Aurelia Butler

LONDON (Reuters) – Some asset managers face sanctions for failing to manage liquidity properly, posing risks to market stability and investors’ ability to withdraw money, Britain’s Financial Conduct Authority (FCA) said on Thursday.The suspension of property funds in Britain and difficulties faced by liability-driven investment funds last September have thrown a spotlight on the ability of asset managers to drum up enough cash to meet investor redemptions or collateral calls.The watchdog said its review of asset managers found that while some firms showed very high standards, most fell short in some aspects of liquidity management, with a minority having inadequate frameworks to manage liquidity risks.”As things stand, gaps observed in liquidity management could lead to a risk of investor harm,” the FCA said in a statement.The watchdog had already asked firms to review their liquidity arrangements back in 2019, and boards of asset managers should study the findings of the review, the FCA said.”It’s vital the outliers take quick action. They risk regulatory intervention if they don’t take this opportunity to address weaknesses,” it added.Asset managers should also perform liquidity stress testing diligently, and use liquidity management tools appropriately, it said.Some funds have struggled in stressed markets to meet their promise of daily redemptions, with global regulators on Wednesday proposing a new system of categorising open ended funds to end daily redemption promises that cannot be met.”It is important that fund redemptions operate in line with funds’ terms and the way in which they are marketed,” the FCA said.”Additionally, investors should be able to redeem at an accurate price that reflects the value of their investment, ensuring fairness for both remaining and redeeming investors in the fund,” the FCA added. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.U.S. Treasury Secretary Janet Yellen touches down in Beijing on Thursday for a three-day visit just as trade tensions between the world’s two superpowers ratchet up another notch, while a Malaysian interest rate decision tops the region’s economic calendar.Australian trade data and Taiwanese inflation figures are on tap too, and equity investors will digest a mixed earnings report from Taiwan’s Foxconn, a major iPhone assembler for Apple Inc (NASDAQ:AAPL).Asian stocks go into Thursday’s session on the defensive, underperforming on Wednesday after figures showed that China’s service sector activity expanded at the slowest pace in five months in June.Foxconn’s results may help lift the gloom, after the firm on Wednesday forecast a brighter third quarter ahead of peak shopping season at the end of the year. But that is only relative to a near 14% drop in Q2 revenue year-on-year.China remains front and center for investors. U.S.-China trade tensions appear to be intensifying by the day – the latest flare up coming over Beijing’s restrictions on exports of some metals – not the best backdrop for Yellen’s visit on Thursday.U.S. officials says they expect “candid” discussions, and Washington has said it “firmly” opposes the new export controls on gallium and germanium, which go into producing semiconductors and other electronics.However well – or otherwise – Yellen’s visit goes, there will be no quick fix. Former Vice Commerce Minister Wei Jianguo said the controls are “just a start”.In Malaysia, meanwhile, the central bank on Thursday is expected to leave key rates unchanged at 3.00% and keep them there for the rest of the year, putting it in line with regional peers in India, South Korea, Indonesia and New Zealand who have already ended their tightening cycles.Headline inflation eased to a one-year low of 2.8% in May, but core inflation moderated only a bit to 3.5%, suggesting Bank Negara Malaysia (BNM) will hold its key rate higher for longer.The central bank delivered a surprise hike in May. Last week, it said it would intervene in the foreign exchange market to stabilize the ringgit to counter what it said were “excessive” recent losses.The ringgit was one of Asia’s worst-performing currencies in the first half of the year, losing almost 6% of its value against the dollar.Here are key developments that could provide more direction to markets on Thursday:- U.S. Treasury Secretary Janet Yellen visits China- Australia trade (May)- Taiwan inflation (June) (By Jamie McGeever; Editing by Lisa Shumaker) More

Good morning. We start today with a scoop that Xi Jinping personally warned Vladimir Putin against using nuclear weapons in Ukraine, suggesting Beijing remains concerned about Russia’s war even as it offers tacit backing to Moscow. Xi’s warning was delivered during the Chinese leader’s state visit to Moscow in March. Since then, Chinese officials have privately taken credit for convincing the Russian president to back down from his veiled threats of using a nuclear weapon against Ukraine. Russia’s invasion is heavily reliant on support from China, which has helped Moscow to navigate economic sanctions that have excluded it from critical global markets and supply chains.But the war is threatening to scupper China’s efforts to drive a wedge between Europe and the US, according to a senior Chinese government adviser. A Russian nuclear strike on Ukraine or one of its European allies would risk turning the continent against China, the adviser said, while sustained pressure from Beijing to prevent such an act might help improve relations with Europe.Shi Yinhong, professor of international relations at Renmin University in Beijing, said that “Russia has never and will never have China’s approval for using nuclear weapons”. If Russia used nuclear weapons against Ukraine, “China will further distance itself from Russia”, he added. China-Europe relations: The war in Ukraine exposes the flaws in Beijing’s efforts to understand Europe, writes Yuan Yang.War in Ukraine: Ukraine’s president Volodymyr Zelenskyy warned that Russia might be preparing to blow up part of the Zaporizhzhia nuclear power plant as Kyiv’s military reports gains in its counteroffensive. Do you think deterring Putin will help China repair its damaged ties with Europe? Email me your thoughts: [email protected]’s what else I’m keeping tabs on today:US-China relations: US Treasury secretary Janet Yellen will arrive in Beijing and spend four days meeting top Chinese officials and US business leaders. Meta’s new app: Facebook’s parent company is expected to launch Threads, its new social media app, in a direct challenge to Twitter. Economic data: S&P Global releases construction purchasing managers’ index (PMI) for the UK and services PMI for the US, while factory orders figures are due from Germany. Five more top stories1. Federal Reserve officials signalled they intend to resume interest rate increases amid a growing consensus that more tightening is needed to stamp out high inflation in the world’s largest economy. Read more on the Fed’s outlook on the US economy. Go deeper: What explains inflation’s persistence in the face of aggressive rate rises?2. PwC tipped off Google on the timing of a controversial Australian tax law, based on inside information gleaned by one of the accounting firm’s partners. The tech company is the first to be named as a recipient of confidential information in the auditor’s widening scandal. 3. South Korea will allow new entrants to the banking sector for the first time in 30 years, as the government seeks to boost competition in an industry dominated by five lenders. President Yoon Suk Yeol earlier this year accused the country’s banks of enjoying a “feast” of bonuses amid rising interest rates. 4. Sir David Adjaye has stepped back from several roles and projects after an FT investigation revealed that three female former employees have accused the renowned architect of serious misconduct, including sexual assault. Read the full story. 5. US drugmaker Moderna has struck a deal to make messenger RNA drugs for use in China, despite the tensions between Washington and Beijing. The biotech said that it had reached an agreement with authorities in Beijing to research, develop and manufacture drugs that would be “exclusively for the Chinese people”. Here are more details on the deal. News in-depth

Pan Gongsheng, the new People’s Bank of China Communist party chief, is expected to soon also be given the more public additional role of governor © FT montage/Reuters

Pan Gongsheng, the new head of the People’s Bank of China, is set to take the helm at an uncertain moment for the world’s second-largest economy — and for the central bank itself. The bank will be fighting to reset China’s post-Covid recovery, and will be doing so with its own authority weakened after a regulatory shake-up. But Pan’s appointment was welcomed by market participants because of his extensive experience in the sector and western contacts and training. We’re also reading . . . Japan Airlines: In an effort to ditch the environmentally unfriendly suitcase, passengers travelling with Japan Airlines can rent outfits by season, size, formality and colour scheme. Electric vehicles: Upstart carmaker VinFast is hoping to become Vietnam’s answer to Tesla, but the company has hit bumps in the road.Avoiding the evils of AI: Having botched things with social media, let’s hope we can do better with AI, writes Gillian Tett. Chart of the day

As electric vehicles gain popularity worldwide, carmakers are constantly vying for anything that will give them the edge over rivals. After announcing that it expected to produce its “solid-state” batteries as early as 2027, can Toyota grasp this holy-grail battery technology that has long eluded the industry? Take a break from the newsHumanity today is flirting with disaster in the ways we manage water, both on land and at sea. What is to be done? Three new books seek to help recalibrate our relationship to the water that sustains us.

A school of fish in Cabo Pulmo National Marine Park, Mexico © Benjamin Lowy/Getty Images

Additional contributions by Tee Zhuo and David Hindley More

Federal Reserve officials signalled they intend to resume interest rate increases amid a growing consensus that more tightening is needed to stamp out high inflation in the world’s largest economy.According to minutes from June’s meeting of the Federal Open Market Committee, “almost all” officials who participated said “additional increases” in the Fed’s benchmark interest rate would be “appropriate”.They added the “tight” labour market and “upside risks” to inflation were still “key factors” shaping the outlook nearly a year and a half after the US central bank embarked on an aggressive cycle of interest rate rises to tame price pressures.Some Fed officials had favoured a 25 basis point increase in interest rates in June, rather than the pause in further tightening that was ultimately backed by the committee, according to the minutes. But most Fed officials noted the “uncertainty” about the outlook and said additional information about the economy would be “valuable”. On the economic outlook, Fed officials said they expected growth to be “subdued” for the remainder of the year, even though “banking stresses” had “receded” compared to earlier in the year. According to the account, Fed staff who briefed policymakers at the June meeting stuck by their previous expectation of a “mild recession” starting later this year to be followed by a “moderately-paced recovery”. The June meeting marked the first reprieve in the Fed’s campaign to root out stubborn inflation after it soared to a multi-decade high last year. Having raised the benchmark interest rate at 10 consecutive meetings — at times moving in jumbo three-quarter or half-point intervals — central bank officials opted instead to hold it steady at a target range of between 5 per cent and 5.25 per cent.John Williams of the New York Fed on Wednesday reiterated the central bank’s determination to tackle inflation and said there was “more to do” with regards to interest rate rises. Economic data showed demand was still strong and the housing market had stabilised after a period of softness, he added at a conference. Jay Powell, the Fed chair, has justified the pause by saying the effects of earlier rate rises still needed to fully make their way through the economy, on top of the drag on hiring and growth caused by turmoil among regional banks earlier this year.

But additional rate rises this year are widely expected, with most officials projecting the benchmark rate will eventually hit a range of between 5.5 per cent and 5.75 per cent. That translates to two more quarter-point increases, with the first likely to come at the Fed’s next meeting at the end of this month. Speaking at a forum hosted by the European Central Bank last week, Powell said he would not take “moving at consecutive meetings off the table at all”.The likelihood of further rate rises stems from the surprising persistence of some price pressures, especially in the services sector. The US labour market also remains very strong, helping fuel consumer spending. By raising borrowing costs, the Fed aims to damp demand across the economy.Officials maintain a period of below-trend growth and job losses will be necessary in order to achieve their goal of inflation averaging 2 per cent. According to estimates published in June, policymakers broadly anticipate the economy to grow 1 per cent this year and 1.1 per cent next year as the unemployment rate peaks at 4.5 per cent. In May, unemployment stood at 3.7 per cent.No rate cuts are anticipated by Fed officials until 2024 given the expectation that “core” inflation, which strips out volatile food and energy prices, will remain well above the central bank’s longstanding target. More

NEW YORK (Reuters) – Federal Reserve Bank of New York President John Williams said on Wednesday it was the right move for the central bank to hold rates steady three weeks ago, while hinting at some point it may have to raise rates again amid ongoing economic strength. “We still have more work to do” to balance supply and demand and get inflation down, Williams said an event at his bank. He said he’ll be “data dependent” in thinking about future steps for the central bank but added the data support the idea the Fed may need to raise rates further at some point. Williams declined to say whether he believes a July rate increase is needed and noted his staff has yet to begin the work that would help him decide what to do at the next monetary policy meeting. Williams said in his appearance that inflation is still too high for his comfort levels, although he also acknowledged price pressures have eased. “I’m not content” with where price pressures are, Williams said at an event held at his bank. He also said demand for labor remains high and the economy has dealt with rate rises “reasonably well.” Earlier Wednesday, the Fed released minutes for the Federal Open Market Committee meeting, held over June 13 and 14. Then, the FOMC—Williams is its vice-chairman—held rates steady for the first time since starting an aggressive rate rise campaign aimed at cooling high levels of inflation. The minutes said almost all officials favored holding steady while a unnamed minority were open to an increase. Fed rate actions have taken the federal funds rate target range from near zero in March 2022 to its current level of between 5% and 5.25%. Fed officials held steady on rates last month to take stock of how past increases are affecting the economy as inflation pressures have been waning. In recent comments, Fed Chairman Jerome Powell has reiterated his view that the central bank is unlikely to be done hiking rates, and he noted that official forecasts released at that meeting pointed to half a percentage points’ further increases this year. A number of other Fed officials have also spoken in favor of more increases without saying when they might happen. But some, like Atlanta Fed leader Raphael Bostic, have said inflation is already declining in a way that will allow the Fed to hold steady on rates for the foreseeable future. The Fed’s meeting minutes also showed participants viewed the economy as performing very strongly, even as central bank staffers continued to warn about the prospect of a “mild” recession later this year. Williams also said that recent divergences between the Fed’s view more rate rises would be needed compared to market views of looming Fed rate cuts have eased, noting markets “have heard the message” from the central bank. He added that to the extent markets are pricing in rate cuts next year it may just reflect a view that inflation will fall, so that in real terms, lower market rates still imply monetary policy is having the same influence on the economy. More