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IMF Working Paper-Commercial Real Estate in Crisis: Evidence from Transaction-Level Data
January 27, 2023--Summary:
During the past two decades, the commercial real estate (CRE) market has been impacted by major disruptions, including the global financial crisis and the Covid-19 pandemic. Using granular data from the U.S., we document how these crises have unfolded and elaborate on the role of heterogeneity and underlying shocks.
Both a set of reduced-form approaches and a structural framework suggest a prominent role for demand-side local factors in the short run, along with significant shifts in preferences during crisis episodes. However, valuations become more closely linked to macro-financial factors over the long term. A one-standard deviation tightening in financial conditions is associated with a drop of about 3% in CRE prices in the following quarter, with a stronger impact on the retail sector and milder effects in states where household indebtedness is lower.
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Source: imf.org
Investors jump into European stocks at fastest pace in nearly a year as U.S. equity inflows remain muted: BofA Global
January 27, 2023--Investors poured $3.4 billion into European stock funds in the week to Wednesday, as slowing inflation in Europe and China's relaxation of strict zero-Covid policies made investors hunt for gains in non-U.S. equities, according to analysts at BofA Global Research, citing EPFR Global data in a weekly note.
The weekly inflows into European stock funds were the largest since February 2022, and is the second straight week of inflows following an entire year of outflows
Meanwhile, U.S. equity funds witnessed their first weekly inflow in four weeks. BofA strategists said there were $300 million of inflows to U.S. stock funds in the week through Jan. 25, the first positive flow in a month.
The BofA data also showed emerging-market debt and equity saw their strongest inflows in almost two years, averaging $7.1 billion over the last four weeks.
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Source: marketwatch.com
Passive US funds poised to overtake active, ISS says
January 25, 2023--Research group forecasts 56% of total US fund assets will be passively managed by 2027
Index funds will control more than half of long-term invested US assets by the end of 2027, according to ISS Market Intelligence.
Active fund's share of the US market will fall from 53 per cent in 2022 to 44 per cent in five years, the research group, part of the Institutional Shareholder Services group, estimates. Most of the market share will go to index exchange traded funds, which are expected to garner $2tn in new sales. Active mutual funds, meanwhile, will bear the brunt of outflows, according to the report, with an estimated $1.4tn in net redemptions expected over the next five years.
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Source: ft.com
NYSE says manual error triggered major trading glitch
January 25, 2023-- The New York Stock Exchange said on Wednesday a manual error triggered a technical issue that prevented the opening auctions in some listed stocks, leading to widespread confusion and attracting a review from the U.S. Securities and Exchange Commission.
The glitch, which occurred on Tuesday, impacted stocks of major companies including 3M (MMM.N), Wells Fargo & Co (WFC.N) and Verizon Communications Inc (VZ.N).
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Source: reuters.com
SEC Proposes Rule to Prohibit Conflicts of Interest in Certain Securitizations
January 25, 2023--The Securities and Exchange Commission today proposed a rule to implement Section 27B of the Securities Act of 1933, a provision added by Section 621 of the Dodd-Frank Act. The rule is intended to prevent the sale of asset-backed securities (ABS) that are tainted by material conflicts of interest.
Specifically, the rule would prohibit securitization participants from engaging in certain transactions that could incentivize a securitization participant to structure an ABS in a way that would put the securitization participant's interests ahead of those of ABS investors. The Commission originally proposed a rule to implement Section 27B in September 2011.
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Source: SEC.gov
CBO-The Demographic Outlook: 2023 to 2053
January 24, 2023--In CBO's projections, the U.S. population increases from 336 million people in 2023 to 373 million people in 2053. Population growth is increasingly driven by net immigration which accounts for all population growth beginning in 2042.
Summary
The size of the U.S. population, as well as its age and sex composition, affects the economy and the federal budget. For example, the size of the population ages 25 to 54 affects the number of people employed; likewise, the size of the population age 65 or older affects the number of beneficiaries of federal programs such as Social Security and Medicare.
In this report, the Congressional Budget Office describes its population projections, which underlie the agency's baseline budget projections and economic forecast that will be published later this year.
Population. In CBO's projections, the Social Security area population-the relevant population for calculating Social Security payroll taxes and benefits and the measure of population used in this report-increases from 336 million people in 2023 to 373 million people in 2053. As growth of the population age 65 or older outpaces growth of younger age groups, the population is projected to continue to become older.
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Source: CBO (congressional Budget Office)
SEC-Fee Rate Advisory #2 For Fiscal Year 2023
January 23, 2023--The Securities and Exchange Commission today announced that, starting on February 27, 2023, the fee rates applicable to most securities transactions will be set at $8.00 per million dollars.
Consequently, each self-regulatory organization will continue to pay the Commission a rate of $22.90 per million dollars for covered sales occurring on charge dates through February 26, 2023, and a rate of $8.00 per million dollars for covered sales occurring on charge dates on or after February 27, 2023.
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Source: SEC.gov
Happy 30th birthday to the ETF*
January 22, 2023-As the asterisk hints, the headline is not quite correct. One of the ETF industry's favourite supposedly obscure but actually pretty well-known factoids is that the first ETF was born in Canada, on March 9, 1990.
But the almost $10tn ETFs industry's true progenitor is unquestionably the SPDR S&P 500 ETF Trust, which was born with $6.5mn of seed money three decades ago today (and first started trading a week later, on Jan 29).
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Source: ft.com
PIMCO Launches New Preferred and Capital Securities Active Exchange-Traded Fund (PRFD)
January 19, 2023--The fund will invest primarily in Preferred and Capital Securities, which may provide investors diversification, favorable tax treatment, and opportunity for attractive yields.
PIMCO, one of the world's premier fixed income investment managers, is expanding its actively managed exchange-traded fund suite with the addition of a new ETF that aims to deliver attractive levels of income and total return.
The PIMCO Preferred and Capital Securities Active ETF (PRFD) aims to find compelling opportunities in the preferred and capital securities markets where investments may offer equity-like total returns with significantly less volatility-less than half, historically-compared with the traditional stock market.
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Source: PIMCO
U.S. Nears Debt Ceiling, Begins Extraordinary Measures to Avoid Default
January 19, 2023--Maneuvers give Congress five months to pass legislation raising or suspending the debt limit
The Treasury,Department began taking special measures to keep paying the government's bills on Thursday as the U.S. bumped up against its borrowing limit, kicking off a potentially lengthy and difficult debate in Congress over raising the debt ceiling.
With the federal government constrained by the roughly $31.4 trillion debt limit, the Treasury Department began deploying so-called extraordinary measures. Those accounting maneuvers, which include suspending investments for certain government accounts, will allow the Treasury to keep paying obligations to bondholders, Social Security recipients and others until at least early June, the department said last week.
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Source: wsj.com
