Treasury bills – Westie Lovers http://westielovers.com/ Sat, 14 May 2022 16:50:15 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://westielovers.com/wp-content/uploads/2021/03/cropped-icon-32x32.png Treasury bills – Westie Lovers http://westielovers.com/ 32 32 Behind Buffett’s Big Moves and What’s Next – ictsd.org https://westielovers.com/behind-buffetts-big-moves-and-whats-next-ictsd-org/ Sat, 14 May 2022 16:50:15 +0000 https://westielovers.com/behind-buffetts-big-moves-and-whats-next-ictsd-org/ warren buffet is one of the richest people in the world and regularly ranks at the top of the Forbes billionaire list. As of April 19, 2022, his net worth is listed at around $125 billion. Buffet is known as a philanthropist and businessman. During this time, he is probably best known for being the […]]]>

warren buffet is one of the richest people in the world and regularly ranks at the top of the Forbes billionaire list. As of April 19, 2022, his net worth is listed at around $125 billion. Buffet is known as a philanthropist and businessman. During this time, he is probably best known for being the most successful investor in the world. So it’s no surprise that Warren Buffet’s investment strategy has reached mythical proportions. It follows several key principles and an investment philosophy that is widely followed around the world. From last September until Berkshire’s most recent filing, the company has $120 billion in cash and short-term Treasuries and even more insecurities in liquid form.

  1. Company Performance – ROE reveals the rate at which shareholders typically earn income on shares. Buffett examines ROE to d tv if a company has consistently performed well compared to other companies in a similar industry.
  2. Company Debt – D/E is a key element for Buffet to consider carefully. He prefers to see the small amount of debt so that earnings growth is manufactured from shareholders’ equity rather than borrowed money.
  3. Profit Margins – A company’s profitability is on par with a good and steadily increasing profit margin. By net sales, this margin is calculated by dividing the net result. For a good historical indication of profit margin, investors should look back five years.
  4. Is the company public? – Typically, Buffet considers a company that has been around for about 10 years. So most tech companies that have gone public over the past few decades have failed to get noticed by Buffet.
  5. Addiction to Commodities – Buffet tends to shy away from, but not always, products from companies that are generally indistinguishable from those of competitors. Also, those who mainly depend on one commodity like gas and oil.
  6. Is it cheap? – For verification, an investor determines the intrinsic value of a company through a series of analyzes of the fundamentals of the company including assets, revenues and profits. The intrinsic value of a business is usually higher than the liquidation value, which is what a business is worth to be broken up and sold.

Buffett’s philosophy

  • Buffet generally follows the Benjamin Graham School of value investing. Value investors go for stocks that are priced unduly low based on their intrinsic value.
  • There has been no universally accepted method for determining intrinsic value, often estimated by analyzing a company’s fundamentals.
  • Like bargain hunters, value investors look for stocks that are mostly undervalued by stocks or markets that have value while not being recognized by the majority of other buyers. This value-driven approach to investing is taken by Buffet to another level.
  • Most value investors do not support the EMH. Thus, this theory suggests that stocks trade at their fair value, which makes it harder for investors to buy stocks that are undervalued or at inflated prices by selling them.

Future moves

  • Buffet’s approach to purchases is described in his latest letter to major shareholders. This, as follows, is consistent with its long-term approach.
  • In addition, he mentions that he might prefer, if possible, to buy companies directly, rather than taking a stake in them. Moreover, he mentions that according to the agreement, this is not always possible.
  • It looks like Berkshire is making some big moves due to the current crisis. If 2007-9 is any kind of guide, it may not be in a hurry.

Conclusion

It can be concluded that Buffet generally likes to acquire entire companies and seek out investments that move Berkshire forward. It just means that they should be increased largely as the business grows. Thus, Berkshire took advantage of the low interest rate to issue debt and reduce several holdings of airline stocks while no major measures were taken.

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CB will print money when absolutely warranted to avoid bigger crisis: Governor – Business News https://westielovers.com/cb-will-print-money-when-absolutely-warranted-to-avoid-bigger-crisis-governor-business-news/ Thu, 12 May 2022 19:24:00 +0000 https://westielovers.com/cb-will-print-money-when-absolutely-warranted-to-avoid-bigger-crisis-governor-business-news/ Central Bank will have to print money while failure to do so leads to even bigger problems such as non-payment of state sector wages, says Central Bank Governor Dr. Nandalal Weerasinghe , adding that they do so with greater responsibility and restraint now than before, however. Since the […]]]>






Central Bank will have to print money while failure to do so leads to even bigger problems such as non-payment of state sector wages, says Central Bank Governor Dr. Nandalal Weerasinghe , adding that they do so with greater responsibility and restraint now than before, however.

Since the Central Bank shocked the markets with an unprecedented 700 basis point hike in policy rates on April 8, weekly treasury bill auctions have seen full or near-full subscriptions, showing that funding needs government are largely satisfied via the market rather than central bank liquidity.

Dr Weerasinghe said they are engaging in printing money with great restraint than before and only in cases where the government needs the money to meet extremely essential or urgent fund requirements such as the payment of salaries in the state sector.

In response to a reporter’s question about rumors that the government was running out of money to pay salaries for state sector employees from July, the governor said he remained obligated to support the Treasury in cases where the treasury could not cope with the finances on its own, because the damage you cause by not paying wages is far greater than printing money.

In other cases where the expenditure is not urgent and essential, the Central Bank advises the Treasury to postpone or eliminate such expenditure.

The Secretary of the Treasury, during the last week of April, issued a circular to all heads of government departments to reduce or cut spending.

According to the data, the Central Bank holds a portfolio of treasury bills and bonds worth 1,869.84 billion rupees as of Wednesday, little change from 1,849.70 billion rupees on 8 April, when the new governor took office and the sharp adjustment in policy rates was made.

The Central Bank could soon begin to reduce the size of its Treasury bill holdings over the coming period if fiscal revenue and spending reforms in the form of tax increases, utility pricing on the market and a temporary halt to big-budget infrastructure projects are being implemented.

The U.S. Federal Reserve last week raised its short-term rate by half a point, the most since 2000, and announced the reduction of its balance sheet by about $9 trillion from June 1, initially by 47.5 billion dollars per month, an amount which will then be increased. to $95 billion a month after three months.

This will have the effect of dampening the record stimulus unleashed on the economy during the two years of the pandemic and significantly tightening monetary policy to bring inflation back to its target level of 2.0% over the medium term.

US inflation rose to 8.3% in April 2022 from a year ago, down from 8.5% recorded in March, but still higher than expected. When the United States entered the pandemic, the size of the US Fed’s balance sheet was around US$2 trillion and it launched a monthly bond-buying program after cutting rates to lows. close to zero to stimulate and prevent companies from defaulting.


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Plenty of catalysts to help push Treasury rates above 2018 highs https://westielovers.com/plenty-of-catalysts-to-help-push-treasury-rates-above-2018-highs/ Sat, 07 May 2022 21:07:08 +0000 https://westielovers.com/plenty-of-catalysts-to-help-push-treasury-rates-above-2018-highs/ Breadcrumb Links PMN Company Author of the article: Bloomberg News Michael MacKenzie and Liz Capo McCormick Content of the article (Bloomberg) – The relentless bear market in US Treasury debt is on the cusp of a new phase, with yields across much of the maturity spectrum poised to surpass their 2018 highs and several major […]]]>

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(Bloomberg) – The relentless bear market in US Treasury debt is on the cusp of a new phase, with yields across much of the maturity spectrum poised to surpass their 2018 highs and several major potential catalysts for help in such development.

The center stage will be April consumer price inflation on Wednesday, which is expected to decline from March rates that were the highest since 1982. Federal Reserve officials, who raised rates by half -point this week and set a date of June 1 to begin reducing holdings of Treasuries, will be out in force to discuss their approach to inflation. Meanwhile, the biggest month of Treasury debt sales for the May-July funding quarter kicks off with auctions of 3-, 10- and 30-year debt.

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While none of these provide a logical impetus for higher yields, liquidity has deteriorated, making the Treasury market more sensitive to big changes. Bloomberg’s U.S. Government Securities Liquidity Index, which measures the average return error for notes and bonds maturing in at least a year, approached its highest level for the year on Friday. The two-year range broke above 25 basis points for the third time this year on the day of the Fed meeting.

“This is a unique moment in ten years in capital markets,” said James Camp, director of fixed income at Eagle Asset Management. Correlations are increasing and “the volatility between assets is incredible. We have nowhere to hide.

A weekly survey of Treasury investors by JPMorgan Chase & Co. this week found a historically high level of risk avoidance; neutral positioning was at its highest level since March 2020.

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The surge in yields was led by real or inflation-protected notes and bonds, indicating that tighter financial conditions rather than inflation expectations were the main driver. It was accompanied by sharp declines in US equities which propelled the Standard & Poor’s 500 index to its lowest level in almost a year.

For shorter-dated Treasuries like two- and five-year bonds, surpassing the 2018 highs would mean returning to levels last seen before the 2008 financial crisis. For the benchmark 10-year, its peak of 3 .25% in 2018 was the highest level since 2011.

The two-year yield this week peaked at 2.85%, less than 26 basis points from its 2018 high. The five-year yield hit 3.08%, two basis points above 2018 levels. The 10-year yield’s 19 basis point rise to 3.13%, however, was overshadowed by the 10-year inflation-protected yield’s 27 basis point rise, from just under 0% in the week. previous.

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Real yields on Treasury inflation-protected securities climbed as the Fed’s stance bolstered confidence that consumer price growth rates have peaked. Yields on five-year TIPS rose more than 150 basis points in 40 trading days through May 3, the fastest pace since 2008.

The April CPI report is expected to show an overall decline in the annual pace of inflation to 8.1% from 8.5% in March. For underlying prices, which exclude food and energy, a decline to 6% from 6.5% is expected.

Fed policymakers, in their statement announcing this week’s rate move – the first half-point hike since 2000 – said they were “very attentive to inflation risks”. And while short-term interest rate markets expect the policy rate to rise to 3.25% next year, from the current range of 0.75% to 1%, it is not clear how. their evolution could be influenced by the lagged effects of the tightening on the economy. Already, 30-year fixed mortgage rates in the United States have climbed to 5.27%, their highest level since 2009.

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The latest phase of the sell-off steepened the Treasury yield curve, with long-term rates rising the most – the two-year to 10-year spread widened by more than 17 basis points and reached the level the highest since early March.

The rise in the term premium — offsetting the risk of poor results over a longer period — reflects deep uncertainty about the path of inflation and the Fed’s policy response, Roberto Perli and Benson Durham said. Piper Sandler.

Next week’s auctions may extend the trend as the market tends to seek high coupon rates for new auctions. The 10-year and 30-year are about to collect at least 3% coupons, the first since 2019.

The rise in long-term Treasury yields above 3% “makes them attractive, but they can look a lot more attractive from here,” said George Goncalves, head of US macro strategy at MUFG. “Investors want to be compensated for owning long-term bonds in a world where the Fed can’t really solve the inflation problem with its blunt policy tools.”

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What to watch

Economic Calendar: May 9: Wholesale Stocks May 10: Small Business Optimism NFIB May 11: CPI, MBA Mortgage Claims May 12: PPI, Weekly Unemployment Claims May 13: Import Price Index export, feeling of the U. of MichFed Calendar: May 10: New York Fed President John Williams, Richmond Fed President Thomas Barkin, Cleveland Fed President Loretta Mester, Fed Governor Christopher Waller, Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael BosticMay 11: BosticMay 12: San Francisco Fed President Mary DalyMay 13: Minneapolis Fed President Neel Kashkari, MesterAuction Schedule: May 9: 13 and 26 week notes10 May: 3-year notesMay 11: 10-year notesMay 10: 4- and 8-week notes, 30-year bonds

©2022 Bloomberg LP

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What are EE bonds? How do they work? https://westielovers.com/what-are-ee-bonds-how-do-they-work/ Thu, 05 May 2022 12:06:43 +0000 https://westielovers.com/what-are-ee-bonds-how-do-they-work/ The beauty of EE bonds is that their face value increases by 100% when held for the long term. NoDerog by Getty Images Signature; Cloth Content What are EE bonds? The United States Treasury offers investors several low-risk bonds that are backed by the “entire confidence and security” of the United States government. These bonds […]]]>

What are EE bonds?

The United States Treasury offers investors several low-risk bonds that are backed by the “entire confidence and security” of the United States government. These bonds pay semi-annual interest and have the highest credit rating available, AAA. They are also considered liquid and therefore easily convertible into cash. As such, they are considered some of the safest investments available, since the US government is virtually guaranteed never to default.

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Albania sells 9.9 billion leks (82.2 million euros) of Treasury bills https://westielovers.com/albania-sells-9-9-billion-leks-82-2-million-euros-of-treasury-bills/ Tue, 03 May 2022 07:06:00 +0000 https://westielovers.com/albania-sells-9-9-billion-leks-82-2-million-euros-of-treasury-bills/ TIRANA (Albania), May 3 (SeeNews) – The Albanian Ministry of Finance sold for 9.9 billion leks (86.3 million dollars/82.2 million euros) of public securities during two auctions organized on April 29, according to data from the country’s central bank. The Ministry of Finance sold 9.24 billion lek worth of one-year treasury bills that will mature […]]]>

TIRANA (Albania), May 3 (SeeNews) – The Albanian Ministry of Finance sold for 9.9 billion leks (86.3 million dollars/82.2 million euros) of public securities during two auctions organized on April 29, according to data from the country’s central bank.

The Ministry of Finance sold 9.24 billion lek worth of one-year treasury bills that will mature on May 4, 2023, according to the data. Some 4.1 billion lek of the supply was reserved for the central bank.

The ministry also sold 688 million lek worth of six-month treasury bills with a maturity date of November 3, 2022. Some 200 million lek of the supply was earmarked for the central bank.

The details follow (in billions of leks unless otherwise stated):

One-year treasury bills

Auction date April 29 April 19
Amount offered 9 9.7
Amount sold 9.24 9.53
Total bids placed 12:44 p.m. 9.85
Bid/cover ratio 1.35 1.03
Maximum return requested 2.70% 2.50%
Maximum yield accepted 2.38% 2.46%
Minimum return requested 1.80% 1.75%
Minimum yield accepted 1.80% 1.75%
Weighted average return 1.95% 2.22%

Six-month treasury bills

Auction date April 29 April 12
Amount offered 1 1
Amount sold 0.688 0.504
Total bids placed 0.688 0.704
Bid/cover ratio 1.00 1.40
Maximum return requested 1.88% 1.83%
Maximum yield accepted 1.88% 1.78%
Minimum return requested 1.80% 1.28%
Minimum yield accepted 1.80% 1.28%
Weighted average return 1.85% 1.75%

(1 euro = 120.465 lek)

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BOD: The Perfect Storm Unfolds (NYSEARCA: BOD) https://westielovers.com/bod-the-perfect-storm-unfolds-nysearca-bod/ Sun, 01 May 2022 05:43:00 +0000 https://westielovers.com/bod-the-perfect-storm-unfolds-nysearca-bod/ BlackJack3D/E+ via Getty Images Investment thesis Oil continues to benefit from a wide range of supply-side tailwinds and stable demand. It is now increasingly likely that the European Union will embargo Russian oil as soon as in early May 2022, which comes at a time when OPEC spare capacity is at an all-time low and […]]]>

BlackJack3D/E+ via Getty Images

Investment thesis

Oil continues to benefit from a wide range of supply-side tailwinds and stable demand. It is now increasingly likely that the European Union will embargo Russian oil as soon as in early May 2022, which comes at a time when OPEC spare capacity is at an all-time low and global oil inventories are below the historical average for the past decade. If we add the fact that a number of Chinese cities were in lockdown in March and April 2022 and are expected to come out of it within the next couple of months, I think we have the necessary catalysts that will drive up the price of oil. . In this article, I will review the Invesco DB Oil ETF (NYSEARC: BOD), which provides exposure to light sweet crude oil futures.

Policy Details

The Invesco DB Oil Fund ETF tracks the investment results of the DBIQ Optimum Yield Crude Oil Excess Return Index. It is a rules-based index comprised of light sweet crude oil futures, with the remaining assets invested in US Treasury bonds.

You can read more about this strategy here.

Invesco

Invesco

Expect additional pressure from the supply side

I am personally bullish on the price of oil over the next two months as supply continues to be constrained by a number of macroeconomic and political factors. Heading into 2022, we already had one of OPEC’s lowest spare capacities at a time when global oil demand was strong. According to a recent PIMCO report, spare capacity in OPEC+ was around 3%-3.5% before the conflict in Ukraine, compared to around 8-9% in 2002. However, it is now estimated from recent negotiations with energy authorities in the Middle East. that number could be significantly lower, at just 2.5%.

US EIA

US EIA

It comes at a time when global oil inventories have fallen at their fastest pace on record in the past 18 months, dropping more than 600 million barrels as slow production failed to keep up with the pace. pace of growing demand. Unsurprisingly, oil inventories are currently at their lowest level in ten years and are well below the 2010-14 average. If demand for oil remains strong, I think the end result will be prices going up until it eventually goes down.

Product Background

Product Background

The Russian invasion of Ukraine makes this subject even more complex as European countries actively discuss an embargo on Russian oil. Recently, Germany announced that it would not object to such a measure and a new EU sanctions package against Russia is expected next week. Energy could very well be one of them.

We cannot ignore the fact that Russia is one of the world’s leading oil suppliers, accounting for 12% of world oil trade. The US and Canada have already banned imports of Russian oil and the EU is expected to join them soon, putting further pressure on global supply and ultimately the price of this commodity. .

UBS/Bloomberg

UBS/Bloomberg

As a result, oil could very well top $130 a barrel in Q3 2022 by some estimates.

Morgan Stanley

Morgan Stanley

Demand continues to be strong

According to the IEA, oil demand is expected to remain positive throughout 2022, although the rate of demand growth is expected to be lower than in 2021. Unless growth turns negative, it is difficult to see how oil prices will decline given the current supply challenges.

Morgan Stanley / IEA

Morgan Stanley / IEA

A recession in the United States and Europe could contribute to weakening demand for oil. This scenario is now more likely than 6 months ago as economic growth has slowed in both regions and recent quarterly US GDP data has taken markets by surprise. That said, US consumer confidence continues to be flat and above the March 2020 COVID-19 lows, leaving ample room for oil prices to rise until a recession hits.

Refinitiv Eikon

Refinitiv Eikon

In Europe, however, the situation is deteriorating more rapidly. The war in Ukraine has dragged consumer confidence well below the long-term average and is approaching levels seen in the first quarter of 2020. Although consumers have yet to capitulate, it would be interesting to watch future readings for get an idea of ​​where we might be heading.

Refinitiv Eikon

Refinitiv Eikon

At the same time, I believe China’s oil demand is expected to increase in the coming months compared to March and April 2022 as the country gradually emerges from lockdown. To put China’s role in the global oil market, the country accounted for about 16% of total oil consumption in 2018.

Mackenzie Wood/RAW/WBMS

Mackenzie Wood/RAW/WBMS

Key points to remember

I believe we now have the perfect storm that will drive oil prices higher in the months ahead. Oil continues to benefit from a variety of supply-side tailwinds and solid demand in the US and Europe. If the EU imposes a ban on Russian oil, we could very well see oil jump to $130/bbl before Q3 2022 as OPEC spare capacity and global oil inventories are at historic lows. .

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Government sinking deeper into debt trap: Veritas https://westielovers.com/government-sinking-deeper-into-debt-trap-veritas/ Fri, 29 Apr 2022 07:46:25 +0000 https://westielovers.com/government-sinking-deeper-into-debt-trap-veritas/ TATIRA ZWINOIRALEGAL think tank, Veritas says the government is sinking deeper into the debt trap thanks to its agriculture financing model, which has massively contributed to the sector’s current mess. Last month, the International Monetary Fund (IMF) warned of rising debt aggravated by the Treasury’s assumption of $3.77 billion of debt in blocked funds and […]]]>

TATIRA ZWINOIRA
LEGAL think tank, Veritas says the government is sinking deeper into the debt trap thanks to its agriculture financing model, which has massively contributed to the sector’s current mess.

Last month, the International Monetary Fund (IMF) warned of rising debt aggravated by the Treasury’s assumption of $3.77 billion of debt in blocked funds and a pledge to pay $3.25 billion to former white farm owners.

For these reasons, along with the central bank’s quasi-fiscal activities and increased issuance of government securities to finance spending, the debt is estimated at over $20 billion.

The driver of public debt is the money the government has spent to finance the agricultural sector through managed agriculture.

“The government has invested billions in boosting agricultural production, but statistics from the State of Public Debt confirm that this has not helped Zimbabwe, as over the years it has continued to import maize , wheat and soybeans at a high cost to the taxpayer,” Veritas said in its latest economic governance analysis on agricultural finance.

“Farmers’ private debt is guaranteed by the state, and if farmers default, as most seem to do, the public must pay their debts. Simply put, some people (farmers) use public finances for personal gain.

“Granting broad powers to a few companies to buy and distribute agricultural inputs raises questions of state capture unless the processes are done transparently and tenders for those tenders not be opened and can be viewed by the public,” he said.

Veritas said the funding for the managed agriculture program, in particular, had disproportionately drained Zimbabwe’s finances with little commensurate benefit to the public.

According to the Treasury, the maturity profile of domestic debt reflects the short-term nature of domestic debt securities or treasury bills, as investors in government securities have a preference for short-term instruments to hedge against inflationary pressures.

The maturity profile reflects government refinancing risk, as Z$31.3 billion ($196.43 million) (81%) of outstanding domestic debt securities matures this year, with a corresponding interest bill of 5.1 billion zw dollars (32 million dollars million).

This means the treasury will have to pay nearly Z$37 billion (US$232.2 million) to service the maturing treasury bills that were used to fund the 2020/21 agricultural season.

“The Treasury does not have the capacity to repay this loan and it looks like the debt will have to be rolled over and new notes issued. This will be expensive,” Veritas said.

Last year, Treasury guarantees worth Z$20.21 billion (US$126.83 million) were issued to the Agricultural Marketing Authority (AMA) for the purchase of grain, titles set to expire this year.

In 2020, the government issued national guarantees, including to private companies under the Covid-19 recovery and economic recovery plan, amounting to ZW$24.2 billion ($151.87 million ) and $15.2 million.

The guarantees were issued to the Agricultural Finance Corporation (AFC), formerly Agribank, Silo Food Industries, Infrastructure Development Bank of Zimbabwe (IDBZ) and CBZ Agroyield (winter wheat) which the Treasury said were all on good way.

Veritas called for the managed farming program to be reviewed with the goal of making individual farmers accountable for their debts.

The managed agriculture program was first launched in 2015 with the aim of improving agricultural production, following the land reform program.

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Sri Lanka currency board would bring immediate confidence: Mark Mobius https://westielovers.com/sri-lanka-currency-board-would-bring-immediate-confidence-mark-mobius/ Wed, 27 Apr 2022 04:30:00 +0000 https://westielovers.com/sri-lanka-currency-board-would-bring-immediate-confidence-mark-mobius/ ECONOMYNEXT – A currency board for Sri Lanka would bring immediate confidence to investors and help stem the economic crisis, said Mark Mobius, the biggest emerging markets investor, who has experience investing in stable countries with fixed exchange rates. “I like the idea of ​​the currency board. It worked all over the world. Provided you […]]]>

ECONOMYNEXT – A currency board for Sri Lanka would bring immediate confidence to investors and help stem the economic crisis, said Mark Mobius, the biggest emerging markets investor, who has experience investing in stable countries with fixed exchange rates.

“I like the idea of ​​the currency board. It worked all over the world. Provided you have a really ethical board of the currency board, to make sure they don’t deviate (from the rules of the currency board),” Mobius said in an interview in Colombo. .

“But for me, this is the solution. This will immediately bring confidence.

Mobius said it has long invested in Hong Kong, which has a currency board.

Hong Kong set up a currency board in 1983 after the currency became unstable and maintained its exchange rate at 7.8 to the US dollar and is a territory with one of the highest economic freedoms in the world.

A currency board cannot buy treasury bills to create currency shortages, and the exchange rate is permanently fixed.

As a result, unconventional economists or mercantilists cannot engage in “stimulating” or targeting the output gap to create currency shortages and a balance of payments crisis.

Soft-pegged currencies (central banks with foreign exchange reserves) are collapsing due to liquidity injected through open market operations to keep interest rates low when domestic credit picks up.

Nor can they depreciate the currency in pursuit of temporary trade gains (mercantilist goals), give short-term zero-sum profits to exporting firms at the expense of workers, and trigger strikes and social unrest.

However, the currency board must have its own law and must be a “real currency board,” unlike the case in Argentina where it was claimed to be a currency board but operated in a different way, Mobius said. .

“The law needs to be changed,” he said.

Argentina had a “convertibility system” under the same Latin American central bank law and the exchange rate crashed in 10 years. Soft pegs typically collapse during the second Fed cycle when the cap rate is lowered.

Mobius said it sees opportunities in Sri Lanka’s stock markets in companies “with strong balance sheets, high returns on equity that can boost dollar earnings” that can survive a crisis.

Related

Sri Lanka stocks, sovereign bonds an investment opportunity: Mark Mobius

He had bought an apartment in Sri Lanka and hired a decorator who quoted a price in dollars because some materials had to be imported.

However, when he went to the bank to get the money, he was told that only rupees would be released. He wondered what to do and “waited for the answer” since the rupee was falling and if the money was withdrawn, there were doubts about the possibility of importing material.

However, in the case of sovereign bonds, they were traded overseas and the money did not have to be brought into Sri Lanka, he said.

Related

Restoring Sri Lanka’s currency board would control deficits, inflation and bring stability: Hanke

Sri Lanka had a currency board from 1885 to 1950 and it was legislatively overridden in favor of an intermediate regime. Currency boards are usually set up in times of crisis.

The Ceylon Currency Board was established by the British colonial administration after the Eastern and Eastern Bank (a chartered note-issuing bank went bankrupt and closed, resulting in a 50% depreciation of the Ceylon rupee .)

Singapore also maintained its currency board after independence to avoid inflation and balance of payments crises. (Colombo/April 27, 2022)

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Treasury yields plummet to start the week https://westielovers.com/treasury-yields-plummet-to-start-the-week/ Mon, 25 Apr 2022 08:02:21 +0000 https://westielovers.com/treasury-yields-plummet-to-start-the-week/ US Treasury yields tumbled on Monday morning as investors digest signals that more aggressive interest rate hikes are on the horizon. The yield on the benchmark 10-year Treasury fell 8 basis points at 3:45 a.m. ET. The yield on 30-year Treasury bonds fell 5 basis points. Yields move inversely to prices and 1 basis point […]]]>

US Treasury yields tumbled on Monday morning as investors digest signals that more aggressive interest rate hikes are on the horizon.

The yield on the benchmark 10-year Treasury fell 8 basis points at 3:45 a.m. ET. The yield on 30-year Treasury bonds fell 5 basis points. Yields move inversely to prices and 1 basis point equals 0.01%.

Treasury yields fell sharply on Monday morning, after surging late last week following comments from Federal Reserve Chairman Jerome Powell.

Powell said on Thursday that a 50 basis point interest rate hike was “on the table” for the Fed’s monetary policy meeting in May.

The 5-year Treasury yield then rose above 3% on Friday, exceeding the interest rate on 30-year government bonds. This is also known as the “yield curve inversion” and indicates a lack of investor confidence in the economy as they sell short-term debt in favor of bonds. long-term.

The 5-year yield slipped 10 basis points to 2.8486% on Monday morning.

No release of major economic data is scheduled for Monday. This week, investors are likely to focus on the March Personal Consumption Expenditures Price Index as a key gauge of inflation, which is due out Friday morning.

CNBC Pro Stock Picks and Investing Trends:

Julian Howard, head of multi-asset solutions at GAM, told CNBC’s “Squawk Box Europe” on Monday that he believed talk of a 75 basis point interest rate hike by some policymakers, in an attempt to to control inflation, was “totally the wrong policy and will actually hurt the economy.”

He pointed out that the so-called “Misery Index”, which looks at unemployment and inflation, was currently at “recessionary levels”.

“Do we really want a recession to beat inflation? I think that’s almost a policy mistake,” Howard said.

Investors continue to monitor developments in Ukraine as Russia’s invasion of the country entered its third month on Sunday. The conflict that has killed thousands and led to Europe’s worst refugee crisis since World War II.

The war will only end if Russian troops completely withdraw from the country, Ukrainian Prime Minister Denys Shmyhal has said.

CNBC.com staff contributed to this market report.

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Treasury yields climb ahead of Fed Chairman Powell’s remarks https://westielovers.com/treasury-yields-climb-ahead-of-fed-chairman-powells-remarks/ Thu, 21 Apr 2022 08:03:03 +0000 https://westielovers.com/treasury-yields-climb-ahead-of-fed-chairman-powells-remarks/ U.S. Treasury yields climbed on Thursday, with Federal Reserve Chairman Jerome Powell due to deliver speeches later in the day. The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.8728% at 4 a.m. ET. The 30-year Treasury bond yield rose 4 basis points to 2.9227%. Yields move inversely to prices and […]]]>

U.S. Treasury yields climbed on Thursday, with Federal Reserve Chairman Jerome Powell due to deliver speeches later in the day.

The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.8728% at 4 a.m. ET. The 30-year Treasury bond yield rose 4 basis points to 2.9227%. Yields move inversely to prices and 1 basis point equals 0.01%.

Powell is due to deliver the welcome speech at the special Volcker Alliance and Penn Institute for Urban Research briefing at 11 a.m. ET.

He is next due to speak on the global economy during a panel discussion at the International Monetary Fund at 1 p.m. ET.

It comes after the IMF on Tuesday cut its forecast for global economic growth, for 2022 and 2023, largely due to the effects of Russia’s invasion of Ukraine.

Investors will be listening closely to Powell’s remarks for more clues about the Fed’s plans to aggressively tighten monetary policy to contain inflation.

Concerns about inflation and the potential effect of Fed policy tightening led yields to soar, with the 10-year rising to its highest level since late 2018 on Tuesday, at 2.94%.

Grace Peters, head of EMEA investment strategy at JPMorgan Private Bank, told CNBC’s “Squawk Box Europe” on Thursday that her team expects inflation to peak in the second quarter of this year and then falls more significantly towards the end of the year and continues into 2023.

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However, she said that since this spike in inflation would not have been reflected in economic data at the time of Fed policy meetings in May and June, it made sense that the central bank could go from forward with rate hikes of 50 basis points, as market prices had done.

Peters said that “from a risk perspective, the concept of inflation peaking and therefore yields peaking in due course as well, will provide some comfort to investors.”

Meanwhile, the number of initial jobless claims filed last week is expected to be released at 8:30 a.m. ET.

The Russian-Ukrainian war remains at the center of investors’ concerns, with the second phase of the conflict, focusing on the Donbass region in eastern Ukraine, being fully underway.

Auctions are due to take place on Wednesday for $35 billion in four-week bills, $30 billion in eight-week bills and $20 billion in five-year inflation-protected Treasury securities.

CNBC’s Holly Ellyatt contributed to this market report.

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