Aurelia Butler

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    in Economy

    Italy wants more public debt in domestic hands – econ minister

    ROME (Reuters) – The Italian government aims to place an increasing proportion of the public debt in domestic hands, Economy Minister Giancarlo Giorgetti said on Tuesday.In a speech to bankers in Rome, Giorgetti said the recent success of bond issues dedicated to Italian retail investors was “a very important sign” of trust between the government and savers.”That is part of a broader strategy aimed at placing the main part of the public debt within our country, as it should be,” he said.Italy has collected around 45 billion euros ($47.93 billion) this year through the issuances of the ‘BTP Valore’ and ‘BTP Italia’ bonds, both products specifically earmarked for retail investors.Data from the Bank of Italy showed that in July foreign investors held a 27.4% stake of the country’s 2.84 trillion euro public debt.To further boost domestic holdings, Rome introduced in its 2024 budget a measure to partly discount government bond income from the ISEE, an indicator of wealth that determines access to welfare benefits under government means testing.Under the bill, still subject to change in parliament, taxpayers can deduct a maximum of 50,000 euros in sovereign bonds and investment products for small savers whose repayment is guaranteed by the state.The proposal drew criticism from the opposition and academics, who said it would blunt welfare programmes’ focus on the poor.Giorgetti on Tuesday stressed the need for the Treasury to consolidate the “confidence of savers and markets in Italy” against a difficult economic backdrop in which the risk of a new global recession “is not entirely unlikely.”The Treasury last month raised its budget deficit targets for the 2023-2025 period, worrying markets and setting it up for a possible clash with the European Commission.($1 = 0.9388 euros) More

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    in Economy

    Company insolvencies in England and Wales at highest level since 2009

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Corporate insolvencies in England and Wales climbed to their highest level since the global financial crisis in the six months to September as businesses grappled with high borrowing costs and slowing demand, according to official data. Insolvency Service data on Tuesday showed that between July 1 and September 30 there were 6,208 registered company insolvencies in England and Wales. The level was up 10 per cent year-on-year and only 2 per cent down from the previous quarter when it also hit a new peak since the financial crisis.The rise in insolvencies reflected the ending of government Covid-19 support schemes, the accumulation of debt post-pandemic and high inflation hitting demand. The data also showed the effect of surging borrowing costs since the Bank of England started raising rates from a record low of 0.1 per cent in November 2021 to the current 5.25 per cent to quench fast-rising prices. The Insolvency Service said: “The last two quarters saw the highest quarterly insolvency numbers since Q2 2009 and the highest numbers of creditors’ voluntary liquidation since the start of the series in 1960.”Corporate insolvencies are formal measures taken when a business can no longer pay its debts.Markets expect the BoE to leave interest rates unchanged at their current elevated level until at least the middle of next year. The next monetary policy decision is due on Thursday. Mark Ford, partner in restructuring and recovery services at professional services company Evelyn Partners, said: “Company insolvencies have soared this year to levels not seen since the financial crisis of 2007-08 against a grim backdrop of continuing cost increases, a harsh and uncertain macroeconomic environment and continuing friction in supply chains and trading conditions.”A rise in insolvencies is worrying for the economy as it could lead to a reduction in jobs while hitting output growth, economists said. “It is difficult to look at these figures and not see a risk of a recession looming,” said Olga Galazoula, partner and global head for the restructuring and special situations group at Ashurst.The data indicated that higher insolvencies were driven by the accommodation and food service, wholesale and retail trade and manufacturing sectors, which were hit by weak demand and high energy and wage bills. Separate data from the Office for National Statistics showed that in September retail sales were down 2.5 per cent compared with February 2020 reflecting the impact of high inflation and borrowing costs. Relative to the number of active companies, liquidations in the four quarters to the end of September were the highest since 2014. Benjamin Wiles, managing director at financial advisory firm Kroll, said many sectors were vulnerable to rising debt and would be hoping for a good Christmas. “Whether that happens could be make or break,” he noted.“The cost of borrowing and a lack of access to working capital alongside weak consumer confidence and high inflation means that we will likely continue to see an upward trend over the next 12 months.” More

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    in Cryptocurrency

    Cryptoverse: As good as gold? Spot bitcoin ETFs aim to whip up US demand

    (Reuters) – Bitcoin, the original crypto rebel, is racing into the heart of the financial establishment with an exchange-traded fund that tracks its price. But will it strike gold? The world’s biggest cryptocurrency has leapt 28% in October, with investors betting U.S. regulators will give the green light for a spot bitcoin ETF and thereby unleash a new wave of demand.How much cash could such a fund reel in, though? Well, it’s hard to say, judging by the wide assortment of estimates from market players, ranging from $3 billion on its first day to $55 billion over five years.”The analogy that I’m looking at is to gold,” said Dave Mazza, chief strategy officer at ETF provider Roundhill Investments, adding that the gold market had been transformed by the approval of spot ETFs.He said he expected the first spot bitcoin ETFs on the scene to see a “wave of buying,” echoing the launch of the first ever gold ETF in 2006 in the U.S. or the bitcoin futures ETF in 2021.Mainstream investment giants such as BlackRock (NYSE:BLK) and Fidelity, as well as crypto-focused firms like Grayscale, have filed applications for spot bitcoin ETFs. The U.S. Securities and Exchange Commission will be considering eight to 10 filings for new spot bitcoin products, its chair said on Thursday, without giving details of timing of decisions. Ranged against the ETF optimists are those traditional investors long wary of crypto who say they won’t be won over by new investment vehicles.”Not a penny of my clients’ money will find its way into these misbegotten so-called investments,” said George Gagliardi, an investment advisor with Coromandel Wealth Management in Lexington, Massachusetts, who believes cryptocurrencies “have no underlying intrinsic value.” The prospect of an ETF that offers investors direct exposure to bitcoin has nonetheless buoyed the price of the cryptocurrency, which hit $35,198 last week, its highest level since May 2022.The metrics investors and analysts use to come up with estimates for demand for an ETF, from the size of the gold ETF market to demand for existing products, vary almost as much as their conclusions. Bitcoin markets are also opaque, with price moves driven mostly by investor sentiment. U.S. crypto firm NYDIG estimates demand for a spot bitcoin ETF at around $30 billion. Their calculation compares the sizes of the gold and bitcoin ETFs – $210 billion versus $28.8 billion, respectively – and adjusts them for their relative volatility. “It’s rare to see a brand-new asset class arrive on the ETF market,” said Todd Sohn, ETF strategist at Strategas Securities. “That makes it tough to figure out exactly how much demand is going to materialize.”Existing bitcoin ETFs, tied to the price of futures, don’t track price movements precisely, and the cost of rolling over futures contracts can eat into returns, leading many investors to see them as a less desirable vehicle. Steven McClurg, investment chief at Valkyrie Funds, which has applied for a spot bitcoin ETF, believes one starting point in gauging demand is the size of the Grayscale Bitcoin Trust (GBTC), an open-ended private trust that owns bitcoin directly. “If you look at the current market capitalization of GBTC – $3.2 billion – that’s probably day-one demand” for a spot bitcoin product, he said. HALF OF FUNDS ‘GONE IN TWO YEARS’Some advocates say that financial advisers, pension funds and other money managers – a pool of capital estimated to total around $46.5 trillion by Boston Consulting Group – could be a significant source of demand for a spot bitcoin ETF.”If BlackRock reaches the market then some percentage of the wire houses and financial advisers will add their fund to platforms,” said Matthew Sigel, head of digital assets research at VanEck, which has a spot bitcoin ETF awaiting SEC approval.BlackRock declined to comment on its pending spot bitcoin ETF, other than to confirm that it is still awaiting final SEC approval.Matthew Hougan, CEO of crypto firm Bitwise Investments, said in an industry panel earlier this month that he expects spot bitcoin ETFs to pull in $55 billion in their first five years. His forecast is based on how demand evolved in smaller markets where spot bitcoin ETFs already exist, such as Canada. However large demand turns out to be, it is unlikely to sustain offerings from all the asset managers vying for a slice of the action, said Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ:IBKR).”Are all of them going to be a success? Of course not,” he added. “The ones with the best marketing will succeed, but half will be gone within two years.” More

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    in Cryptocurrency

    Web3 wallet Backpack to launch VASP-licensed crypto exchange in Dubai

    Backpack’s VARA license is limited to crypto exchange services in Dubai and does not allow the company to offer any other of its virtual asset products and services. According to the announcement, Backpack Exchange incorporates zero-knowledge (ZK) proof-of-reserves, multi-party computation (MPC) for custody and low-latency order execution, among other features.Continue Reading on Cointelegraph More

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    in Economy

    Federal Reserve expected to maintain key interest rate amid economic pressure

    The U.S. has witnessed robust consumer spending that led to an economic growth spike in Q3. However, inflation persisted at a four-decade high, prompting Powell’s goal of returning to a downward trajectory for inflation before decelerating the Fed’s efforts towards its 2% inflation target.Fluctuating financial markets have caused long-term rates on U.S. Treasurys to rise, stock prices to fall, and corporate borrowing costs to increase. These factors are seen by the Fed as potential triggers for an economic slowdown, which could reduce inflation without necessitating further rate hikes.From March 2022, the Fed increased its key rate from near-zero to approximately 5.4%, a notable 22-year high. This move was an attempt to control inflation which subsequently led to an increase in the costs of mortgages, auto loans, and credit cards.Inflation has since decreased from its peak of 9.1% in June last year to 3.7%. Meanwhile, Treasury yields have reached a 16-year high with the yield on the 10-year Treasury note pushing the average 30-year fixed mortgage rate close to 8%. This rise has affected business borrowing and tightened financial conditions equivalent to three or four quarter-point rate hikes.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

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    in Cryptocurrency

    Bitcoin ETF approval speculation heightened ahead of SEC meeting

    Scott Johnsson, an attorney from Davis Polk, drew attention to this meeting via a tweet on social media platform X (formerly known as Twitter), which will discuss administrative proceedings and litigation claims.This anticipation comes in the wake of ProShares Bitcoin Strategy ETF (BITO), becoming the fastest ETF to reach the $1 billion mark. Before BITO’s launch, a leak from an SEC meeting reported by Bloomberg suggested readiness to allow the first US Bitcoin futures ETF under mutual fund rules. Johnsson proposed that a similar leak might occur concerning Grayscale’s spot Bitcoin ETF.Grayscale’s unopposed aim to convert its GBTC into a spot Bitcoin ETF has captured significant attention. A pivotal question is whether the SEC will approve only Grayscale’s application or extend its approval to other applicants simultaneously.A host of prominent applicants, including BlackRock, Fidelity, Ark Invest, VanEck, and Valkyrie Funds, have submitted amendments to their applications. James Seyffart recently tweeted about Valkyrie Funds joining this amendment movement. Johnsson highlighted June 15, 2023 – when Blackrock (NYSE:BLK) lodged its spot ETF application – as a significant date on SEC chair Gary Gensler’s busy calendar.Despite these promising developments, there are speculations about a possible unexpected rejection of spot Bitcoin ETF applications by Gensler, humorously referred to as a “Gensler semi-comedic rug-pull”. While Johnsson acknowledges this possibility, he finds it hard to envisage.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More