Brief: While the financial world waits for the Federal Reserve to start reversing its ultra-loose policy stance, recent moves by a clutch of other central banks signal the days of pandemic-era accommodation are already numbered even as COVID-19 continues to impede smooth economic recoveries around the world. South Korea's central bank on Thursday raised its benchmark interest rate by a quarter of a percentage point to blunt rising financial stability risks posed by a surge in household debt, becoming the first major monetary authority in Asia to do so since the coronavirus broadsided the global economy 18 months ago.Even before the rate hike in South Korea, though, central banks in Latin America and eastern and central Europe had begun lifting interest rates this year to beat back inflation that is building on the back of currency fluctuations, global supply chain bottlenecks and regional labor shortages.
Brief: The Federal Reserve continues on its path towards tapering its quantitative easing programme, but rising uncertainty resulting from the Delta variant has stifled economic confidence. Speaking at the Jackson Hole symposium, Fed chair Jerome Powell said the strong monetary policy employed over the past 18 months had led to a "vigorous but uneven recovery", one which stands as "historically anomalous". He referenced the July meeting of the Fed, in which he and his fellow bankers suggested the tapering of its QE programme "could be appropriate", however despite continued progress towards maximum employment, the uncertainty of the Delta variant had left "much ground to cover". Powell highlighted lessons learned from the period of the 1950-80s in which stabilisation policy enacted too soon in response to transitory inflation had created a negative effect as evidence for the current policy.
Brief: U.S. consumer sentiment remained weak in late August amid ongoing concerns over inflation and the coronavirus pandemic. The University of Michigan’s final sentiment index fell to a near-decade low of 70.3 during the month from 81.2 in July, data released Friday showed. The figure was in line with the preliminary reading and just below the median estimate of 70.8 in a Bloomberg survey of economists. “Consumers’ extreme reactions were due to the surging Delta variant, higher inflation, slower wage growth, and smaller declines in unemployment,” Richard Curtin, director of the survey, said in a statement. “The extraordinary falloff in sentiment also reflects an emotional response, from dashed hopes that the pandemic would soon end and lives could return to normal without the re-imposition of strict Covid regulations,” he said.
Brief: Some two dozen Metro Bank Plc office staff got an early taste of what hybrid working will look like this week as they trialled their firm’s new approach to office life. Hovering outside the lender’s Moorgate branch in the City of London until it opened at 8:30 a.m., colleagues on the bank’s financial crime team greeted each other in person on Thursday after a year and a half of remote work. Walking into the branch, they turned left and passed through a glass gate before descending into a newly opened basement office below the store.The new space is part of a sweeping overhaul of the bank’s estate as the firm adopts a hybrid work model. It has vacated its standalone office building and redeveloped 78 of its branches to create office space above -- and in some cases below -- its branches. The bank, which employs about 3,000 office workers, has 1,100 desks under the new hybrid system. From Sept. 13, teams will have access to offices via a bookings system that allows staff to book a desk in their neighborhood up to six weeks in advance.
Brief: Emerging Markets (EM) hedge funds, led by funds investing in India, Russia, China, and the Middle East, extended strong gains through mid-year 2021 as EM hedge fund capital eclipsed another record, with performance again topping gains in EM regional equity markets and complemented by volatile cryptocurrencies. The HFRI Emerging Markets (Total) Index has returned +8.1 per cent YTD 2021 through July, led by the HFRI Emerging Markets: India Index, which surged +33.3 per cent, while the HFRI Emerging Markets: Russia/Eastern Europe Index vaulted +16.3 per cent YTD, as reported today with the releases of the HFR Asian Hedge Fund Industry Report and the HFR Emerging Markets Hedge Fund Industry Report from HFR. The investable HFRI 500 Fund Weighted Composite Index, which includes funds across all regions in both Emerging and Developed markets, has gained +8.8 per cent YTD 2021 through July.