Central Banks

Indonesia cautiously crosses central bank rubicon

9 Jul 2020

Bank Indonesia will buy $28 bln of bonds directly from the government, breaking a long-held taboo. It will refund interest gains, and the securities will be tradeable, providing price transparency. That’s about as credible as an emerging market monetary authority can hope to be.

Japanese bond market shift spells stronger yen

7 Jul 2020

Central bank boss Haruhiko Kuroda has kept yields on 10-year debt near zero but let those on longer-dated ones rise. Now most of Japan’s yield curve is above that of France. Dwindling returns on overseas bonds could reduce local demand for foreign currency, sparking a yen rally.

Fed keeps yield-curve control in back pocket

2 Jul 2020

Minutes of the U.S. central bank's June meeting suggest ambivalence about the policy. It’s unnecessary for now, with bond markets quiescent. If that changes, Japan’s experience shows the tactic can effectively cap long-term interest rates. But it may not deliver higher inflation.

Ukraine central banker exit is nail in reform hope

2 Jul 2020

Governor Yakiv Smoliy quit, citing political pressure. He tamed inflation and stood up to the former owners of nationalised PrivatBank. His resignation scuppered a bond issue and puts a $5 bln IMF loan at risk. Opaque vested interests are winning out over transparency in Kyiv.

The Exchange: BIS chief Agustin Carstens

30 Jun 2020

It has been a hectic year for central bankers, who are on the front line of fighting a global recession. The head of the Bank for International Settlements joins Swaha Pattanaik to discuss how to unwind massive monetary stimulus, risks in the financial system, and regulation.

Fed takes from U.S. bank investors in two ways

29 Jun 2020

The biggest lenders will have to set aside $50 bln more in capital under new rules. Goldman Sachs and Wells Fargo are two that may have to cut payouts to shareholders. A bigger drag for investors overall will be the curb on buybacks, which flattered earnings per share for years.

Bank stress tests give the Fed a pass grade too

25 Jun 2020

The biggest lenders would have a minimum capital ratio of 7.7% in a W-shaped virus recovery, the U.S. regulator reckons. The Fed is capping dividends as some banks approach the danger zone. Still, it reassures that after a decade of reforms, they can weather an unforeseen crisis.

Central banks have a way to spur greener recovery

24 Jun 2020

Fed chief Jerome Powell and ECB boss Christine Lagarde are purchasing bonds without taking account of whether they are supporting the carbon-intensive status quo. There are good reasons for that. But they can at least demand more disclosure of climate risks before buying.

Corona Capital: A tax on martinis

24 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: Uncle Sam has bad news for those enjoying the libation during lockdown as it’s putting up import duties on gin, vodka and olives.

UK stimulus exit talk may do more harm than good

23 Jun 2020

Central bank boss Andrew Bailey is talking about how monetary easing will be unwound, while finance minister Rishi Sunak may later this year unveil deferred tax rises. Payback is inevitable. But when flagged so clearly, it undermines recovery efforts.

Sovereign funds are having their rainy-day moment

23 Jun 2020

Temasek is stepping in to support Singapore Airlines and a marine group. It makes sense to shore up strategic assets at home when global valuations are high and cash is on hand. Peers from Abu Dhabi’s Mubadala to Malaysia’s Khazanah are likely to follow.

Virtual vouchers offer digital-payments stimulus

19 Jun 2020

Taiwan is issuing $1.7 bln of coupons to goose its economy. These types of handouts have worked to varied effect elsewhere, but often just replace one kind of spending with another. Making them electronic instead of paper should at least help accelerate efforts to go cashless.

Viewsroom: Stock underwriting bonanza, Vietnam

18 Jun 2020

Equity capital markets bankers are having their day in the sun as companies scramble to raise money while central banks pump liquidity into the financial system, Breakingviews editors explain. Plus: Asia columnists Robyn Mak and Una Galani chew over Vietnam’s productive pandemic.

Andrew Bailey can freeload on Fed and ECB largesse

18 Jun 2020

The Bank of England boss will buy an extra 100 billion pounds of bonds, but at a slower pace. His peers are being more open-handed. For example, banks just borrowed 1.3 trillion euros from the European Central Bank. Ample global liquidity will help Bailey contain UK debt yields.

Wall Street underwriters get their day in the sun

16 Jun 2020

Investors are going bananas for new shares. Even bust rental-car firm Hertz can sell stock. Re-equitizing companies is bringing a bonanza of fees to global equity capital markets desks at investment banks. But the window is only open now thanks to central banks and governments.

Corona Capital: Next crisis, Overvalued markets

16 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: Deutsche Bank analysts sound a warning about future catastrophes, while investors try to square overpriced stocks with their hopes of a recovery.

Corona Capital: KKR, Rugby, Centene

12 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: KKR volunteers advisers to share the pain, Super Rugby heads back to the pitch, and Centene's best bet.

Crack in Hong Kong dollar peg is invisible

12 Jun 2020

U.S. investor Kyle Bass has bet the currency’s greenback link will snap within 18 months. The peg is vulnerable if Beijing’s new security law scares capital away. But that looks to be a long-term trend, and authorities for now are restraining a rally. Shorters are short on time.

Fed risks nothing new – yet – on nascent recovery

10 Jun 2020

After early aggressive action, Chair Jay Powell and his colleagues added no more on Wednesday. He committed to keep conditions very easy, but there was no sign of yield-curve control or negative rates. That makes sense given the unknowable trajectory of the post-pandemic upturn.

Inflation is alive and well in equity markets

10 Jun 2020

The May U.S. consumer price index fell 0.1%. So massive money creation doesn’t seem to be generating inflation. But the S&P 500 is up 24% this quarter, IPOs are cruising and bankrupt companies are getting bids, all while unemployment is at 13%. Policymakers probably won’t notice.