amaro | ) www.cnbc.com time to read: +2 min

The European Central Bank announced Thursday a 75-basis-point interest rate hike — its third consecutive increase this year — while also scaling back support for European banks. These are a tool that provides European banks with attractive borrowing conditions, designed to incentivize lending to the real economy. However, because the ECB has been increasing rates faster than expected in the face of soaring inflation, European lenders are benefiting from both TLTROs and higher interest rates. This will see the cost of lending for banks rise significantly under the scheme. Further details on the new conditions for European banks will be published at 2:45 p.m. London time.

☆ ECB policymakers put balance sheet run-off on the table
▼ + stars: | 2022-10-15 | by ( Balazs Koranyi | ) www.reuters.com time to read: +3 min

"Once we will have reached neutral territory with our policy rate, it makes sense to consider the roll-off of asset purchases by limiting reinvestments," Knot said in a speech in Washington. Register now for FREE unlimited access to Reuters.com RegisterThe balance sheet run off, part of a broader scheme of monetary policy tightening, is needed as inflation is running at 10% and will stay above the ECB's 2% target for years to come. A presentation to policymakers earlier this month provided a possible timeline for a balance sheet run-off starting in the second quarter but there has been no firm decision by the 25-member Governing Council, sources told Reuters earlier. Others on the Governing Council have also said quantitative tightening should start soon but none have called for immediate action, indicating that policymakers are keen to be done with the bulk of rate hikes before dealing with the balance sheet. Knot also said that rate hikes should not end at the neutral rate, an undefined level, and the ECB will likely have to enter a territory that brakes growth.

A new 100-euro banknote is presented at the ECB headquarters in Frankfurt, Germany, September 17, 2018. Register now for FREE unlimited access to Reuters.com RegisterSenior staff presented the model to policymakers at a retreat in Cyprus last week. MODELS, DOUBTSThe ECB has raised its deposit rate from -0.5% to 0.75% in less than two months, its fastest pace on record, and another large hike is slated for Oct. 27. And staff said this rate peak would be even lower if the ECB hoovered up some excess liquidity from the financial system - a reduction in its balance sheet often called quantitative tightening - the sources added. Policymakers' key objection was that staff models have fared poorly in recent years so there was little confidence in an indicator that was so far below current market pricing, the sources said.

☆ ECB closing in on rule change to shave banking profits, sources say
▼ + stars: | 2022-10-12 | by ( Balazs Koranyi | ) www.reuters.com time to read: +4 min

All sources said that a decision could come at the Oct. 27 policy meeting because there's little benefit in waiting. The benefit is that all banks are affected the same way and the ECB would not be playing favorites. They also said that this sort of accommodation is inconsistent with interest rate policy, which is being tightened. That risks putting political pressure on central banks around the euro zone. In extreme cases, central banks could even deplete their own capital, possibly forcing governments to recapitalize lenders.

☆ Morning Bid: U-turn sparks huge turn
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +2 min

Take Britain, where a government budget on Friday sparked a run on the pound and gilts, accelerated the downdraft across world markets, before prompting an astonishing policy U-turn from the Bank of England on Wednesday. This unleashed a wave of buying across British assets - the 30-year gilt yield sank a record 100 basis points and sterling rose 1.5% - and triggered a pent-up recovery across world markets. The relief was palpable: world stocks and the S&P 500 snapped six-day losing streaks, with the S&P 500 jumping around 2%. Its tinkering at the edges seems to have failed, so will it soon have to take more forceful action to support the yuan? They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Further interest rate hikes will depend on data, ECB's de Guindos says
▼ + stars: | 2022-09-19 | by ( ) www.reuters.com time to read: +1 min

Register now for FREE unlimited access to Reuters.com RegisterVice-President of the European Central Bank (ECB) Luis de Guindos gives a statement during the second day of the Informal Meeting of EU Ministers for Economics and Financial Affairs in Berlin, Germany September 12, 2020. Odd Andersen/Pool via REUTERSMADRID, Sept 19 (Reuters) - The exact number of further interest rate increases by the European Central Bank will depend on upcoming macroeconomic data, ECB Vice-president Luis de Guindos said on Monday. read more"Monetary policy always tries to act to fight inflation, that will have an effect on consumer spending and investment by companies...and further interest rates increases will depend on economic data," de Guindos told a financial event in Madrid. "Inflation is the biggest pain for European population," he added. Register now for FREE unlimited access to Reuters.com RegisterReporting by Jesús Aguado and Emma Pinedo, editing by Andrei KhalipOur Standards: The Thomson Reuters Trust Principles.

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