With softening profit margins and high debt levels, some parts of the U.S. corporate sector are looking more vulnerable
Indian shadow banks came under pressure in 2018. We assess how much of a macro risk they pose.
On January 7, 2019 the IIF submitted its response to the IAIS Recovery Planning Application Paper.
Expansionary fiscal policy will continue to drive non-oil growth, as fragile investment sentiment and regional tensions continue to hinder growth of the private non-oil sector. We expect overall growth to moderate to 2.0% in 2019, dragged down by compliance with the recent OPEC+ deal.
Our January 2019 US Financial Regulatory Update covers new reports released by the Federal Reserve on Financial Stability, and Supervision and Regulation; proposed adoption of SA-CCR for large banks; proposed regulations on GILTI Inclusion and BEAT Tax; the November 2018 U.S. General Election and other federal personnel updates, among other topics.
EM Growth Tracker at 3.4% 3m/3m sa ar in December. Decline driven by hard data and business sentiment. Trade volumes and industrial production weakening. All regional trackers slowing towards the end of 2018.
Jittery equity analysts cut forecasts for next year’s corporate earnings; Tighter financial conditions may prompt more central bank caution; Safe-haven flows intensify in early 2019 amid concerns about the credit cycle; Heightened volatility — notably in equity markets – dampens risk appetite
In a letter to the Central Banks and Supervisors Network for Greening the Financial System (NGFS), the IIF announces the formation of the Sustainable Finance Working Group and proposes ways the group can support the efforts of NGFS. The IIF also offers comments on the Oct. 2018 NGFS Progress Report.
Slump in cyclical sectors highlights concerns about global growth, impact of quantitative tightening; Market selloff has prompted a sharp correction in equity valuations—but they still don’t look cheap; Signs of rotation to emerging markets; This will be the last Weekly Insight of 2018—see you in the New Year!
In this forerunner to deeper IIF analysis that will follow in 2019, we look at some potential scenarios where innovative disruption could have an asymmetric effect on banks’ balance sheets.
Lesson #1: Don’t engineer an outsize credit boom into a global tightening cycle. Lesson #2: Current account-based estimates of FX fair value are really important. Lesson #3: After a decade of G-3 monetary easing, EM has a positioning overhang. Lesson #4: Imposing a tariff on China is a negative shock that weakens the RMB. Lesson #5: Don’t get hung up on stories the Fed is shifting hawkish. It isn’t.
In our last edition of Sticky Notes in 2018, we look at President Xi's reform anniversary speech, Venezuela's future, NAFTA termination, oil markets, and a potential U.S. government shutdown.
On December 17, 2018 the IIF responded to the IAIS Application Paper on Proactive Supervision of Corporate Governance.
We have introduced a new measure of real money positioning in EM, which extends the IIF’s well-known work on capital flows to positioning. Our positioning data are calibrated to match stock positions in the BoP, so by construction are representative of the full positioning picture.
Growth has rebounded, driven by higher copper prices and robust investment. Ongoing reforms will help reduce the fiscal deficit and stabilize public debt. High external corporate debt poses challenges, but several factors mitigate risks.
Trade finance is a business line ripe for innovation, and Mike Hogan (MUFG) and Richard Chenga-Reddy (Standard Chartered) join FRT to discuss how to modernize, with a fascinating case study in Japan and many opportunities for distributed ledger technology (Brad Carr).
The Heat Map is constructed to compare relative vulnerabilities across countries and is used for analyses in our publications such as the Global Economic Monitor and Capital Flows Report, in particular to assess' the cross-country impact of higher risk aversion or increase in Fed policy rates, especially in EMs with external vulnerabilities and less credible policy frameworks.'
The December 2018 IIF Global Regulatory Update provides updates on current work streams in regulatory capital, recovery and resolution, accounting, cyber security, digital finance, sustainable finance, AML/CFT, insurance, and upcoming events.
Sentiment on oil prices remained weak amid doubts that the planned production cuts will be enough to rein in oversupply, and as investors suspect that OPEC+ would honor their pledge to cut production. We expect Brent oil prices to average $67/bbl in 2019 if the OPEC+ agreement is fully implemented.
U.S.: $1.5tn in student loans present fiscal risks; $1tn in leveraged loans vulnerable to rising interest rates ; Banking flows to the UK weaken since the Brexit referendum; Inflation under control in most key EMs; but central bank independence under scrutiny in many countries; RMB gains as a global reserve currency; foreign investor demand for bonds shifts from China to other EMs