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The triennial central bank survey of foreign exchange and derivatives market activity from the BIS is out.
FX details are here and OTC IR derivatives are here. Oh, and the Bank of England’s parochial summary is here.
But if you are interested in how financial centres stack up against each other you’ll need to consult this table: (Click to enlarge)
Not a relaxation of capital requirements by the Prudential Regulation Authority on Wednesday — it’s a relaxation of the amount of liquid assets which banks have to hold (falling by some £90bn, apparently) so long as they do meet strictures on capital.
From the release: Read more
First — GDP or unemployment as the slack indicator in forward guidance about low rates?
More on why the Bank of England chose unemployment (the 7 per cent threshold, not seen being reached until 2016), from the July/August minutes of the MPC: Read more
Have a chart from HSBC which, once the key is provided, will explain sterling’s weakness, probably:
Before we get there though we should touch back on Carney’s forward guidance thing, of which there are numerous different takes. Here are three for the hell of it: Read more
That’s Bank of England Governor Mark Carney, announcing on Wednesday that Jane Austen will adorn the new ₤10 note. Read more
Sir Merv, as portrayed by Diana Blakeney. Click the image for full effect.
Apparently the recent sovereign bond yield spike has almost completely wiped out the Bank of England’s QE bond portfolio’s unrealised profit. As Bank of America Merrill Lynch’s John Wraith said:
…the mark-to-market gains that were previously being registered by the Bank of England’s portfolio of Gilts acquired through the UK’s QE Asset Purchases since March 2009. As recently as 2nd May, this portfolio was showing an unrealised profit of £26.8bn; this had collapsed by 24th June to just £1.2bn.
Get your pitchforks out. Read more
Ostensibly, this is Governor Mervyn King and Governor Zhou Xiaochuan celebrating the RMB 200bn currency swap announced between their two central banks this weekend.
Click to enlarge for the Prudential Regulation Authority’s table on UK bank capital shortfalls…
The Bank of England has ushered some new risks into its biannual risk survey.
Out of the list of top seven key risks go funding risk, the risk of financial market disruption/dislocation and the risk of tightening in credit conditions. In their place we get the risk of property price falls, operational risk (‘cyber’ security), and risks surrounding the low interest rate environment. Read more
A pretty interesting paper, and conclusion, from the Bank of England’s External MPC unit on Friday — or at least one that should keep the debate going over the art/science of GDP revisions… Read more
…And the treatment of public debt in the government’s books gets left in some disarray.
Remember this from the ONS, in February? Read more
Gaspard Koenig has been sounding off, entertainingly, at the Centre for Policy Studies on the costs associated with the Banque de France — whose governor, Christian Noyer, has been pressing Hollande’s government to make deeper and quicker cuts…
Let’s take a look at the Banque de France, which recently published its annual report. Apart from being lavishly located in the Hotel de Toulouse, a 17th-century gem, its operating costs are bewilderingly high. It employs 13,000 agents for a total human resources expenditure of nearly €1.5 bn a year (including pensions). With 6% of its staff aged under 30 and 32% over 55, the Banque de France’s age pyramid looks more like a cocktail glass.
Yes, the Wall Street Journal caught our eye on Wednesday with The Federator, a fun retro-looking QE game that flies Helicopter Ben over Main Street USA, spewing cash.
Yes, it’s hardly a neutral document on the matter.
Still, there are lots of interesting charts in the UK government’s latest report on the finance and economics of Scotland becoming a sovereign state, this time covering the dangers from banks…
…Although we think they missed one.*
From ICAP’s Gilt Repo Comment on Monday:
The announcement by the DMO of further supply of UKT4T 15 (1.75 bln on the 29th May) is welcomed in light of the issue’s “tightness” in the REPO market. The bond overnight has averaged 11 bps through DBV to date in May and was tight in the 1st quarter. However, post Friday’s announcement the bond held its premium in term and it is not certain the additional supply will cheapen the issue despite the free float increasing.
Remember the Bank of England audits? Launched in May last year. Covered banking rescues, the really super top-secret hush-hush banking rescues, and fan-charting.
The bank’s official response to them is out. Read more
Breaking: deputy prime minister Nick Clegg has hit soundbite pay dirt.
In Tuesday’s FT he is quoted as saying that the Funding for Lending Scheme, whereby financial institutions get cheap loans from the Bank of England to boost credit to the wider economy, should be “put on steroids”.
This does smack of desperation, doesn’t it? From the FT on Thursday morning:
Osborne will use his Budget on March 20 to reinforce his message of “fiscal conservatism and monetary activism” by clarifying how the government intends to use monetary policy to get the economy growing again.
Like Top Trumps, just not as much fun…
The question mark in the header is just so as to (reluctantly) give the Bank of England the benefit of the doubt.
Here are the latest stats on the Funding for Lending Scheme, which was supposed to pump £100bn into households and businesses in the UK. Six months in, £13.8bn has been drawn down by British banks, £9.5bn of that coming in the final quarter of 2012. Read more
Okay. Negative interest rates have now gone fully mainstream in the UK thanks to this week’s testimony by Bank of England deputy governor Paul Tucker.
Even the Daily Mail is writing about it.
But a number of major misunderstandings are popping up as a result. So let us try to clear some of them up. Read more
Throwing around the negative interest rates idea has become very trendy all of a sudden with Draghi, Praet and Constancio weighing in and, we’d argue, using the threat to substitute for policy impotence.
So, was Bank of England deputy governor Paul Tucker doing the same thing on Tuesday morning in front of a Parliamentary committee? Using a jedi-trick to talk down sterling perchance? It’s not a phrase you use lightly and it seems unlikely he would have whacked it out completely unintended. But it has to be said, if he was going Jedi here, the effect didn’t last all that long. Read more
That’s the considered opinion of Julian D. A. Wiseman (most recently head of UK rates strategy at Société Générale but writing on his personal blog here) on the Monday after Moody’s cut its credit rating for the UK from Aaa to Aa1, taking the Bank of England down with it. For those keeping count, that makes it a downgrade that was neither surprising, nor informative nor, in itself, damaging (as Martin Wolf put it)… but more to the point it was just plain silly. Read more
We tried to explain the QE surplus ‘raid’ before but never approached the crystal clear clarity of Thursday’s ONS release on the treatment of cash transfers from the BoE to the Treasury (the release of which accompanies the news that public finances improved in January although they were flattered by such transfers): Read more
Here’s the dovish BoE minutes that started sterling sliding (click through for the pdf): Read more
So the Bank of England has decided to give its new-fangled biannual Money Market Liaison Group Sterling Money Market Survey (first launched in May 2011) more oomph.
No longer will the results sit, largely unnoticed, in one of the Bank’s quarterly bulletins. From now on the survey will be presented on a standalone basis, with its very own pdf and cover illustration, which looks like this: Read more
This alarming gilt fact is brought to you by Bank of America Merril Lynch and it underlines one of the main fears many people raised about the QE surplus “raid” staged by the Her Majesty’s Treasury on the Bank of England last year.
From BofAML’s John Wraith (our emphasis):
As a result of the dramatic spike higher in yields that occurred over the first week or so of the New Year, the mark-to-market value of the BoE’s portfolio of Gilts acquired through QE over the past four years dropped by more than £7bn. This exceeds the largest decline in the portfolio’s value in any full month since QE began by more than £1.5bn, emphasizing both the extent of the rise in yields, and also the very large size the BoE’s holdings have reached (£326.7bn in nominal terms, with a basis point value of about £360m).
Fresh from the Bank of England — it’s a draft Policy Statement explaining the planned powers for the Financial Policy Committee to give directions setting extra capital requirements for the purposes of financial stability. Click the image for the full doc: