Four leaders -- British Prime Minister Theresa May, French President Emmanuel Macron, Italian Premier Paolo Gentiloni and US President Donald Trump -- are making their debut at the Group of Seven summit amid significant change in national positions. G-7 leaders were once in broad agreement, but they are expected this year to seek common ground and to strive for trust among themselves as they discuss issues related to the economy, trade, climate change and security.
Minutes of the latest Federal Reserve meeting describe how the central bank plans to unwind the $4.5 trillion bond portfolio it has built since the financial crisis. The process is expected to be slow, with bonds moving off the balance sheet at maturity to keep government-debt yields from spiking.
Social Security faces an increasing burden as the baby boom generation enters retirement, prompting the Center for Retirement Research at Boston College to explore ways the program could bolster its funds, other than by cutting benefits or raising taxes. Researchers say that although investing in equities as well as bonds carries a degree of risk, it could improve the health of the trust fund.
Despite political fears over the euro's future, the currency has emerged as one of the top-performing in the Group of 10 nations this year. Foreign investors are buying into eurozone funds and regional economic growth has exceeded expectations.
Buy-side executives said that forcing clearing of euro-denominated contracts into the EU from London would drive up costs for trading euro-denominated interest-rate swaps.
Investors were disappointed by the extension of oil production curbs from OPEC and other producing nations, causing prices to fall 5% Thursday. "Today the bottom evaporated from the market," said Robert Yawger of Mizuho Americas.
A number of market risk experts at global banks say the Fundamental Review of the Trading Book's requirements could cause fragmentation, as separate trading desks may need to be opened in every country where they operate. Under the current structure, a network of offices can report to a central line manager, but national regulators may prohibit this, which would cause particular problems for banks with a significant presence across numerous Asian territories.
The Basel Committee on Banking Supervision will set an aggregate floor on banks' internal regulatory capital models, instead of individual floors for certain risks, Secretary-General William Coen told a conference. This decision aims to allow banks more flexibility in modelling risks for each portfolio, although the final floor calibration has yet to be agreed upon and may be a source of contention.
A European Commission proposal to simplify reporting on exchange-traded derivatives under the European Markets Infrastructure Regulation has not been sufficiently explained, some market participants say. In its recent EMIR review, the commission said the current dual-sided reporting status will be changed so only central clearing counterparties need to report ETD trades, but this gives rise to a number of questions and grey areas, they contend.
The European Central Bank will soon be faced with a difficult balancing act, writes Ambrose Evans-Pritchard. Its current policy of covering Italy's budget deficit and rolling over its public debt is at odds with its need to dampen the German economy, which is showing signs of overheating.
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