The central bank said in a statement that daily traditional swap auctions would be held as long as necessary for the expiring stock to be fully renewed.The central bank usually seeks to provide currency hedging and maintain liquidity conditions to the market with its rolling policy. More
NEW YORK (Reuters) -A U.S. judge on Friday refused to block the Federal Reserve Bank of New York from terminating a Puerto Rican bank’s access to the U.S. central banking system, as part of a crackdown on lenders with links to Venezuela.U.S. District Judge John Koeltl in Manhattan said Banco San Juan Internacional (“BSJI”) failed to show it would suffer irreparable harm if he failed to issue a preliminary injunction.The bank said it plans to appeal.BSJI sued in July to stop the New York Fed from terminating its “master account,” which lets banks access the Fed’s electronic payment system, over concerns it was not complying with U.S. sanctions and anti-money laundering rules.It said it had improved compliance during a 22-month suspension in 2019 and 2020, following a probe into its credit agreements with state-run oil company Petroleos de Venezuela, which is subject to sanctions. Venezuela is an OPEC member.The bank said that suspension cost it more than 90% of its customers, and it was “unlikely to survive” the termination of its account.But in a 33-page decision, Koeltl dismissed the warning as “self-serving speculation,” and found “no likelihood” the New York Fed acted arbitrarily or capriciously given the “significant number of red flags” it had found.”Accepting deposits from and providing financial services to a financial institution with BSJI’s record of noncompliance exposes the FRBNY and the financial system to risk,” Koeltl wrote. “Granting BSJI’s motion for emergency relief would place the public in harm’s way.”The New York Fed agreed to keep the bank’s master account open until Koeltl ruled on the preliminary injunction motion.In a statement, the bank said Koeltl’s decision “departs from decades of uniform consensus evidencing BSJI’s entitlement to a master account.” It also said multiple independent experts have found its compliance program “comprehensive and effective.”The New York Fed declined to comment.Puerto Rico’s banking industry has historically been close to Venezuela.In 2019, the New York Fed said it would stop approving new master accounts for Puerto Rican offshore banks because of sanctions aimed at ousting Venezuela’s socialist President Nicolas Maduro.The case is Banco San Juan Internacional Inc v Federal Reserve Bank of New York et al, U.S. District Court, Southern District of New York, No, 23-06414. More
Barr highlighted the central bank’s vested interest in the matter and referred to new banking guardrails that were set up in August for handling stablecoin operations. These measures are part of a larger effort to ensure the stability and security of financial transactions involving these digital assets.A stablecoin bill is currently under congressional scrutiny, having been advanced by the House Financial Services Committee. This proposed legislation aims to establish a federal regulatory framework for stablecoins. However, it has faced criticism due to its provision allowing state-level approval without the Federal Reserve’s consent.Rep. Maxine Waters (NYSE:WAT) expressed her dissatisfaction with this aspect of the bill, stating her expectation of restarting discussions on this topic. Her comments were conveyed to Politico earlier this week.In parallel with these regulatory developments, research on Central Bank Digital Currencies (CBDCs) continues. The focus of the study is on end-to-end system architecture concerning recording, securing, verifying transactions and ownership, tokenization, and custody models. This research follows a report published last year that evaluated CBDCs’ advantages and disadvantages.As digital currencies continue to gain traction globally, the need for robust regulatory frameworks becomes increasingly crucial. The actions of the Federal Reserve and Congress will likely play a significant role in shaping the future landscape of digital currency regulation in the United States.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More
This decrease is concurrent with the S&P 500 and Nasdaq Composite Index edging towards correction territory and a forecasted rise in Treasury debt issuance to finance an estimated federal budget deficit of $1.7 trillion for FY2023, a 23% year-on-year increase. Wall Street is also preparing for an additional $1.5 trillion in Treasury borrowing needs.In response to these developments, the Fed is anticipated to keep its policy interest rate at a 22-year high of 5.25%-5.5%.This situation is unfolding amidst volatility in the U.S. stock and bond markets, a projected 2.2% weekly drop in the Dow Jones Industrial Average, and significant expected losses in both the communications services and energy sectors of the S&P 500. The benchmark 10-year Treasury yield remains steady at 4.84%, after recently spiking above 5%, a level not seen since 2007.Furthermore, the Nasdaq Composite Index is down by 2.9% for this week, while the Fed continues to maintain its focus on its 2% annual inflation target.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More
Since March 2022, the central bank has increased its key rate from nearly zero to around 5.4% in an effort to curb inflation. This rate peaked at a substantial 9.1% in June of last year. Despite these measures, consumer spending has remained strong, driving a notable 4.9% annual growth rate in the third quarter (July-September). This robust spending has led businesses to raise prices across various sectors.Excluding volatile food and energy costs, core prices rose by 0.3%, with core inflation moderating to 3.7%, the slowest pace since May 2021. Consumer spending increased a robust 0.7% last month, aligning with the central bank’s forecast for this quarter.Federal Reserve Chair Jerome Powell anticipates a “proceed carefully” approach in the coming months, suggesting that the central bank will continue to closely monitor inflation trends and economic indicators before making further policy decisions. These statistics underscore a resilient consumer sector that continues to support economic growth despite persistent inflation and high-interest rates. The widespread expenditure across various sectors of the economy is intensifying inflation further.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More
The monthly Core PCE matched predictions at 0.3%, marking an increase from the preceding 0.1%. Meanwhile, both the annual and monthly PCE Price Indexes were reported at 3.4% and 0.4% respectively. These figures met expectations, with a minor rise in the monthly index against its forecast of 0.3%.The Core PCE, which excludes volatile food and energy prices, serves as a stable inflation measure compared to the Consumer Price Index (CPI). This makes it the preferred choice for both the Federal Reserve and currency traders.It is important to note that this data should not be misconstrued as direct investment advice but is instead a reflection of the current economic climate and its potential impacts on interest rates and currency trends.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More
Stay informed with free updatesSimply sign up to the More
Investors pulled out a net $7.46 billion from global equity funds during the week, extending outflows into a sixth straight week, data from LSEG showed.The yield on U.S. 10-year Treasury bonds reached a 16-year high earlier this week, breaching the 5% mark, driven by expectations of robust U.S. growth and a growing fiscal deficit.European equity funds logged about $7.39 billion worth of outflows during the week, the biggest amount since Sept. 28, 2022. Investors also divested $2.69 billion worth of U.S. equity funds but poured $2.53 billion in Asian funds.Among sectors, health care, financials, and consumer discretionary sector funds faced outflows of $696 million, $649 million, and $405 million, respectively. In contrast, the tech and energy sectors received around $500 million each in inflows.Meanwhile, safe-haven government bond funds received $5.02 billion, the biggest weekly inflow in seven months. Investors also accumulated $18.3 billion worth of money market funds after $108.7 billion worth of net selling a week ago.Global bond funds registered a combined outflow of about $604 million on a net basis, the first weekly net selling in three weeks.Investors withdrew a net $1.73 billion from high-yield bond funds, staying net sellers for a seventh successive week. Corporate bond funds, meanwhile, received $520 million, the second weekly inflow in a row.Commodities data revealed that investors poured about $411 million into precious metal funds, snapping a 21-week-long selling streak. Energy funds also received inflows, roughly about $435 million.Data covering 28,654 emerging market funds showed that investors exited EM equity funds of $2.55 billion, extending outflows into an 11th straight week. EM bond funds also remained out of favour for a 13th successive week with $875 million in net disposals. More
