DIRS.INFO The most relevant business & tech news

☆ Dollar gains as geopolitical worries, rate hike fear rattle market
▼ + stars: | 2022-10-11 | by ( Ankur Banerjee | ) www.reuters.com time to read: +3 min

"This renewed wall of worries is likely to keep the dollar supported," he said, but cautioned that there could be a bit of a relief rally in risky assets. U.S. dollar index was up 0.239% at 113.34, inching toward the 20-year high of 114.78 it touched late last month. Fear of intervention has held the yen firm in recent weeks, but as it drifts back to multi-decade lows analysts aren't convinced it can hold the line. The risk-sensitive Australian dollar made a 2-1/2 year low of $0.6275 on Monday and hovered at $0.6267 on Tuesday. Yields on the 30-year bond leapt as much as 11 basis points to the highest in almost nine years at 3.956%.

☆ War and prospect of rate hikes hoist dollar, gilt wipeout hits Treasuries
▼ + stars: | 2022-10-11 | by ( Selena Li | ) www.reuters.com time to read: +3 min

"Sentiment has also not been helped by a big core global bond sell off led by UK gilts, notwithstanding a flurry of announcements designed to calm UK debt markets," he added. Treasury yields jumped when trading resumed after Monday's U.S. holiday, with 30-year yields up 11 basis points to an almost nine-year high of 3.956%. That outlook is giving dollar bulls another run and has the greenback drifting toward the milestone highs it scaled last month. The Aussie made a 2-1/2 year low of $0.6260 in the Asia session and the kiwi a low of $0.5541. The Japanese yen , at 145.75 per dollar, was within a few pips of the level that prompted official support a couple of weeks ago.

☆ Dollar gains, yen flirts with intervention levels
▼ + stars: | 2022-10-11 | by ( Ankur Banerjee | ) www.reuters.com time to read: +2 min

Oct 11 (Reuters) - The dollar loomed large over fragile financial markets on Tuesday, with worries about rising interest rates, global growth and geopolitical tensions unsettling investors, while the yen was testing levels that have prompted official intervention. The yen hit 145.80 per dollar overnight, just 10 pips short of the 24-year trough it made before the Japanese government stepped in to prop it up three weeks ago. The risk-sensitive Australian dollar made a 2-1/2 year low of $0.6275 on Monday and hovered at $0.6296 early on Tuesday. "Our expectation for the world economy to enter recession next year is consistent with further gains in the dollar," said Commonwealth Bank of Australia strategist Carol Kong. U.S. dollar index was up 0.053% at 113.12, not far off the 20-year high of 114.78 it touched late last month.

☆ 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.

☆ Jamie Dimon says UK government deserves benefit of the doubt after sparking market turmoil
▼ + stars: | 2022-10-11 | by ( Hannah Ward-Glenton | ) www.cnbc.com time to read: +1 min

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co. says the new U.K. government should be "given the benefit of the doubt." JPMorgan Chase CEO Jamie Dimon said new governments "always have issues" and U.K. Prime Minister Liz Truss should be "given the benefit of the doubt" following a turbulent first month in office. "I would like to see the new prime minister, the new chancellor, be successful," he said. Dimon's comments come after a rocky few weeks for Truss's administration. Sterling plummeted and yields on U.K. government bonds, or "gilts," were sent through the roof and have yet to return to their pre-announcement levels.

☆ BoE quantitative tightening likely to be delayed until later this year -fund manager
▼ + stars: | 2022-10-11 | by ( ) www.reuters.com time to read: +1 min

LONDON, Oct 11 (Reuters) - The Bank of England should consider giving markets "some comfort" around its quantitative tightening timetable, and will likely push back the long-anticipated policy change until later this year, a portfolio manager at U.S.-based investment manager Federated Hermes said on Tuesday. Orla Garvey, senior fixed income portfolio manager at Federated Hermes, said the central bank's quantitative tightening (QT), which is set to start on Oct. 31, was likely to be delayed until later this year. QT is a monetary policy used to shrink central bank balance sheets. "There are a lot of risk events coming that could impact market stability in the next few weeks, with the OBR report scheduled at the end of the month, and multiple central bank meetings," Garvey, referring to the Office for Budget Responsibility report due Nov. 23, said in a statement supplied to Reuters. Register now for FREE unlimited access to Reuters.com RegisterReporting by Sinead Cruise and Muvija M; editing by Jonathan OatisOur Standards: The Thomson Reuters Trust Principles.

☆ 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.

☆ Bond yields higher following market slumps, job data
▼ + stars: | 2022-10-11 | by ( Natasha Turak | ) www.cnbc.com time to read: +1 min

The yield on the 2-year Treasury , the part of the curve most sensitive to Fed policy, was up by 2 basis points to 4.3329%. The yield on the benchmark 10-year Treasury note rose 6 basis points, trading at 3.9531% at around 5:30 a.m. The yield on the 30-year Treasury bond climbed 7 basis points to 3.9173%. U.S. Treasury yields traded higher on Tuesday as investors digested Monday's market retreat and the previous week's data releases that will guide the Federal Reserve's policymaking. Investors will be looking out for the data release on the NFIB (National Federation of Independent Business) Small Business Optimism Index on Tuesday, after the previous week's release showed an unexpected decline in job openings, slower job growth than forecast and a lower-than-predicted unemployment rate.

☆ Morning Bid: Burning bridges
▼ + stars: | 2022-10-11 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Tom WestbrookBarely Tuesday and markets and the world seem to be sweeping unnervingly past points of no easy return. Register now for FREE unlimited access to Reuters.com RegisterNuclear-armed North Korea says it has no interest in talks or dialogue and has fired seven test missiles since Sept. 25, apparently in simulation of the destruction of the south. Meanwhile Britain's attempts at mending fences with markets over fiscal spending plans are faring badly. The Bank of England doubled its bond buying caps as its emergency gilt market support programme nears its end on Friday. Finance minister Kwasi Kwarteng promised to reveal some details of longer-term tax and spending plans at the end of the month.

☆ UK bond market moves are dramatic, confusing, and analysts think it may get worse
▼ + stars: | 2022-10-11 | by ( Elliot Smith | ) www.cnbc.com time to read: +3 min

Monday's sharpest moves were concentrated in the index-linked gilt market — illiquid bonds where payouts to bondholders are benchmarked in line with the U.K. retail price index. The scale of the rise in bond yields — which move inversely to prices — prompted the Bank to expand its emergency bond purchase program on Tuesday to include index-linked gilts until the deadline on Friday. In a statement, the Bank said dysfunction in the index-linked gilt market posed a "material risk to U.K. financial stability." Analysts broadly expect volatility to continue in the coming weeks, at least until Finance Minister Kwasi Kwarteng's make-or-break fiscal policy announcements on Oct. 31. Stuart Cole, head macro economist at brokerage Equiti Capital, said the sequence of announcements from the Bank of England since its initial intervention may suggest that it is starting to "lose control" of the gilt market.

☆ Sterling falls for a fifth day; turmoil dogs the bond market
▼ + stars: | 2022-10-11 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

LONDON, Oct 11 (Reuters) - The pound fell for a fifth day on Tuesday as the turmoil engulfing UK government bond markets forced the Bank of England to step in yet again to attempt to stem a damaging sell-off in the country's debt. Sterling fell 0.3% to $1.1036, and was also down 0.3% versus the euro at 88.00 pence. If you have a look at the population of holders of long-dated UK assets - anything that is 15-20 years - it's mostly domestic funds," ADM Investor Services Chief Economist Marc Ostwald said. The pound promptly nosedived and the gilts market went into a tailspin, putting pension funds at risk of insolvency. But sterling's problems extend beyond the liquidity crunch in the gilts market.

☆ Bank of England warns risks to UK financial stability haven't gone away
▼ + stars: | 2022-10-11 | by ( Mark Thompson | ) edition.cnn.com time to read: +4 min

A slump in UK government bonds that promise to protect investors from inflation — known as index-linked gilts — was the latest source of risk, it said. “Dysfunction in this market, and the prospect of self-reinforcing ‘fire sale’ dynamics pose a material risk to UK financial stability,” it said in a statement. Starting Tuesday, the Bank of England will include index-linked gilts in its emergency £65 billion ($71.7 billion) bond-buying program announced on Sept. 28. The market meltdown began after Prime Minister Liz Truss’ government unveiled £45 billion in unfunded tax cuts on Sept. 23. And with monetary and fiscal policy now working in opposite directions, we think the broader risks around UK monetary [and] financial stability are growing,” he added.

☆ IMF urges UK to align fiscal policy with BoE inflation goals
▼ + stars: | 2022-10-11 | by ( David Milliken | ) www.reuters.com time to read: +2 min

"Fiscal policy should be aligned with monetary policy," Gourinchas said at a news conference in Washington, when asked about Britain's economic situation and the turmoil in its government bond market. "Central banks are trying to tighten monetary policy, and if you have at the same time fiscal authorities that try to stimulate aggregate demand, it's like having a car with two people in the front ... each trying to steer the car in a different direction. "Now what we've seen in the UK market, we've seen market dysfunction, related to some illiquidity in some segments," Gourinchas said. The IMF published new growth forecasts for Britain on Tuesday, although these were finalised before Kwarteng's Sept. 23 statement. The Fund expects British economic growth to slow to 0.3% next year compared with a July forecast of 0.5% growth for 2023.

☆ 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.

☆ Factbox: What are index-linked bonds and why is the Bank of England is buying them?
▼ + stars: | 2022-10-11 | by ( ) www.reuters.com time to read: +3 min

REUTERS/Phil Noble/File PhotoLONDON, Oct 11 (Reuters) - The Bank of England said on Tuesday it would buy index-linked government debt as part of its emergency programme to try and quell turmoil in the debt market. Following is a summary of what index-linked bonds are and why the BoE is buying them. The recent surge in inflation globally has increased demand for index-linked bonds by investors, but their sensitivity to rising interest rates means many have fallen in value this year. Britain's stock of index-linked debt stood at around 558 billion pounds ($617.54 billion) on Tuesday, making up about a quarter of the government's debt portfolio, a bigger share than in many other rich economies. The BoE said it would buy up to 5 billion pounds of index-linked bonds a day, the same as its maximum for normal bonds.

Compounding the pain, providers of so-called liability-driven investment strategies (LDI) are demanding more cash to support new and older hedging positions. The cash buffers now required are about three times bigger than previously requested, according to four consultants advising pension schemes, as market players seek bigger cushions against more volatile moves in bonds. Estimates of how much pension funds need to sell range but are in the hundreds of billions of pounds, although it is not known how much in assets schemes have sold already. "We are definitely not there," he said, referring to whether funds were close to raising the required cash by selling assets. He estimated 100 billion pounds could come from gilts and the rest from assets such as global credit, global equities and asset-backed securities.

☆ Markets won’t go back to normal until the Fed stops hiking rates
▼ + stars: | 2022-10-11 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +8 min

What’s happening: Markets and the Federal Reserve have conflicting temperaments, said Blinder. Markets are capricious while the Fed remains calm. Markets on average, said Blinder, overreact to inflation-related data by a factor of three to 10 times more than they should. The central bank announced Monday that it would provide extra support to UK markets, beefing up its efforts to ensure financial stability, reports my colleague Julia Horowitz. The research is especially relevant today as rapid interest rate hikes to combat inflation have sent markets into turmoil, drawing comparisons to 2008.

☆ The Bank of England should extend its emergency bond-buying to manage the volatility that's rocked the country's debt market, UK pensions group says
▼ + stars: | 2022-10-11 | by ( Carla Mozée | ) www.businessinsider.com time to read: +4 min

A UK pensions trade group on Tuesday called on the Bank of England to continue its emergency bond-buying operations to manage volatility in the debt market. The central bank began its bond-market intervention last month as fears of a UK financial crisis risked damaging investments held by pension funds. The BoE is expected to continue purchasing long-dated UK bonds until Friday under its £65 billion intervention aimed at stemming a massive sovereign debt sell-off. The BoE last week said $1 trillion in UK pension funds' investments could have been lost if it didn't intervene with its emergency bond purchases. The group said pension funds over the last couple of weeks have, among other actions, taken steps to strengthen their financial resilience.

☆ BoE should extend bond buying to Oct 31 or "possibly beyond"-pensions trade body
▼ + stars: | 2022-10-11 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 11 (Reuters) - The Bank of England should consider continuing an emergency bond-buying programme aimed at stabilising the market for UK government debt to October 31 "and possibly beyond", the Pensions and Lifetime Savings Association said on Tuesday. "...many feel it should be extended to the next fiscal event on 31 October and possibly beyond, or if purchasing is ended, that additional measures should be put in place to manage market volatility". The BoE on Monday doubled the maximum size of the buybacks and on Tuesday expanded the programme to include inflation-linked gilts, a move welcomed by the PLSA. read more read more"We continue to encourage all pension funds and service providers to use this period to take further steps to rebalance portfolios and ensure necessary measures are in place to protect their strategies in uncertain times," the trade body said. ($1 = 0.9061 pounds)($1 = 0.9057 pounds)Register now for FREE unlimited access to Reuters.com RegisterReporting by Carolyn Cohn, editing by Sinead CruiseOur Standards: The Thomson Reuters Trust Principles.

☆ Bank of England Offers Further Support for Pension Funds Amid Crisis
▼ + stars: | 2022-10-10 | by ( Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—The Bank of England on Monday offered to buy long-dated U.K. government bonds in larger amounts and said it would provide continuing support to pension funds that have been at the heart of the U.K.’s bond-market crisis. On Sept. 28 the U.K.’s central bank launched a series of auctions in which it offered to buy £5 billion of long-dated gilts, as U.K. government bonds are known, equivalent to $5.5 billion. The program was aimed to stanch the damage from a furious selloff in U.K. government debt over previous days in the aftermath of a surprise package of tax cuts announced by the government.

☆ UK gilts slump as government fails to woo investors
▼ + stars: | 2022-10-10 | by ( Andy Bruce | ) www.reuters.com time to read: +3 min

The finance ministry also announced that a civil servant with extensive budgetary experience, James Bowler, will head its staff. The sharp rise in yields was specific to Britain, as French, German and Italian bonds showed much smaller increases in yields. "The gilts market may be vulnerable this week as the end date for the BoE interventions nears," Rabobank analysts said. In the index-linked market, yields were mostly up more than 60 bps on the day across all bonds with a maturity of 10 years or more. Total offers were far below the 10 billion pounds the BoE said it was open to buying.

☆ BoE doubles potential bond buy-backs as emergency plan nears end
▼ + stars: | 2022-10-10 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

Although the maximum auction size was raised to 10 billion pounds in Monday's operation the BoE bought only 853 million pounds' worth of debt. read moreThat left its total of bonds acquired since the launch of the emergency programme at less than 6 billion pounds, compared with the 50 billion pound maximum it could have bought. The BoE said in its statement earlier on Monday that it was prepared to deploy unused purchasing capacity in the remaining auctions this week. The BoE also said it would launch a temporary expanded collateral repo facility to help banks ease liquidity pressures facing client funds caught up in the turmoil, which threatened pension funds. The sharp sell-off in British government bonds after Kwarteng's "mini-budget" sparked a scramble for cash by Britain's pension funds which had to post emergency collateral in LDIs.

☆ Bank of England buys 853 mln pounds of bonds, most since Sept. 30
▼ + stars: | 2022-10-10 | by ( William Schomberg | Sachin Ravikumar | ) www.reuters.com time to read: +1 min

LONDON, Oct 10 (Reuters) - The Bank of England bought 853.1 million pounds ($942.4 million)of long-dated government bonds on Monday, its most since Sept. 30, but far fewer than the 10 billion pounds' worth which it said it was open to buying earlier in the day. The central bank rejected 262.6 million pounds of offers. The BoE confirmed earlier in the day that it intends to end its daily programme of gilt purchases on Oct. 14, but said it was doubling the maximum volume of gilts that it was prepared to buy to 10 billion pounds. The BoE has bought more than 5 billion pounds of gilts in total since the operations started on Sept. 28 in a bid to calm turmoil in the British government bond market triggered by the government's tax cut plans. ($1 = 0.9052 pounds)Register now for FREE unlimited access to Reuters.com RegisterReporting by David Milliken Editing by William SchombergOur Standards: The Thomson Reuters Trust Principles.

☆ How a sleepy corner of the market nearly triggered a meltdown
▼ + stars: | 2022-10-08 | by ( Julia Horowitz | ) edition.cnn.com time to read: +8 min

London CNN Business —Pension funds are designed to be dull. The scale of the tumult put enormous pressure on many pension funds by upending an investing strategy that involves the use of derivatives to hedge their bets. “It started to feed itself,” said Ben Gold, head of investment at XPS Pensions Group, a UK pensions consultancy. Yields on longer-term bonds have dropped sharply, giving pension funds time to recoup — though they’ve recently started to rise again. Still, Kenneth is concerned that if the program ends next week as scheduled, the task won’t be complete given the complexity of many pension funds.

☆ Pension fund blowup faces brutal second act
▼ + stars: | 2022-10-06 | by ( Aimee Donnellan | ) www.reuters.com time to read: +5 min

The Bank of England announced a 65 billion pound gilt-buying scheme to stabilise markets and rescue pension funds. Bailey’s move may have been too late to stop some pension funds from having to close out their hedges, like interest rate swaps or futures. The rate at which retirement payments are discounted will also fall, pushing up the pension fund’s future liabilities, but without a corresponding asset gain. Meanwhile, investors like Goldman Sachs are hoovering up cut-price stakes in private equity vehicles, which LDI funds are selling. They also held 78 billion pounds and 317 billion pounds in property and equities respectively.

Search resuls for: "Gilts"

25 mentions found