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Barclays: Europe saw steady buyback activity in May

Buyback announcements in Europe surged to €38 billion in May, although have remained below the average since 2017, Barclays strategists said in a note. The strongest activity was noted in the Financials, Energy, and Consumer Discretionary sectors, with these sectors running 1.5 to 2 times above the third quartile over the past three months. However, only Financials and Consumer Discretionary sectors showed year-over-year improvement in buyback announcements. “For the coming months we expect buyback announcements to slow somewhat given the lower average monthly amounts announced over the summer since 2017,” ...

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Shares firm, pound slips after BoE decision tees up August cut

Global shares neared record highs on Thursday, supported by investor confidence in the prospect of a drop in U.S. interest rates this year, while the pound eased after the Bank of England left rates unchanged in a dovish decision. In an action-packed day for central banks in Europe, the BoE kept UK rates at a 16-year high of 5.25%, but said the decision not to cut had been “finely balanced”, a sign traders took to mean an August cut could be on the table. The Swiss National Bank cut interest ...

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China central bank head says slower credit growth ‘natural’

A slowdown in China’s credit expansion is natural due to factors such as economic shifts and less lending to the property sector and local governments, Pan Gongsheng, the governor of the People’s Bank of China (PBOC), said on Wednesday. Pan’s comments come after data showed new bank lending China rebounded far less than expected in May and some key money gauges hit record lows, suggesting the world’s second-largest economy is still struggling to regain its footing despite policy support. “It is natural for growth of the financing aggregate to fall, ...

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Asian shares steady, sterling treads with caution ahead of BoE meeting

Asian stocks took a breather on Thursday, hovering near their highest in two years as traders waited for more U.S. policy clues, while sterling was steady before a Bank of England meeting where rates are expected to remain unchanged. Apart from the BoE, investors will also watch for central bank decisions from Switzerland and Norway on Thursday to set the tone for a global rates outlook. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was little changed at 572.42, just below the two-year high of 573.38 it touched on ...

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Asia week ahead: It’s not all about rate cuts

Inflation and central banks Following the revelation that the Reserve Bank of Australia (RBA) discussed rate hikes at its last meeting (and that is not a typo – we did mean hikes, not cuts), the May CPI data will probably raise the question, “well, why didn’t they?” We think that the May data will show a 0.3% month-on-month decline in the price level, mainly driven by seasonal declines in holiday prices as well as clothing. On top of this, we will also see some influence from sharply lower retail gasoline ...

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Asian bonds see biggest monthly foreign inflows in a year in May

Asian bonds attracted their largest monthly foreign inflows in a year in May, helped by a cooling inflation trend in the United States and an improving economic outlook in Asia. Overseas investors purchased about $9.5 billion worth of bonds in Indonesia, Malaysia, India, South Korea and Thailand last month, marking their largest net buying since May 2023, data from regulatory authorities and bond market associations showed. “Softening inflation numbers in the U.S. helped improve investor sentiment, particularly towards bonds,” said Khoon Goh, head of Asia research at ANZ. Data released ...

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China’s cenbank signals it may soon start bond market trading as rally persists

China’s central bank on Wednesday signalled that it might soon start trading in the secondary bond market as yields continue to fall, reinforcing policymakers’ concerns that sharp speculative-driven moves could unwind rapidly in a blow to financial stability. The People’s Bank of China, which has pledged to add treasury bond trading to its monetary policy toolkit, has issued repeated warnings against plummeting yields in long-dated government bonds, but has failed to reverse the trend. “At present, it is particularly important to pay attention to the maturity mismatch and interest rate ...

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Hedge fund’s trades with lenders point to return of crisis-era structures

Earlier this year a hedge fund structured two trades worth $642 million, the kinds of which have not been seen since the 2008 crisis. It sold insurance to two U.S. lenders against losses on a loan portfolio, and then sold much of that risk to investors. The trades, a form of re-securitization, were done by Bayview Asset Management after it sold credit default swaps (CDS) to Huntington HBAN.O and Sofi SOFI.O late last year, according to Moody’s reports about the trades seen by Reuters and a person familiar with the ...

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Stocks boosted by Nvidia rally; dollar steady

Global stocks hit record highs on Wednesday, driven by a rally in tech shares that has made AI chipmaker Nvidia (NASDAQ:NVDA) the world’s most valuable company, while the dollar stalled as soft U.S. retail sales data suggested rates could fall this year. MSCI’s All-World index was up 0.2% at 805.13, having traded at an all-time high of 805.43. A burst higher in tech stocks on Wall Street overnight that allowed Nvidia to dethrone Microsoft (NASDAQ:MSFT) as the world’s most valuable company carried on through Asian hours, sending regional tech stocks ...

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FX Talking: Politics vs Policy

Executive summary Crosswinds in the FX market suggest EUR/USD should stay volatile within ranges – although probably with a downside bias this month as investors reduce euro exposure ahead of French elections on 30 June and 7 July. EUR/CHF is proving a cleaner vehicle to hedge against election risk and looks to press 0.9500 – especially if the Swiss National Bank does not cut rates this month. On the subject of rate cuts, we see downside risks to sterling this month when UK May CPI likely comes in lower and ...

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China securities regulator vows to strengthen oversight, resolve risks

China’s securities regulator said on Tuesday it will strengthen regulation of all financial activities and prevent and resolve risks, in a move to improve and reform financial markets amid a wobbly economic recovery. The China Securities Regulatory Commission (CSRC) said in a statement it will maintain a “zero-tolerance” stance on illegal activities in the capital market. “Preventing and defusing financial risks, especially preventing systemic financial risks, is the fundamental task of financial work,” the CSRC said in a statement. The comments came a day before the Lujiazui Forum in Shanghai, ...

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EU finance chief says ditch national symbols to boost capital market

Merging national stock exchanges and clearing houses and pan-EU supervision are the next steps needed to achieve a better capital market for the bloc, its financial services chief said. European Union member states should set aside such “national symbols” and recognise that consolidation is crucial to develop a single market for capital, said Mairead McGuinness. Countries have long blocked efforts to centralise supervision and consolidate market players, but discussion on this is needed to end fragmentation, she said, adding that the need was now more pressing as EU financial centres ...

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Bond traders worry liquidity will worsen as US market size grows

U.S. bond market participants are worried market liquidity will keep deteriorating as the U.S. Treasury continues to issue large amounts of debt to back deficit spending while dealers struggle to keep up with the ballooning size of the market. Liquidity – or the ability to trade an asset without significantly moving its price – has worsened over the past few years. U.S. government bond prices have fluctuated sharply since the Federal Reserve started hiking interest rates to tame inflation and the issue was discussed during several panels at the Fixed ...

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US bond ETF issuers anticipate big flows in higher-for-longer rate environment

Investors are pouring money into bond-focused U.S. exchange traded funds, and some industry participants believe inflows could hit records in 2024 if the current pace continues. U.S. bond ETFs have taken in a net $109 billion this year as of Thursday, data from Morningstar Direct showed. Flows into the category could total a record $250 billion this year, beating the record of $210 billion set in 2020, Morningstar said. While bond ETFs make up less than 18% of the entire ETF market based on assets under management, they have received ...

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Goldman Sachs raises S&P 500 year-end target to 5,600

Goldman Sachs has raised its 2024 year-end target for the S&P 500 Index .SPX to 5,600 from 5,200 earlier, citing strong earnings growth by five mega-cap U.S. tech stocks and a higher fair value price-to-earnings ratio multiple. Microsoft MSFT.O, Nvidia NVDA.O, Google GOOGL.O, Amazon.com AMZN.O, and Meta Platforms META.O have collectively surged by 45% and now comprise 25% of the S&P 500 equity cap, the brokerage said in a note after markets closed on Friday. “The drivers of the rally include upward revisions to consensus 2024 earnings estimates for these ...

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