Aurelia Butler

(Reuters) – Global equity funds recorded heavy disposals in the week ended Aug. 31, on concerns that major central banks would continue to hike rates, with inflation levels showing no signs of abatement. Investors jettisoned global equity funds worth $21.41 billion, posting their biggest weekly net selling since the week ended June 15, data from Refinitiv Lipper showed. Fund flows: Global equities bonds and money market https://fingfx.thomsonreuters.com/gfx/mkt/byvrjgljyve/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg Last week, Federal Reserve Board chair Jerome Powell said the U.S. central bank will raise rates as high as needed, and that people should not expect it to dial back its monetary policy quickly until inflation is fixed. Economic data from the euro zone this week signalled the region’s inflation scaled a record high in August, while another set of numbers from the United States showed that job openings had increased in July.Investors offloaded European and U.S. equity funds worth $12.64 billion and $10.21 billion, respectively, but purchased funds worth net $1.51 billion in Asia. Healthcare and tech sector funds suffered withdrawals of $546 million and $700 million, respectively, although financials recorded $792 million as inflows. Bond funds also recorded outflows, amounting to $8.04 billion in a second straight week of net selling. Fund flows: Global equity sector funds https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnkgnkpq/Fund%20flows-%20Global%20equity%20sector%20funds.jpg High yields and short- and medium-term bond funds faced outflows of $5.44 billion and $2.46 billion, respectively, but government- and inflation-linked funds received inflows of $1.3 billion and $162 million. Global bond fund flows in the week ended Aug 31 https://fingfx.thomsonreuters.com/gfx/mkt/egpbkryynvq/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Aug%2031.jpg Money market funds were also out of favour, as investors sold about $1.34 billion in their fourth consecutive week of net selling. Data of commodity funds showed precious metal funds recorded outflows of $890 million, the biggest net selling in six weeks, while energy funds posted an outflow of $118 million. An analysis of 24,482 emerging market funds showed equity and bonds faced outflows worth $738 million and $933 million, respectively. Fund flows: EM equities and bonds https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwdkwrpo/Fund%20flows-%20EM%20equities%20and%20bonds.jpg (This story has been refiled to correct the sixth paragraph in which the outflows from healthcare sector are changed to $546 million from $522 million, outflows from tech sector are changed to $700 million from $414 million, and inflows into financial sector funds are changed to $792 million from $989 million; Also corrects the seventh para in which bond outflows are changed to $8.04 billion from $6.46 billion) More

According to Refinitiv Lipper data, investors offloaded $10.19 billion worth of U.S. equity funds, posting their biggest weekly net selling since June 15. Fund flows: US equities bonds and money market funds – https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwdklrpo/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg Federal Reserve Board chair Jerome Powell said last week that the central bank will raise rates as high as needed, and that people should not expect the Fed to dial back its monetary policy quickly until the inflation problem is fixed.U.S. large-, mid-, and small-cap funds all saw weekly outflows of $8.55 billion, $1.02 billion and $700 million, respectively.Growth funds were hit hard as weekly net selling jumped to $4.52 billion, marking the biggest withdrawal in 11 weeks, but value funds secured $724 million in net buying. Fund flows: US growth and value funds – https://fingfx.thomsonreuters.com/gfx/mkt/klpykagdkpg/Fund%20flows%20US%20growth%20and%20value%20funds.jpg Among sector funds, healthcare and tech funds posted outflows of $522 million and $414 million respectively, although financials obtained a third weekly inflow at $989 million. Fund flows: US equity sector funds – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkryanvq/Fund%20flows%20US%20equity%20sector%20funds.jpg Investors also exited bonds funds of $6.46 billion, marking a second weekly outflow.U.S. high yield and municipal debt funds recorded outflows of $4.57 billion and $2.4 billion respectively, but short/intermediate government & treasury funds received $2.08 million, the biggest weekly inflow since June 15. Fund flows: US bond funds – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrxdedpm/Fund%20flows%20US%20bond%20funds.jpgMeanwhile, investors exited money market funds of $563 million after pouring a net $11.07 billion in the previous week. More

LONDON (Reuters) -The dollar was headed for its third weekly gain in a row and was near two-decade highs against other major currencies, as investors focused on U.S. jobs data due later on Friday that could bolster the case for aggressive interest rate hikes.The U.S. currency has been riding high since Federal Reserve Chair Jerome Powell said at the Jackson Hole symposium in Wyoming last Friday that rates would need to be high “for some time” to combat inflation.The dollar index – which tracks the currency against six counterparts – leapt to a fresh 20-year high on Thursday of 109.99, bolstered by robust U.S. data showing a fall in unemployment claims.The index came off the boil in early European trading hours on Friday, slipping 0.3% to 109.23. However, the index is still on track for a 0.4% weekly gain.U.S. non-farm payrolls data due at 1230 GMT will be closely watched, analysts said. Economists expect 300,000 jobs were added in August, which would extend a strong run of data. “We would have to see clearer signs of an economic downturn in the US with the addition of more cautious comments on the part of the Fed to end the USD rally,” You-Na Park-Heger, currency analyst at Commerzbank (ETR:CBKG), said in a note.Fed funds futures are pricing about a 75% chance that the Fed hikes rates by 75 bps this month and it has been a week of heavy selling in the U.S. Treasury market.The moves have supported the dollar’s march on the yen in particular, since Japan’s yields are anchored near zero.The dollar surged above 140 yen for the first time since 1998 on Thursday, and the yen fell to a fresh trough of 140.43 on the day. It was last broadly flat at 140.305.Japan’s government will take “appropriate” action as needed, Japanese finance minister Shun Suzuki said on Friday.The euro retraced some of the previous day’s losses against the dollar and inched back above parity, up 0.6% to $1.00045.The European Central Bank is due to meet next week, with money markets betting on an unprecedented 75 basis point hike. Sterling edged up 0.2% on the day versus the dollar at $1.15670, but remains down around 1.4% this week. Britain’s new prime minister will be announced on Monday, when the ruling Conservative Party’s leadership contest concludes, which could prompt further pound moves. More

This article is the latest part of the FT’s Financial Literacy and Inclusion CampaignThe start of the academic year has always been a moment when I schedule in some time for financial planning — and given the winter that’s coming, maybe you should too. In years gone by, this process has been positively tinged with the smell of fresh exercise books. Approaching the halfway point of the tax year, it’s a good time to review the investment performance of your Isa and pensions, adjust your budget and check your savings goals are on track. This year, however, you may well be feeling a sense of foreboding. There’s even more political and financial uncertainty than usual, and we have rising inflation, spiralling bills and volatile markets to contend with.Now more than ever, colleagues in the FT newsroom are stopping by my desk to ask questions about their personal finances. The three most common topics? Energy bills, mortgage rates and retirement worries. As suppliers start to increase monthly direct debits, submitting regular meter readings is a must, as is understanding your household’s power consumption and what you could do to manage this. People who live in period properties will be in for a shock, as their homes are likely to be the most energy inefficient. However, higher prices will shorten the investment “pay back” of installing solar panels (do drop me a line if this is something you’re considering). In a double feat of forward planning, my stepdaughter’s Christmas present from us will be having “smart” radiator valves fitted in her home that are compatible with her Hive app.Rising energy bills could add hundreds to your monthly costs, but so too could rising interest rates when you come to remortgage. The best piece of forward planning advice? Knowing the date that your current fix expires, and looking for a new deal six months beforehand (it’s possible to “lock in” a rate ahead of time). If you’re thinking of paying to break your current fix and take out a fresh one, I’ve had good feedback from readers about the free calculator on the Nous.co app I recently mentioned, which helps make a cost comparison. Needless to say, all of these things are going to take a much bigger chunk out of our budgets in future.

The record credit card borrowing figures we’re seeing show how many people already use debt to plug gaps in their budgets. For some, the solution might mean having to cut back on what you regularly put aside in savings and investments. This is never a decision to be taken lightly, particularly if you’re considering trimming your pensions contributions as you’ll lose out on employer top-ups and tax relief. An exercise you might find helpful is cash flow planning — a tool beloved of financial planners. For the months ahead, plug in the likely rises to your living costs and major expenditure (such as Christmas, and January’s tax bill) then see how your budget could absorb the shock of this.Lastly, many will worry about the long-term implications for their investment goals. Charlotte Ransom, founder of Netwealth, says the number one question her clients are asking is: will I have enough to retire on? “People want to understand the impact of rising inflation, higher outgoings and current low investment returns on their likely retirement pot,” she says. As well as working for longer, many are weighing up the extent to which they can afford helping adult children with cash gifts. At a time where there are so many questions for our finances, I’ll be asking a few more this Saturday at the FT Weekend Festival in aid of FT Flic, the Financial Literacy and Inclusion Campaign. We all need to get to grips with our finances, and boosting financial literacy is a goal we can all get behind. Martin Wolf, our chief economics commentator, will be among those taking part in a personal finance quiz (if you are feeling flush, you can bid to have lunch with either of us in the Flic charity auction).

Cracking prize: a 1988 vintage FT egg cup, commemorating that year’s Budget

If you can’t join us for the festival at Kenwood House Gardens in north London on Saturday, fear not. I’ve devised this mini quiz for readers at home, and have two prizes from FT’s archive to inspire your budgeting endeavours. The Financial Times egg cup was (we think) a gift for subscribers in the 1980s. Its pinstriped arms hold a copy of the FT from March 1988 with the Budget speech of former chancellor Nigel Lawson on the front page.One of the most controversial in history, Lawson announced huge tax cuts (sound familiar?) which ultimately preceded a huge inflationary spiral — something to think about as you crack open your breakfast egg! To stand a chance of winning one, please answer the following questions and tie breaker.I will reveal the answers (and winners) in my next FT Money column on Saturday September 24. Yes, readers, despite my love of forward planning, I’m about to embark on the worst-timed holiday in history. But when I return, we will have a new prime minister, plus new energy help measures and potentially some tax policies to chew over together. Claer Barrett is the FT’s consumer editor: [email protected]; Twitter @Claerb; Instagram @Claerb More

The country is braced for a winter where most of us get poorer, many substantially so. Inflation is set to leave average real pay 9 per cent lower than two years previously by next spring, the Resolution Foundation said this week, wiping out all pay growth since 2003. Without government support, the think-tank sees another 3mn people being pushed into absolute poverty, defined as annual household income for a couple after housing costs of £15,781, taking the total to 14mn. The response from high street banks — at least earlier this year — was an uncomfortable one: this, largely, is not something affecting our customers. To some extent, it was just a statement of fact. The UK’s high street banks are, in effect, utilities that have chosen not to deal with the poorest in society — the first and the hardest hit by soaring energy bills. Such was the lack of immediate worry that NatWest, at its half-year results, made a £46mn cut to its impairment provisions, although it also noted the “significant uncertainty in the economic outlook”. Citizens Advice is reporting surging traffic to its cost of living web pages, with a spike in July. But while it is helping rising numbers of people struggling with energy bills, the demand for help on credit, debit or store cards has remained flat.It is unlikely to stay that way. More than half of UK households are expected to be in fuel poverty by next year, defined as more than a 10th of income going on energy bills. Chancellor Nadhim Zahawi has said that people on £45,000 a year, which puts them within the top fifth of the pay distribution, will find this winter “really hard”, requiring government support. Higher bills, and higher interest rates, will hit measures of mortgage affordability. The burden of rising energy costs on businesses, as well as the policy response required to tame inflation, could yet dent the strength of the jobs market.The typical response for banks in a slump is to pull up the drawbridge: rising risk aversion and tighter lending criteria tend to mean more demand for alternative sources of credit. The trouble is that the market for non-standard or high cost credit has shrunk dramatically after the regulator cracked down on harmful practices, reducing the pool of options. Meanwhile, the benchmark for judging how banks handle this downturn has changed since the financial crisis. “Customer expectations are rightly very different,” said one banker. Barclays was recently accused of cutting financial flexibility just as it was most needed, by axing unused overdraft facilities. The bank said it reviewed limits each year to ensure they were not more than customers could afford. The regulator is on the prowl. The Financial Conduct Authority has written to bosses emphasising banks’ responsibilities and making a link to the forthcoming consumer duty, which aims to set higher standards for consumer protection. In June, it complained that some banks were not communicating well with customers, did not fully understand individuals’ circumstances or consider a range of tailored options to help them. A looming question is whether this cost of living crisis should be tackled in a similar manner to the pandemic, where early intervention, flexibility and forbearance were deployed in spades.The sector is wary, given how long energy prices could stay high. Fair4All Finance, a non-profit organisation focused on financial inclusion, is looking at how the pandemic response could work as a blueprint for a more creative approach in supporting customers, at a negligible cost to the banks. It is also pursuing pilot schemes for products like no interest loans or consolidation loans for customers in vulnerable financial circumstances.One concern is that the pandemic created greater numbers of newly precarious consumers, with about 14mn estimated to have less than £100 in savings. Another is that the use of buy now, pay later could mask early signs of financial difficulties, a factor that is being watched closely by some lenders. To date, the range of responses from banks appears to vary widely: from proactive engagement with customers, charities and regulators to a sense that it is not really their problem. It will be — and could prove hard to [email protected]@helentbizAre you facing difficulties managing your finances as the cost of living rises? Our consumer editor Claer Barrett and finance educator Tiffany ‘The Budgetnista’ Aliche discussed tips on the best ways to save and budget as prices across the globe increase in our latest IG Live. Watch it here. More

This marks the third consecutive month that remittances reached a record amount, following highs recorded in May ($5.142 billion) and June ($5.144 billion).Mexicans abroad – mostly in the United States where the economy benefited from stimulus measures that were absent in Mexico – are sending more money to help their families back home as President Andres Manuel Lopez Obrador struggles to deliver on promises to energize growth.Lopez Obrador has often boasted about the strong expansion in remittances sent to Mexico, as rising inflation that hit 8.15% annually in July, its highest level in nearly 22 years, chips away at people’s purchasing power.Remittances this year through July rose 16.4% to $32.8 billion, the central bank said.Lopez Obrador has forecast remittances to reach $60 billion by year end.BBVA (BME:BBVA) Research attributed the record flow in part to “buoyant” employment levels in the United States despite fears of a recession.The U.S. unemployment rate fell to 3.5% in July, as accelerating job growth lifted employment above pre-pandemic level. “As long as the level of unemployment in the United States remains at such low levels, significant levels of remittances will continue to reach Mexico,” BBVA Research said in a note. More

SEOUL (Reuters) – South Korea’s central bank said on Friday consumer inflation is expected to remain high at 5-6% levels for some time.The Bank of Korea said the inflation rate for August also came in as expected. More