The fund owned Russian stocks worth some 27 billion Norwegian crowns ($2.86 billion) at the end of 2021, equivalent to 0.2% of its total value, but has since said the value of those assets has fallen by at least 90%. ($1 = 9.4451 Norwegian crowns) More
Investing.com — Eurozone bond yields hit multiyear highs on Tuesday as the prospect of higher interest rates from the Federal Reserve and European Central Bank was compounded by fresh signs of unprecedented inflationary pressure.The 10-Year German benchmark bond yield touched 1% for the first time since 2015, while its Spanish counterpart broke through 2% for the first time in as many years.Italian benchmark yields likewise hit 2.88%, its highest since late 2018, pushing the Spread between them and German yields to its widest since 2020, when the first wave of the pandemic tested the Eurozone’s commitment to joint action to support the economy.The latest moves come a day ahead of an expected 50 basis point increase in U.S. official interest rates aimed at taming inflation that is running at a 40-year high.Eurozone yields have been pulled higher by those on U.S. Treasuries in recent weeks as the market has priced in an aggressive tightening cycle from the Federal Reserve. That has also strengthened the dollar, while the euro again dipped below $1.05 in European morning trading, as traders priced in a widening interest rate differential between the two major currency blocs.The European Central Bank is still reluctant to raise interest rates, despite widespread evidence of the worst inflation in over 30 years. According to Eurostat data released on Tuesday, Eurozone producer prices rose an eye-watering 5.3% in March, even more than the 5.0% expected, bringing the year-on-year rate to 36.8%. That development is down largely to soaring energy prices, which are set to rise even higher if, as expected, the EU announces plans to boycott Russian oil by the end of the year later this week. EU energy ministers discussed such a measure at a meeting on Monday. The ECB argues that monetary policy is the wrong weapon with which to fight an energy supply shock.The impact of high inflation on the labor market has, however, been relatively moderate so far. The ECB says it has seen no sign of a wage-price spiral, while companies continue to hire. Seasonally adjusted German unemployment fell for the 12th month in a row in April, albeit by a less-than-expected 13,000. The Eurozone jobless rate edged down 0.1 point to 6.8% in March, extending its slow recovery from the pandemic. More
The central bank’s international reserves fell to $26.8 billion as of beginning of May from $28.1 billion a month earlier.”We have an adequate stock of international reserves, despite the … government’s fulfilments of all its foreign debt obligations,” Shevchenko wrote on the NV Business media portal.”With sufficient international financial assistance, we will be able to maintain reserves at the proper level and even increase them.”Russia’s invasion on Ukraine, now in its third month, has displaced millions, sent food and oil prices soaring, shut many businesses and slashed exports. Inflation in annual terms may increase to 15.9% at the end of April, compared to 13.7% a month earlier, Shevchenko said. By the end of the year it may exceed 20%.”In times of war, it is impossible to avoid rising prices,” Shevchenko wrote, adding, that the central bank will keep its fixed exchange rate as one of the measures to control consumer price inflation.To manage through the war, the country will need more international financial support, he added. So far, Ukraine has received more than $4.3 billion in international aid.Gross domestic product is expected to shrink by at least a third, he said. “The economy will recover, but the losses from the war will be significant,” Shevchenko wrote. (Reporting in Melbourne by Lidia Kelly; Editing by Sam Holmes) More
The benchmark yield rose four basis points to touch 1%, a level not seen since the bloc was in the middle of grappling with the Greek debt crisis. It’s a sharp turnaround from March when demand for havens after Russia’s invasion of Ukraine sent the rate into negative territory.“The market looks in poor shape with few investors willing to take the other side given the entrenched bearish dynamics,” said Christoph Rieger, head of fixed-rate strategy at Commerzbank AG. “Inflation risks are not getting any smaller, while risk sentiment is recovering.”Money markets are wagering on almost four 25 basis-point hikes from the ECB this year, ratcheting up bets as euro-area inflation continues to break records and a growing number of ECB officials acknowledge the possibility of greater policy tightening. Vice President Luis de Guindos said an ECB rate increase in July is possible but not “likely,” in an interview published Sunday. U.K. bonds were also caught up in the rush to offload debt, with 10-year yields surging above 2% for the first time in more than a week as domestic markets reopened after being closed Monday for a holiday. Money markets are betting on a quarter-point Bank of England rate hike this Thursday and are rapidly raising wagers on a half-point increase at any of its next four meetings.(Updates throughout.)©2022 Bloomberg L.P. More
Elisabeth Stheeman, a member of the BoE’s Financial Policy Committee (FPC), said the impact on the transition to net zero of the increase in energy prices, as a result of Russia’s invasion of Ukraine, was yet to be determined.”Recent events have highlighted the transition risks that businesses face,” Stheeman said in a speech.”In light of this situation, the role for central banks and supervisors is to continue to help build resilience to climate-related financial risks, and in doing so they can also help support the transition,” she added.The Bank has conducted a “climate scenario” exercise to assess the resiliency of banks, insurers and the wider financial system to different climate-related risks.Aggregated results will be published on May 24.”The exercise is not intended to inform the setting of capital requirements,” Stheeman said.”The FPC will also use it to understand risk management capabilities in the financial sector, and how banks and insurers may adapt their business models in the face of different climate pathways,” she added. More
Australia has raised interest rates for the first time in 11 years just three weeks before a general election that is largely being fought over the rising cost of living. The Reserve Bank of Australia increased the cash rate, the benchmark interest rate, to 0.35 per cent from 0.1 per cent to stem the rising tide of inflation that hit 5.1 per cent in the 12 months to March. The 25 basis point increase was more aggressive than some analysts had expected. It was also the first time the RBA has raised the borrowing rate in an election campaign since 2007, when John Howard, the three-term prime minister, lost to Kevin Rudd.The increase, even from a historically low rate, has forced Prime Minister Scott Morrison to defend his record of economic management — his main weapon in the election campaign — as the cost of living has risen sharply. In Geelong this week, Morrison argued that a rise in interest rates should not be viewed as a political event as the RBA was independent of the government. He then took a swipe at Anthony Albanese, leader of the opposition Labor party, who could not say what the cash rate was at the start of the campaign. “At least I know what it is,” said Morrison, whose Liberal-National coalition government is trailing in the polls. The rise indicated that the RBA was moving away from emergency settings, including interest rate cuts, introduced to help steer the economy through the coronavirus pandemic.Philip Lowe, RBA governor, said on Tuesday: “The board judged that now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic. The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected.” Lowe warned there could be further interest rate rises as inflation was predicted to hit 6 per cent this year. “The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead,” he said.Speaking at a press conference, Lowe added that the central bank would focus on normalising interest rates after the pandemic. “It’s not unreasonable to expect the normalisation of interest rates over the period ahead could see interest rates rise to 2.5 per cent,” he said.Jim Chalmers, shadow treasurer, said that Morrison’s economic credibility was “in tatters”, with rates rising in an uncertain economic environment. “This is the third wave of Scott Morrison’s cost-of-living crisis. This is a triple whammy of falling real wages, skyrocketing inflation and interest rates are about to rise,” he said. Tim Lawless, a director at CoreLogic, a property research firm, said that Australian house prices had surged 27 per cent while the cash rate was at an emergency level, but the market would lose steam when rates rose.
“By lifting the cash rate during an election month, the RBA has sent a clear message it will make decisions based on its mandate and not be swayed by the political cycle,” Lawless said.Inflation has been driven by rising petrol, housing and food costs, which piled pressure on the RBA to lift interest rates after months of expectation that it would follow in the footsteps of central banks in New Zealand, the UK and the US.Josh Frydenberg, treasurer, highlighted the resilience of the economy and falling unemployment. “We don’t have an axe to grind with the Reserve Bank. They are independent,” he said. “These are global factors driving up inflation.”The rising cost of living and concerns over the prospect of higher rates has hit consumer confidence, which plunged 6 per cent last week, according to economists at ANZ Bank. Signs of a sharp slowdown in the housing market have also emerged. More
NEW YORK (Reuters) – When it comes to the status of women in the workplace, there are decades of talk and not enough action. The gender pay gap is still enormous, and CEOs are still overwhelmingly male, as are corporate boards.Stacey Vanek Smith says we should look to an unlikely source to help solve this stubborn problem: Niccolo Machiavelli.Most people remember the Renaissance-era Italian statesman from his iconic book on high-school reading lists, “The Prince.” But Smith, the NPR host and author of the new book “Machiavelli for Women,” says his insights about power and survival can be just as critical for navigating the modern workplace.“I hated that book back in college, but when I re-read it, it helped me understand why the numbers (of women in leadership positions) have been stuck for so long,” says Smith, co-host of NPR’s The Indicator from Planet Money. “It offers real suggestions and effective advice about how to gain power and hold onto it, even though it’s 500 years old.”To be sure, the connotations of the name Machiavelli are quite negative and brutal. His advice to Florence’s ruler Lorenzo de Medici derived from the historical context of regions constantly warring with each other, where the prospect of being taken over and wiped out by rivals was a very real possibility.If you can get past the sometimes harrowing nature of his counsel, these clear-eyed strategic principles – about how to evaluate threats, overcome obstacles and survive in positions of leadership – can be helpful tools in your arsenal.ARM YOURSELF WITH INFORMATIONMachiavelli may not have been a military warrior, but as a diplomat he did place a high value on another power source – information. The more you have of it, the more you can use it to advance your career. “That’s the ultimate advice, especially for women or marginalized workers,” Smith says. “Find out what the typical salary range is for the position, what your colleagues are paid, and how much experience they have. Having those facts in a game changer, because most success in negotiating comes before you even open your mouth.”ASK FOR MOREPart of what is holding women back in the workplace is systemic, like discriminatory attitudes. But women also do not advocate for themselves as forcefully as men do. If you’re not even asking for what you want in the first place, then any negotiation is dead on arrival. “Men ask for raises and promotions at five times the rate that women do,” Smith says. “There is so much stuff that is out of your hands – but this is a significant part of the equation that you do have control over as an individual.”DEMONSTRATE ‘CRAZY CONFIDENCE’Even more than actual competence, the best predictor of career success is confidence, Smith says. It’s free – but it’s definitely a skill you have to develop, since it may not come naturally. Try to be a little like James Spader’s Robert California character from the sitcom “The Office,” Smith advises – who despite little relevant experience, applies at Dunder Mifflin and ends up being appointed CEO of the entire company within days, purely thanks to his extreme confidence.NEGOTIATE WITH A NEW MINDSETThe reason why some women shy away from asking for raises and promotions, Smith says, is that such situations are often perceived as hyper-aggressive, zero-sum games. Instead, reframe such discussions as a win-win: It is obviously in the company’s interests that you feel valued and produce at your highest level, so work together to figure out how to make that happen. “This is tricky for women, because there can be a backlash to too much aggression,” says Smith. “So when I started to think about negotiations in a more collaborative way, that was the most useful shift in mindset for me.”SEIZE THE MOMENTThe pandemic has been horrible so many ways, but it also shifted the power dynamic of the modern workplace: It is now much more acceptable to work remotely and to be dealing with home and family issues at the same time.Previously, that lack of flexibility kept some women out of leadership positions, so now that work-from-home is the new reality for many, there are new pathways to corporate power, Smith says. “There is a new openness about how work gets done,” she says. “I’ve never seen a moment where workers have more power than they do right now.” More
The US Federal Reserve is expected to accelerate its monetary policy tightening this week with its first half-percentage point rise since 2000 and signal more aggressive action to come until there is clear evidence that red-hot inflation is under control. Mounting inflationary pressures stemming from a tight labour market coupled with price increases extending beyond the sectors most sensitive to pandemic-related shocks and the war in Ukraine have compelled the Fed to speed up its withdrawal of stimulus, or risk falling further out of step.Federal Open Market Committee officials will convene on Tuesday for a two-day policy gathering, at which they are expected to raise rates for the second meeting in a row and formalise plans to shrink the Fed’s $9tn balance sheet.The central bank’s rhetoric has shifted notably since March, when it delivered its first interest rate increase since 2018, bringing the target range of the federal funds rate from near-zero to between 0.25 and 0.50 per cent. Since that meeting, Jay Powell, chair, has pledged the Fed will “expeditiously” move its benchmark policy rate closer to a “neutral” level that no longer supports demand. That is likely to translate into multiple half-point rate rises in the coming months, which would lift the fed funds rate to about 2.5 per cent by the end of this year.Estimates of “neutral” vary. Fed officials have pegged it between 2 and 3 per cent, although many economists think it is higher given the current level of inflation. The Fed is “playing catch-up . . . they wish they had started earlier and so could have moved more gradually, but they didn’t,” said Randall Kroszner, who served as a Fed governor between 2006 and 2009. “If they don’t act boldly and speak about acting boldly now, the risk of inflation expectations becoming unanchored increases significantly.”
Financial markets have adjusted rapidly, with borrowing costs across a number of metrics dramatically higher than just a few weeks ago. The benchmark 10-year Treasury yield breached 3 per cent on Tuesday, having just reached 2 per cent in February. That is the highest level in four years and the fastest rise of that magnitude since late 2010. Equity markets have also come under pressure, with the technology-heavy Nasdaq Composite registering in April its worst monthly performance since 2008.To augment its tightening efforts, the Fed will also soon begin reducing its holdings of Treasuries and agency mortgage-backed securities, which swelled over the past two years as the central bank propped up financial markets and the economy. The Fed will make official on Wednesday its plans to shed up to $95bn of assets a month — split between $60bn in Treasuries and $35bn in agency mortgage-backed securities. The process is likely to start in June.Taken together, the next few policy meetings constitute the “front-loading” phase for the Fed, said Allison Boxer, an economist at Pimco, as it seeks to reverse the largesse provided during the pandemic. She reckoned that the earliest the Fed could return to quarter-point rate rises is September, particularly after Russia’s invasion of Ukraine fuelled the inflation surge. Some traders have speculated the central bank may boost the size of its rate increases and implement a 0.75 percentage point adjustment at some point, something it has not done since 1994.Uncertainty about how high the Fed will need to raise interest rates to push inflation back towards its 2 per cent target is also complicating the outlook. Core inflation, as measured by the personal consumption expenditures price index, now hovers at 5.2 per cent from a year ago. “I don’t think one can assert with any confidence that we know where the end point is for rate increases,” said Jeremy Stein, a Harvard academic who was nominated by the Obama administration alongside Powell to serve on the Fed’s board of governors in 2011. “You can say we’re going to do what it takes, but it’s hard to know at this stage what it will take.”
“There’s a fair amount of prayer involved,” he quipped.James Bullard, a voting member of the FOMC this year and one of its biggest hawks, said last month that it is a “fantasy” to think the Fed can bring inflation down far enough without lifting rates to a level that actively constrains economic activity.“Neutral is not putting downward pressure on inflation. It’s just ceasing to put upward pressure on inflation,” he said, noting his support for the fed funds rate to be 3 percentage points higher by the third quarter. Given the Fed’s spotty record in successfully engineering a “soft landing” without causing undue economic pain, economists are concerned about an impending recession and job losses. While officials have been optimistic they can avoid that outcome, they have also acknowledged the challenge ahead. Investors on Wednesday will be looking for any sign Powell’s confidence is waning.“The Fed is not operating with a scalpel but more with a hatchet in terms of how it is affecting the economy as policy becomes less accommodative and eventually restrictive,” said Peter Hooper, global head of economic research at Deutsche Bank, who worked at the Fed for almost three decades. “I just don’t see any way around unemployment needing to go up because of this process.”Additional reporting by Kate Duguid in New York More
