Weekly Insight: Policy in the Spotlight—Focus on U.S., China
- Will higher bond yields dent the risk rally?
- China’s third plenum blueprint beats expectations
- Chinese domestic bond market—ready to open up?
- Slow but steady manufacturing expansion in China and the Euro Area
- Fed to markets: “tapering is not tightening!”
- Strong IPO activity in mature markets, but not in emerging markets
IIF Market Monitoring Group Warns on Impact of Regulatory Reforms on Financial Markets
December 5, 2013 — The IIF’s Market Monitoring Group released the following statement today after their quarterly meeting in New York, stating that some regulatory reforms aimed at stability may reduce financial market efficiency, and rising corporate debt levels pose risks for pockets of weaker firms and fragile economies.
Weekly Insight: Risk Rally Still Running
- Mature markets continue to rise, although emerging markets less buoyant
- Yellen remarks seen as dovish, and Fed policy normalization still seen distant
- Slowing Q3 growth in Japan and Euro Area likely to be temporary
- New IIF global forecast calls for rising growth momentum in 2014, but highlights risks
- China’s Third Plenary promises a greater role for market competition, but lacks specifcs
- Large Euro Area corporates increasingly turn to bond markets for funding
International Debt Negotiation: Experiences and Lessons Learned
November 7, 2013 — Speaking at a Bertelsmann Foundation–OAS Conference in Grenada, IIF Executive Managing Director Hung Tran discussed how to strengthen sovereign debt crisis prevention and resolution, as well as the importance of adhering to the current contractual, market-based framework for sovereign debt restructuring.
Weekly Insight: ECB Takes Action
- ECB cuts rates by 25bp — how much more ammunition do they have?
- Incoming real activity data for the Euro Area remained broadly positive
- U.S. Q3 GDP — strong headline due mainly to inventory buildup
- Emerging market manufacturing sector: regaining momentum
- Ongoing search for yield spurs high-yield debt issuance, currency pressures
November 2013 Capital Markets Monitor and Teleconference
Further Monetary Easing and Growth in Corporate Debt
Notwithstanding continuing speculation about when Fed tapering will begin—and lingering concerns about another U.S. budget and debt ceiling impasse—unconventional monetary policies in mature market countries are expected to be eased a notch further with possible moves by the ECB and the Bank of Japan.
Weekly Insight: Can This Rally Be Spooked?
- Only slightly curbed market enthusiasm
- U.S. economy failing to gain momentum so far and Fed stands pat
- ECB next week – on hold with an easing bias
- Euro Area deleveraging could have several more years to run
- Focus on Chinese policy decisions ahead of the Third Plenary
Weekly Insight: Return of the Punchbowl—Will the Buzz Last?
- “Taper-delay rally” highlights the renewed search for yield
- U.S. outlook: fiscal battles and weaker job growth suggest no taper until 2014
- Manufacturing continues to expand in China and the Euro Area
- ECB Asset Quality Review (AQR) highlights investor concerns
- UK banks to enjoy more support from the BoE; U.S. banks Q3 earnings reflect weaker mortgage activity
- EM bank lending conditions continue to tighten
Restoring Financing and Growth to Europe's SMEs
SMEs in Europe have been hard hit by Europe’s economic difficulties and have seen major declines in financing since 2008. To promote better understanding of the factors behind reduced financing, the IIF and Bain & Company held more than 140 interviews with a broad range of stakeholders in six Euro Area countries and with officials in key European institutions. The interviews made clear that progress is needed both to improve the availability of information and the financial health of SMEs and to broaden the base of financial institutions able to identify and fund promising SME activities. The report recommends the establishment of a coordinated European process focused on national task forces to develop tailored, technical, nonpolitical action plans to address each of these impediments in each national market.
Strengthening the Role of Markets in Sovereign Debt Crisis Prevention and Resolution
July 19, 2013 — IIF Executive Managing Director Hung Tran last week delivered a speech at the Banque de France’s Symposium on Sovereign Risk, Bank Risk and Central Banking in Paris (July 8-10, 2013). This text is based on those remarks. At this symposium, Tran discussed how to strengthen the role and efficacy of markets in sovereign debt crisis prevention and resolution and made several suggestions for improvement.
Euro Briefing: Looking for Traction
Prior to the recent shift in market sentiment, abundant liquidity and renewed efforts by the ECB to support growth (including a rate cut on May 2) had helped peripheral Euro Area sovereign yields drop to their lowest level since Q1 2011. Market appetite for Greek financial assets improved, contagion from Cyprus is under control, and Portugal held a 10-year bond auction—the first since its 2011 bailout. However, the selloff in risk assets and focus on Fed “tapering” since May 22 have shifted the focus to the potentially volatile corrections attendant on further increases in U.S. bond yields.
IIF Market Monitoring Group highlights risks of a liquidity-fueled rally: while fundamentals remain weak, parts of corporate sectors exposed
Warns of potential ripple effects as the U.S. moves closer to exit from accommodative monetary policyJune 4, 2013 — Following their recent meeting in Rome, members of the IIF’s Market Monitoring Group agreed today to release the following statement, noting: a lack of fundamental support for financial market rallies; risks associated with exit strategies and a potential rise in U.S. bond yields; a need to reconsider zero risk-weighting of domestic government bonds for members of a currency union; potential vulnerabilities exist in parts of the corporate sector; and restrictions on trading “naked” sovereign CDS might impair market efficiency.
IIF CAIM raises concerns that proposed EU Financial Transaction Tax could hurt savers and pensioners
April 23, 2013 — The IIF’s Council on Asset and Investment Management (CAIM) today released a position paper on the proposed EU Financial Transaction Tax (FTT). CAIM raised concerns that any revenue potentially generated by the proposed FTT would be considerably outweighed by the potential costs in terms of burden on end-users of financial services, potentially weaker economic growth and job losses.
Private Sector and Public Sector Leaders meet in Washington for a Roundtable on International Capital Markets and Emerging Markets
April 21, 2013 — Senior public officials from both mature and emerging market economies, leaders from the private finance sector, and representatives from international financial institutions participated in a Roundtable discussion on International Capital Markets and Emerging Markets in Washington DC. The Roundtable has become over the last few years a major annual event, and a key forum for the exchange of views among key decision makers in both the public and private sectors on global policy issues and sovereign debt market developments.
Strengthening the Role of Long-Term Investors
January 28, 2013 — The IIF and Swiss Re released today a joint report featuring eight short briefings on issues and challenges facing the long-term investment community, including financial repression, regulatory changes, the EU financial transaction tax and infrastructure investment. Long-term investors play a pivotal role for the real economy as providers of risk capital – but also for the financial markets as stabilizers and shock absorbers. This timely report is intended to raise awareness of the need to strengthen the role of long-term investors.