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Low and stable inflation is good for markets and the economy, so central banks had to show their seriousness on inflation, Tannenbaum added. Central banks softened rate rises with communication that was mindful of instability risks, showing reassuring "humility", said Perkins. "The bank resolution framework created after the great financial crisis," said Francesco Papadia, senior fellow at Bruegel and former ECB director general for market operations, "is proving difficult to implement." Reuters Graphics4/ UNITED WE STANDAfter CS's rescue, the Fed and other big central banks supported market liquidity with dollar swap lines. Amundi's Pradhan said the "case by case" central bank responses to individual lenders failing in March exposed the lack of a coordinated bank resolution system.

☆ Ukraine Asks Turkey to Seize Ship It Alleges Is Carrying Stolen Grain
▼ + stars: | 2023-04-20 | by ( Jared Malsin | Anna Hirtenstein | ) www.wsj.com time to read: 1 min

Vessels in the Bosporus in Turkey. Photo: Yoruk Isik/ReutersISTANBUL—Ukrainian authorities have asked Turkey to seize a ship carrying what prosecutors in Kyiv say is thousands of tons of grain stolen from areas of Ukraine occupied by Russia, according to correspondence reviewed by The Wall Street Journal. The ship, the Panama-flagged Bomustafa O, arrived in the Turkish Black Sea port of Samsun on Monday, with a cargo of 19,000 tons of barley, according to shipping records and the correspondence. Days earlier, Ukrainian prosecutors in Kyiv wrote to Turkish authorities asking them to seize the ship, saying that it had loaded barley at a port in Russian-occupied Crimea, according to the correspondence reviewed by the Journal.

German specialised property lenders such as Aareal Bank (ARLG.DE), Deutsche Pfandbriefbank (PBBG.DE) and Berlin Hyp, have a bigger concentration of real estate exposure, analysts added. Blackstone (BX.N) recently blocked withdrawals from its $70 billion real estate income trust after facing a flurry of redemption requests. Open-ended real estate funds in Britain have also battled to meet strong demand for redemptions. In Europe, CRE exposure for smaller banks, more at risk of deposit flight, is estimated at under 30% of all loans, Capital Economics said. "On the other, real estate owners themselves are going to face quite material increase in costs."

☆ Focus now on how UBS positions itself going forward - BlackRock vice chairman
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +2 min

[1/2] Philipp Hildebrand,Vice Chairman of BlackRock, speaks during a news conference with Swiss Economic Minister Guy Parmelin (not pictured), as the spread of the coronavirus disease (COVID-19) continue in Bern, Switzerland October 28, 2020. REUTERS/Arnd WiegmannLONDON, April 20 (Reuters) - The Swiss government has done a 'very good job' with Credit Suisse's rescue given circumstances, but the question now is how the takeover settles and how UBS positions itself going forward, Philipp Hildebrand, BlackRock's vice chairman said on Thursday. "The question now will be how does this settle, and how does UBS position itself going forward, given quite intense political discussions in Switzerland around competition, around size, and many other issues," Hildebrand told a Bloomberg conference in Dublin. BlackRock, the world's largest asset manager, is a major shareholder in UBS. Reporting by Yoruk Bahceli and Padraic Halpin; editing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.

☆ Dollar, stocks slip after Fed minutes spur recession fears
▼ + stars: | 2023-04-12 | by ( Herbert Lash | ) www.reuters.com time to read: +6 min

Fed staff assessing the potential fallout of banking stress projected a "mild recession" later this year. But the minutes showed policymakers ultimately agreed to higher interest rates as data at the time showed few signs of inflation pressures abating. Money markets initially trimmed expectations for a Fed rate hike in May, pricing in a 65.2% chance of a 25-basis-point move, CME Group's FedWatch Tool showed. MSCI's gauge of stocks across the globe (.MIWD00000PUS) closed down 0.08%, while the pan-European STOXX 600 index (.STOXX) rose 0.13%. The dollar fell with an index measuring the U.S. currency against six peers down 0.558%.

The inflation data came on the heels of last Friday's employment report, which showed a solid pace of job growth in March and the unemployment rate falling back to 3.5%. In Europe, stock markets rose after the U.S. data and the broad STOXX 600 index was last up 0.5% (.STOXX) and holding near one-month highs. BONDS UP, DOLLAR DOWNU.S. bonds yields fell after the CPI numbers. Rate-sensitive two-year Treasury yields were last down 12 basis points at 3.93% , while U.S. 10-year yields fell 6 bps to 3.37%. The dollar fell with an index measuring the U.S. currency against six rivals down 0.4% at 101.72.

REUTERS/StaffApril 12 (Reuters) - World stocks and bond yields stalled on Wednesday as markets anticipated crucial U.S. inflation data which could give signals on how soon the Federal Reserve will end its aggressive rate hikes. Markets were in wait-and-see mode ahead of the data, with the pan-European STOXX 600 index inching up 0.3% by 0820 GMT, while Britain's FTSE (.FTSE) was up 0.6%. Government bond yields were also little moved with benchmark U.S. 10-year Treasury yields unchanged on the day at 3.43%. "We do not assume that the discrepancy between Fed and market expectations will end today or in the near future," Reichelt said. With oil prices rising again and labour market cooling only gradually, risk remains tilted for core inflation to remain elevated for longer," they said.

Italy's bond, which marks its third green bond and matures on 30 October 2031, was priced to yield 4.056%. Elsewhere, Cyprus raised 1 billion euros from its first sustainable bond, the country's debt office said, becoming the latest European government to enter the market. Sustainable bonds are a broader form ESG debt, proceeds from which can be spent on both green and social projects. Cyprus follows a number of smaller countries including Slovenia and Luxembourg opting for sustainable bonds as they often struggle to find enough projects to back standalone green bonds. Leonidou said Cyprus expects to sell sustainable bonds every two or three years going forward.

[1/2] The Credit Suisse logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2023. Credit Suisse AT1 bondholders get nothing under the UBS merger deal. A WisdomTree exchange traded fund that tracks a broad index of bank AT1s, has dropped 11% in the past fortnight. Credit Suisse AT1s made up less than 3% of the fund just before the Swiss bank's rescue, the asset manager disclosed. Deutsche Bank AT1 debt is trading at 74 cents on the dollar, off last week's lows around 67 cents but still below levels seen before the Credit Suisse writedown, Tradeweb data shows.

☆ Signs of pain as easy cash era ends are growing
▼ + stars: | 2023-03-30 | by ( ) www.reuters.com time to read: +5 min

LONDON, March 30 (Reuters) - The easy-cash era is over and markets are feeling the pinch from the sharpest jump in interest rate in decades. Since late 2021, big developed economies including the United States, euro area and Australia have raised rates by almost 3,300 basis points collectively. Japanese, European and U.S. banks stocks, while off recent lows, are still well below levels seen just before SVB's collapse. Reuters Graphics2/ DARLINGS NO MOREAs the SVB collapse showed, stress in the tech sector can quickly ripple out across the economy. Reuters Graphics4/ CRYPTO WINTERHaving benefited from an influx of cash during the easy-money era, cryptocurrencies have felt pain as rates rose last year, then gained on recent signs that tightening could end soon.

☆ Analysis: After extraordinary rally, bonds' fate now with bank stability and inflation
▼ + stars: | 2023-03-30 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +4 min

Alongside that dash for safe havens was a rapid repricing of rate-hike bets as banking turmoil raised financial stability risks, fuelling the rally in government debt. But coming so soon after markets had positioned for bigger U.S. rate hikes to tame inflation, bonds swung wildly. March's sharp drop in two-year yields followed a 59 bps jump in February. Two-year Treasury yields are down 24 bps this quarter, their biggest quarterly drop since the 2020 COVID-19 crisis. The likes of JPMorgan, BofA and Morgan Stanley, expect Treasury yields to end 2023 lower; others such as Goldman Sachs and BNP Paribas expect a rise.

☆ Banking turmoil means recession fears are creeping back
▼ + stars: | 2023-03-29 | by ( ) www.reuters.com time to read: +5 min

Here's what some closely watched market indicators say about recession risks:1/ CRUNCH TIME? Central bankers are closely monitoring the potential for banking stress, on top of lending conditions that were already tightening, to trigger a credit crunch. European Central Bank boss Christine Lagarde has also said the market turmoil may help fight inflation. Reuters Graphics3/ BANK STOCK ROUTWorld shares down just 0.1% in March and still sitting on gains this year seem to signal little recession risk, but worries are mounting under the surface. Global bank stocks, which had outperformed the MSCI World Stock Index before the turmoil, are down nearly 15% this month (.dMIWO0BK00PUS).

☆ Central banks stick to rate hikes with eye on market turmoil
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +5 min

Overall, 10 developed economies have raised rates by a combined 3,290 basis points (bp) in this cycle to date. Reuters Graphics1) UNITED STATESThe Fed raised rates by a quarter point on Wednesday, continuing its most aggressive series of hikes since the 1980s. After setting its policy rate to 4.75%-5.00%, the Fed hinted it may soon pause rate rises. Reuters Graphics3) CANADAThe Bank of Canada on March 8 became the first major central bank to halt monetary tightening during this cycle. Reuters Graphics5) AUSTRALIAAustralia's central bank raised its key rate by a quarter point to 3.6% in March, the highest since May 2012, but hinted rate hikes may be over for now.

Britain and Norway hiked rates by 25 bps each, the Swiss National Bank jacked up rates by 50 bps. The European Central Bank hiked rates by 50 bps a week ago. ClearBridge strategist Jeffrey Schluze said, European banking regulation since the global financial crisis has been more stringent than in the United States, making the outlook for European lenders relatively strong. While banking stocks have been battered globally, the S&P 500 is up 0.5% this month (.SPX), while Europe's STOXX 600 index down 3.2% (.STOXX). CHANGE IN TONEBefore the banking turmoil, markets were driven by one-way moves as high inflation pressured U.S. and European markets.

Fed Chairman Jerome Powell sought to reassure investors about the soundness of the banking system, saying that the management of Silicon Valley Bank "failed badly," but that the bank's collapse did not indicate wider weaknesses in the banking system. "These are not weaknesses that are running broadly through the banking system," he said, adding that the takeover of Credit Suisse seemed to have been a positive outcome. The Federal Open Market Committee policy statement also said the U.S. banking system is "sound and resilient." The much-anticipated rate cut by the Fed, which had delivered eight previous rate hikes in the past year, sought to balance the risk of rampant inflation with the threat of instability in the banking system. The banking sector has been in turmoil after California regulators on March 10 closed Silicon Valley Bank in the largest U.S. bank failure since the 2008 financial crisis.

The latest move to restore calm to restive regional bank stocks came as Pacific Western Bank (PACW.O), one of the regional lenders caught up in the market volatility, said it had raised $1.4 billion from investment firm Atlas SP Partners. While that deal brought some respite to battered banking stocks, First Republic (FRC.N) remains firmly in the spotlight. For now, the rescue of Credit Suisse appears to have calmed the worst fears of systemic contagion, boosting shares of European banks (.SX7P) and U.S. lenders (.SPXBK). Reuters Graphics Reuters Graphics'HEAD IN SAND'The wipeout of Credit Suisse's Additional Tier-1 (AT1) bondholders has sent shockwaves through bank debt markets. Seeking to boost confidence among investors rattled by its $3 billion Credit Suisse rescue, UBS said on Wednesday it would buy back 2.75 billion euros ($2.96 billion) worth of debt it issued less than week ago.

UBS is buying back the bonds at the price at which they were sold rather than at market prices, compensating investors after a sell-off this week. UBS shares and bonds have seesawed this week as investors assess the impact of the Credit Suisse deal. The prices of the bonds UBS is buying back on Wednesday had also tumbled but partially recovered on Tuesday. "The issuer has decided to launch this exercise as a result of a prudent assessment of these recent developments and the issuer's long-term commitment to its credit investors," UBS said in its statement. UBS shares were last down 2.3% at 18.97 Swiss francs ($21.05), having risen as much as 3.6%.

☆ Analysis: Market turmoil is doing central bankers' jobs for them
▼ + stars: | 2023-03-21 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +5 min

European Central Bank President Christine Lagarde reckons market turmoil may do some of the ECB's tightening for it if it dampens demand and inflation. Financial conditions reflect the availability of funding in an economy, so they dictate spending, saving and investment plans of businesses and households. Central banks have been trying to tighten them by raising rates to slow rising prices. Signs of tightening financial conditions were plentiful. "Central banks no longer have a good idea about the true tightness of monetary policy," he said.

The Credit Suisse rescue has shaken the European banking sector and fears of wider fallout remain. Under the Credit Suisse rescue deal, 16 billion Swiss francs worth of Credit Suisse Additional Tier 1 debt will be written down to zero on the orders of the Swiss regulator. Overall, bank debt remained under pressure, with the cost of insuring exposure to the debt rising in the credit default swaps (CDS) market. CONTAGION RISKThe wipeout of AT1 bonds in the Credit Suisse rescue has alerted fixed income investors to the risks of investing in these instruments. At Credit Suisse, the bank's AT1 bonds were bid as low as 1 cent on the dollar on Monday as investors braced for the wipeout.

☆ US funding stress metric hits three-month high as crisis rattles regional banks
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +1 min

LONDON, March 20 (Reuters) - A market-based indicator of stress in the U.S. banking system jumped on Monday to its highest in three months, as turmoil engulfed regional lenders following the collapse of Silicon Valley Bank. The gap between the U.S. three-month forward rate agreement and the three-month overnight index swap rate, a funding stress indicator, rose to around 18 basis points in London trade from 23.7 bps on Thursday. The so-called FRA/OIS spread which is used to gauge U.S. banking sector stress jumped to 18.2 bps, from closer to 12 bps last week, its highest since Dec. 22. A U.S. official said on Sunday that the deposit outflows that left many regional banks reeling in the wake of SVB's failure had slowed and in some cases reversed, as investors tried to ascertain whether the crisis was contained. Reporting by Amanda Cooper; Editing by Yoruk Baceli and Christopher CushingOur Standards: The Thomson Reuters Trust Principles.

☆ Explainer: Why markets are in uproar over a risky bank bond known as AT1
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +4 min

Here are some of the implications of the Credit Suisse AT1 bond write-down. WHAT IS AN AT1 BOND? Credit Suisse AT1 holders, therefore, are the only ones not to receive any kind of compensation. It is not the first time that the treatment of AT1 bonds in a bank overhaul has caused controversy. The decision to write down Credit Suisse AT1 bonds to zero is viewed as negative for the AT1 bond market globally.

☆ Market stress indicators flash warnings as banking worries continue
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +3 min

March 20 (Reuters) - Fears of a global banking crisis are continuing to swirl, with investors keeping a close eye on a dashboard of indicators that show how stress is rippling through markets and the banking system. Many of these are continuing to flash warnings, though they have not surpassed levels seen during the COVID-19-fueled market turbulence of 2020. But the spread, measuring the gap between the euro zone three-month forward rate agreement and the overnight index swap rate, is still relatively elevated at around -1 basis points in a sign of lingering concern about financial market stress. Cost of insuring European junk bondsThe cost of insuring exposure to European junk bonds rose to the highest since mid-November on Monday at over 516 basis points. This has risen over 130 basis points since March 7 as riskier assets have borne the brunt of bank turmoil on both sides of the Atlantic.

LONDON, March 20 (Reuters) - European bank bonds slumped on Monday following the state-backed rescue of Credit Suisse (CSGN.S) by UBS (UBSG.S) as a wipeout of some bondholders raised concerns around broader bank capital and also hammered bank shares. "The takeover of Credit Suisse by UBS was done fast and should have provided reassurance to the market that we haven’t had another bank collapse. However, what it has done is exposed the issues around AT1 bonds,” said Russ Mould, investment director at AJ Bell. In the bond market, Credit Suisse's Additional Tier 1 (AT1) bonds were bid as low as 1 cent on the dollar on Monday as investors braced for the wipeout. Shares in Credit Suisse (CSGN.S) fell as much as 64.5% while UBS Group (UBSG.S) shares dropped as much as 16%.

Commodity trading advisers (CTAs) - funds that try to profit by buying or selling when there is a clear direction in markets - slumped 4.3% in the three days to Monday, according to analysis from UBS. "We have seen certainly on (last) Friday and Monday capitulation trades from hedge funds, so all hedge funds have been short duration positioned and we have heard a lot of desks needed to shut down their risk," said Kaspar Hense, a senior portfolio manager at BlueBay Asset Management. Hedge funds felt this "brutally" in Japanese markets, Hense said, where positioning from hedge funds and CTAs had been particularly "one sided" in anticipation of an end to the Bank of Japan's yield curve control policy. British macro hedge fund manager Crispin Odey's main fund posted a minus 4.7% February performance and is down 3% so far this year, said a note from his hedge fund to clients. Very few macro economic funds tracked by bank research seen by Reuters have reported March numbers.

Separately, two days of chaos in China's $21 trillion bond market ended on Friday after Beijing allowed money brokers to resume providing data to third-party platforms. Jeffrey Gundlach, CEO of DoubleLine Capital, said he considered selling Treasuries earlier in the week but the market was "wildly illiquid." Bond market volatility spikesKEEPING WATCHThe heightened volatility has caught the eye of officials who play a role in ensuring financial markets stability. Analysts noted that bond volatility was exceptionally high not only because of a flight to safe-haven government debt, but also due to a massive repricing of rate-hike expectations. "If liquidity is deteriorating due to wild swings in safe-haven markets, that has implications for the functioning of financial markets and broader economic stability."

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