Etikett: Bank of Japan

The slightly hawkish FOMC statement failed to curb investors’ appetite for gold

ETF Securities The slightly hawkish FOMC statement failed to curb investors' appetite for goldThe slightly hawkish FOMC statement failed to curb investors’ appetite for gold

ETF Securities Weekly Flows Analysis – The slightly hawkish FOMC statement failed to curb investors’ appetite for gold


•    Gold inflows suggest investors continue to hedge against uncertainties ahead.
•    Global equity ETPs attracted US$33mn. Inflows dominated by thematic ETPs related to robotics.
•    The Bank of Japan easing measures fell short of expectations, boosting long JPY exposures.

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Gold attracted US$277.6mn of flows this week suggesting the slightly hawkish FOMC statement failed to clear away uncertainty. The Federal Reserve left interest rates unchanged at its July meeting but noted that near-term risks to the US economy have “diminished” after a rebound in US hiring in June. The odds for September hike – calculated from the Fed funds futures – increased modestly to 28%. Gold strengthened marginally over the past week, by 2.16% to around US$ 1,351 per troy ounce. Platinum showed the strongest price increase for the second consecutive week, rising by 6.15% to US$ 1,148 per troy ounce.

Inflows into crude oil ETPs rise by US$35.3mn, while Brent crude has entered a new bear market. The inflows in long oils (US$40mn) are the largest since February this year suggesting that investors see buying opportunities in the weakness of Brent. Brent price fell more than 20% since the peak of US$52.86 in June, reaching US$42 per barrel. The latest drift downward in crude oil prices comes as outages are reduced, there is an overhang of refined products and US rig counts rise.

Inflows into wheat ETPs rise for the 7th consecutive week. The International Grains Council revised upward (+7mn tons) its estimate for the global wheat production in the 2016-17 harvest year. This increase of supply, together with an upward revision of opening stocks, resulted in a 1.8% decline of wheat price on the week.

Global equity inflows increase US$33mn led by thematic ETPs related to robotics. In the meantime, investors continue to reduce their long positions in Europe equity ETPs – although at a moderate pace – in the wake of weaker macro indicators in the region. Last week, we saw US$3mn outflows from EU equity ETPs after inflows culminated at US$10.3mn mid-July.

Investors increase their exposure to JPY by US$18.2mn. The central bank of Japan (BoJ) enlarged its annual purchase of equity ETFs by JPY2.7tn to JPY6tn, while keeping its key monetary tools unchanged. Investors judge the current action insufficient to have a material impact on the inflation outlook. As a result, the JPY soared by 2.85% to 102.30 against the US dollar at close.

Key events to watch this week. The Bank of England meeting will be held on Thursday. The July PMI indicators showed signs of a coming recession in the UK. Investors expect a 25bps decrease of the base rate from 0.5% to 0.25%, to support the UK economy in its transition outside of EU. In the US, the ISM Manufacturing and non-manufacturing indices and more importantly the employment report will get the full attention of the market. A solid increase of nonfarm payrolls after the 287k rise in June would increase the odds for a rate hike in September.

Video Presentation

Morgane Delledonne, Fixed Income Strategist at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Limit to Yen rally after BOJ disappoints

Limit to Yen rally after BOJ disappoints

Limit to Yen rally after BOJ disappoints. The Japanese Yen rallied over 3% against the US Dollar after the Bank of Japan’s (BOJ) latest policy decision to ‘stay the course’ with its current stimulus stance and nearly 10% ytd. Such a policy decision is refreshing.

It seems that foreign Japanese investors’ and firms are losing faith with the economic management of the country and reacting by hedging foreign exposures against adverse Yen movements With ongoing concerns over inflation and with the Fed beginning  its tightening cycle.

Decades of low inflation and weak growth have rendered policymakers ineffective in the eyes of investors and burgeoning local savings have moved offshore in search of better returns. Offshore markets provided returns but the Yen’s safe haven characteristic, a stronger local currency can offset better offshore returns. IMF research asserts that the stronger Yen is likely due to a ‘portfolio rebalancing through derivative positions’, which is to say domestic foreign positions being hedged against adverse Yen movements. Limit to Yen rally after BOJ disappoints

Unconventional policy

Unconventional policy does need to be deployed in Japan and perhaps the key reason is hidden in its December monetary policy statement. The BOJ speaks of the ‘conversion of firms’ and households’ deflationary mindset has been progressing’, which is key to raising inflationary expectations and in turn achieving the inflation target. So the BOJ feels its policy is working and that its move to negative interest rates can assist the ‘progress’.

While the market appears to be losing faith in the BOJ, the central bank appears to be committed to its unconventional policy and wants to see it work its way through the economy given time. Indeed, it was only in January that negative rates were implemented and monetary policy has a lagged impact. Japanese companies clearly hedge their foreign operations, whether that be trade or investment related. It is for this reason that central bank policy needs to be independent of market expectations and shouldn’t be concerned about the day-to-day gyrations of the local currency. The BOJ was right to ignore the market’s expectations for policy. Such a policy decision is refreshing in the light of the US Fed being swayed by market angst and potentially trapping itself in a dangerous policy spiral , which is based on the markets’ view and not fundamentals.

Nonetheless, we expect more stimulus in 2016 to come from the BOJ, and with the Fed tightening, we feel this knee-jerk rally to the latest policy move is limited.

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Martin Arnold, Global FX & Commodity Strategist at ETF Securities

Martin Arnold joined ETF Securities as a research analyst in 2009 and was promoted to Global FX & Commodity Strategist in 2014. Martin has a wealth of experience in strategy and economics with his most recent role formulating an FX strategy at an independent research consultancy. Martin has a strong background in macroeconomics and financial analysis – gained both at the Reserve Bank of Australia and in the private commercial banking sector – and experience covering a range of asset classes including equities and bonds. Martin holds a Bachelor of Economics from the University of New South Wales (Australia), a Master of Commerce from the University of Wollongong (Australia) and attained a Graduate Diploma of Applied Finance and Investment from the Securities Institute of Australia.

The Fed rate hike looms large for commodities

The Fed rate hike looms large for commodities

Commodity ETP Weekly – The Fed rate hike looms large for commodities

  • Precious metal basket inflows hit 8-month high as FOMC meeting looms.
  • Divergent oil flows favour Brent as pressure remains on crude prices after OPEC monthly report continues to show an oversupplied market.
  • Flows into copper ETPs continue as further supply cuts reinforce a tighter market in 2016. 

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Inflows into Brent ETPs broadly offset outflows from WTI ETPs, although the outlook remains polarised. OPEC’s latest annual report continued to highlight the global supply glut, with output in November climbing 1% to 31.7mbpd. The market reacted negatively to the news with Brent crude oil closing below US$40/bbl for the first time since December 2008. WTI crude also reached a near 7-year low of US$35.80. Brent crude ETPs received inflows totalling US$18.7mn last week, broadly offsetting the US$22.1mn in outflows from WTI crude ETPs. Nonetheless, the headline total of outflows in WTI ETPs belies what we believe to be a significantly polarised market, with US$11.7mn of inflows into ETFS Daily Leveraged WTI crude oil (LOIL).

Energy sector ETPs received inflows for the fifth consecutive week, totalling US$205mn over the period.
Third consecutive weekly inflow into precious metal basket ETPs. Inflows into precious metals basket ETPs totalled US$14mn, the highest level since April 2015. While silver has yet to decouple from gold and is likely to range trade, platinum group metals (PGM) are being hampered by a weaker South African Rand. With South African production dominating global PGM supply, a weaker Rand is enabling miners to keep production elevated as it raises profitability. Political uncertainty is rising and the weaker Rand is likely to be a weight on PGM prices for the foreseeable future.

Gold ETPs break three week losing streak, registering modest inflows of US$1.2mn. Gold has been range trading ahead of the FOMC meeting this week, where an interest rate hike is expected. Near-term weakness could transition into medium term strength as inflation pressures build globally, and put downward pressure on real interest rates. Additionally, while the near certain rate hike could boost the USD and buffet the gold price (and commodities more broadly), we expect that the peak for the USD strength will occur in Q1 2015, turning a headwind into a tailwind.

ETFs Copper (COPA) receives third consecutive weekly inflows, totalling US$2mn. Following reports that Chinese smelters agreed to cut production, last week Freeport-McMoRan announced it is cutting 45,000 tonnes of copper, equivalent to around 0.3% of the global market. With the copper market in its fifth year of deficit, ongoing production cuts in the sector will continue to produce a tighter fundamental environment and we feel that it is only a matter of time before prices begin to respond.

Key events to watch this week.  The divergence in central bank policy is likely to be highlighted, with the FOMC looming large this week, with meetings also for the Riksbank, Norges Bank and the Bank of Japan. We expect a rate hike is a near certainty and that the market should begin to focus on the path of future tightening. We feel that the market is underpricing the magnitude that the Fed will need to raise rates in 2016 in order to counteract inflationary forces.

Video Presentation

Martin Arnold, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Policy divergence widens after strong US jobs report

Policy divergence widens after strong US jobs report

ETFS Multi-Asset Weekly – Policy divergence widens after strong US jobs report

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Highlights

•    Commodities: Strong greenback weighs on energy and precious metals.
•    Equities: Buoyant US jobs report rejuvenates confidence in world’s largest economy.
•    Currencies: Holler for dollar after strong US jobs report raises the prospect of 2015 rate hike.
•    Upcoming webinar: Global commodities, have we reached the floor in prices? Register here to attend.

• Equities remained muted, commodities slid while bond yields surged after the release of a stellar US jobs report saw the prospect of higher US borrowing costs resonate across the markets before the year end.
• The greenback was the main beneficiary of the payrolls report and weighed on the commodity complex with energy and precious metals posting losses of more than 4.5% for the week.

Commodities

Strong greenback weighs on energy and precious metals. A firmer dollar buoyed by a surprisingly strong US monthly payrolls report took its toll on the yellow metal, which posted a 4.7% decline on the week. Meanwhile WTI crude and Brent oil slid 4.9% and 4.3% respectively, shrugging off the weekly fall in active U.S. oil drilling rigs. Despite attaining its highest October figure in 14 years, US vehicle sales failed to support palladium prices plagued by ETF outflows and Volkswagen widening the scope of the emissions scandal to its gasoline engines. Supply woes resurfaced after Lonmin the world’s third largest platinum miner cautioned it could suffer insolvency if it failed to shore up its balance sheet. Sugar plunged 5.5% on Wednesday as investors trimmed positions mulling over tightening world supply against sluggish demand.

Equities

Buoyant US jobs report rejuvenates confidence in world’s largest economy. The strikingly buoyant US jobs report released on Friday failed to change the trajectory of global indices that traded most of the week on a cautious footing marked by light volumes. The monthly payrolls swept past expectations adding 271,000 jobs in October and unemployment data halved to 5% from its high in 2009 fuelling the Feds case for a rate hike in 2015. Waning demand inside the Eurozone resulted in an unexpected drop in German industrial production by 1.1% and slump in factory orders by 1.7% pressing for further easing in monetary policy by the European Central Bank. Meanwhile the Euro Area manufacturing purchasing managers index (PMI) rose to 53.9 in October, pointing to a potential recovery in this regard.

Currencies

Holler for dollar after strong US jobs report raises the prospect of 2015 rate hike. Interest rate futures moved to price in a 70% probability of a rate hike in December, after a stellar US jobs report reinforced the Federal Reserve chair Janet Yellen’s remarks of a December rate hike a “live possibility”. With less than a month to go, the rise in the odds for a US rate hike sets the stage for monetary policy divergence between US and China, Europe and Japan, who are likely to continue to ease policy. Super Thursday caught investors off guard as dovish comments by the Bank of England governor, Mark Carney, sent the pound lower. Minutes from the Bank of Japan’s October meeting indicated optimism on the domestic economy while concerns from China and emerging markets continued to linger. Meanwhile European Central Bank maintained its bias towards further monetary easing if weak external conditions persist during its reassessment in December.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

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What Happens When U.S. Interest Rates Rise?

What Happens When U.S. Interest Rates Rise?

Quarterly Outlook – Q4 2015 – What Happens When U.S. Interest Rates Rise?

We are pleased to present our Macroeconomic Quarterly Outlook, a publication jointly authored by Roubini Global Economics and ETF Securities Research.

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What Happens When U.S. Interest Rates Rise?

Our global growth baseline is an unsynchronised expansion, with pockets of recession, but a great deal depends on how the U.S. economy copes with the coming increase in interest rates.

•    Our first key theme for our Q4 update is monetary policy divergence, with the Federal Reserve’s forthcoming rate “normalisation” front and centre for investors, even as other central banks, notably the Bank of Japan and the European Central Bank, continue to ease. Our expectation is for a December Fed “lift-off”, but the risks of a later hike are significant.

•    Our second theme is Europe’s internal and external challenges, with the refugee crisis, the rumbling Greece calamity, the possibility of “Brexit” and elections in Spain (just one manifestation of the Eurozone’s toxic politics) dovetailing to create huge uncertainty around the European project.

•    Third, is the question of whether emerging markets are victims of their own success, with a long period of robust performance failing to spark the necessary adjustments and reforms to allow that to continue.

Download the complete report (.pdf)

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”). ETFS UK is authorised and regulated by the United Kingdom Financial Conduct Authority (the ”FCA”).

This communication is only targeted at qualified or professional investors.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

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