Central Banks

Canada hits Bank of Japan’s problem at warp speed

21 Apr 2021

The Canadian central bank will trim bond purchases due to better economic prospects. Another factor may be that after a year of buying, it owns nearly the same share of its sovereign debt as Japan built up over two decades. This reduces room to support growth in the future.

Capital Calls: SXSW

19 Apr 2021

Concise views on global finance: Rolling Stone publisher Penske Media is taking a 50% stake in hipster arts festival South By Southwest.

Turkey’s monetary meddling offers scant rewards

15 Apr 2021

The country’s central bank kept its interest rate at 19%. Having replaced his chief rate-setter in March, President Tayyip Erdogan hasn’t yet got the lower borrowing costs he wants. Rising inflation, a weak currency and the loss of credibility mean policy will need to stay tight.

Jerome Powell’s tricky tightrope act begins

13 Apr 2021

U.S. consumer prices rose 2.6% in the year to March due to higher energy costs. The upswing may be brief and the Fed boss won’t rush to tighten policy. Still, inflation expectations are rising. If that continues, it will make his focus on jobs rather than prices hard to maintain.

Wall St may get greater of two bank capital evils

5 Apr 2021

Financial firms just lost a regulatory perk that had allowed them to guzzle Treasuries with abandon. They may yet get a reprieve since looser leverage limits help the central bank too. But if the Fed tightens other capital rules instead, lenders could be even worse off.

Capital Calls: BlackRock’s Archegos angle, SPACs

30 Mar 2021

Concise views on global finance in the Covid-19 era: The fallout from the collapse of Bill Hwang’s family office gives regulators reasons to focus on funds, not fund managers; and bosses of blank-check companies don’t take investor questions.

Turkey’s soft capital controls are transitory fix

29 Mar 2021

Subtle curbs that make it harder to sell the lira will slow its fall. They won’t be enough if the central bank’s new boss starts cutting rates under political pressure. President Tayyip Erdogan can impose tougher restrictions but will hurt the economy if he is too heavy-handed.

Viewsroom: Turkish trouble and emerging markets

25 Mar 2021

President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.

Turkey’s battered banks face a slow-burn crisis

25 Mar 2021

A plummeting lira creates the risk of a funding squeeze for Garanti BBVA, Akbank, Isbank and others. But they’ve survived past crises without a bank run. The more likely problem for the sector is mounting bad debt, which will drag down returns and capital for years to come.

South Africa offers Erdogan an inflation lesson

23 Mar 2021

A steep plunge in the lira, of the sort seen this week after Turkey’s president fired his central bank boss, usually drags down the rand. Not this time. The South African currency’s resilience shows the value of a credible and independent central bank left free to control prices.

Guest view: Japan’s socialist equity trap

19 Mar 2021

The central bank may tweak its unorthodox ETF buying programme that has put 10% of the Topix index on its balance sheet. Jesper Koll of WisdomTree argues it won’t be enough. The BOJ’s overhang caps the market’s upside, and has infantilised the asset management industry.

Capital Calls: Airline IPO, Turkey’s central bank

18 Mar 2021

Concise views on global finance in the Covid-19 era: U.S. regional air carrier Sun Country Airlines’ IPO pop is justified by positive cash flow; Turkey shows how emerging-market policymakers face trickier choices than their rich-world peers.

Powell’s inequality goals put him over his skis

17 Mar 2021

The Fed boss wants to close the racial employment gap that widened as a result of the pandemic. But helpful policies are outside of Powell’s mandate, and stimulus might actually exacerbate the problem. The consequence is the economy could overheat before the gap closes.

Capital Calls: Netflix, ECB, Glass Lewis, Zalando

16 Mar 2021

Concise views on global finance in the Covid-19 era: The streaming service’s password-sharing crackdown twists the knife; the central bank worries about identifying bad loans; the proxy adviser’s sale underscores its place on Wall Street; the online fashion giant’s bold targets.

Lagarde’s yen for consensus will be stress-tested

11 Mar 2021

The ECB will step up the pace of bond-buying to combat a rise in yields. Moving sooner wouldn’t have allowed President Christine Lagarde to get the governing council’s green light. Fast-moving markets may require speedier reactions than her instinct for forging unity permits.

Capital Calls: BoE, Soros, Infrastructure, Pay

3 Mar 2021

Concise views on global finance in the Covid-19 era: The Bank of England starts to embrace the green transition; George Soros has some advice for France; Joe Biden gets a timely reminder of the importance of infrastructure; climate laggards risk getting hit in their wallets.

Chancellor: A bear market in bonds is beckoning

2 Mar 2021

Bond bull runs tend to last for decades, making it nearly impossible to accurately predict a turning point. But recent fixed-income extremes, together with the complacent attitude of central bankers and investors, suggest history’s greatest bond boom has passed its sell-by date.

Sustainable debt may be too popular for own good

2 Mar 2021

Investors are piling into bonds sold by companies such as H&M or Tesco which punish issuers for missing environmental targets. Demand has been such that the funding is now dirt-cheap. That could distort the price of the securities, and their intended effect.

The Exchange: The post-pandemic global economy

2 Mar 2021

Policymakers will face tricky choices about when to withdraw massive policy support as economic recovery kicks in. BNP Paribas’ group chief economist, William De Vijlder, joins Swaha Pattanaik to discuss their options, the focus on inclusive growth and the outlook for inflation.

Central banks will have to fight reflation tantrum

26 Feb 2021

Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.