Federal Reserve Chair Jerome Powell has instructed the central bank's staff to examine ethics rules that govern financial activities and investments of high ranking officials. Critics say recent revelations about extensive trading by two of the Fed's most senior officials demonstrated the need for closer oversight.
Formerly unpublished European Central Bank models point to the likelihood that the central bank will start raising interest rates sooner than most economists expect, according to a Financial Times report. The internal forecast reportedly revealed in discussions with a group of German economists, which has been partly denied by the ECB, predicts inflation to reach the 2% target by 2025.
US and European financial industry groups are calling on the EU to extend its temporary authorization for EU banks to use UK clearing houses. A total of nine organizations including the Futures Industry Association said the action is needed to prevent major market disruption when the current interim arrangement ends next year.
The potential for 'stagflation' has been raised as concerns over slow growth and price increases grow, but pricing in the bond market suggests investors are largely unphased by the threat. Yields on 10-Treasury debt have fallen relative to shorter maturities and the yield curve is getting flatter.
When UK Chancellor Rishi Sunak presents his budget next month he will set out rules intended to start bringing down the government's borrowing. The Treasury is worried about what a rise in interest rates could mean for the country's finances, which are highly dependent upon debt.
If Democrats in Congress are successful in raising the corporate tax rate from 21% to 26.5% that could stimulate new demand for tax-exempt municipal debt, analysts say. "With the increase in the tax rate you would see more demand for tax exempts from banks and property and casualty insurance, especially because they're quite sensitive to tax-rate changes and often times they make decisions between municipal bonds and corporate bonds," said Karel Citroen, head of municipal research at Conning.
After holding net negative positions on the US Treasury market for more than two years, investors are now regularly jumping in and out of net negative and net positive positions regularly, as the market loses its reputation for low volatility, writes Dhara Ranasinghe. Investors say they are influenced by the unpredictability of the coronavirus Delta variant's impact on the economy and the debate by major economies on whether inflation is set to increase.
Around 90% of investors say digital assets are appealing, with 52% saying they have invested in cryptocurrencies, according to a survey of American, Asian and European investors conducted by Fidelity Digital Assets. Widespread adoption of digital assets is being slowed by price volatility, according to 54%, while 44% said the lack of a method for gauging their value remains an issue.
Singapore has announced a long list of funding measures to encourage high-growth companies to go public and list their shares in the city state. The package includes a $1.1 billion fund to invest in young companies' late stage private funding rounds and initial public offerings.
The European Central Bank's next stress tests will look into the exposure of banks' trading activities to climate stress, according to the consulting firm Alvarez & Marsal. The ECB has decided that reviewing only banks' loans won't tell it enough about an institution's vulnerability to climate change, the firm said.
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