In an environment of low global growth and slight deflation, high yield corporate bonds continue to offer attractive return prospects as long the current low default rate remains. Moreover, the distortions prompted by the ECB's asset purchasing programme are causing a crowding out effect and accentuating a steeper credit curve. Time is notably an ally in this configuration, as it speeds up a positive carry!
Swiss mortgage rates are at a record low without any downward trend: this is the housing market's situation that emerges from the latest Mortgage Barometer carried out by the website Comparis.ch. In the Q3 2016, the 10-year fixed-rate mortgages has again decreased slightly, dropping to 1.45%, 0.06% less than the previous three months. The same trend was also observed for five-year mortgages (from 1.11% to 1.09%) and for one-year (from 1,10% to 1.06%).
Deutsche Bank plans hiring freeze in order to cut costs and face the growing legal fees after the US Justice asked for $ 14 billion to close the dispute linked to the story of subprime mortgages. The measure - writes the agency Bloomberg citing sources inside the German bank - would take effect immediately and covers all divisions, with the exception of some control functions.
China's September exports fell 10% to $184.5 billion from a year earlier, far worse than expected, the steepest annual decline since January, after a reasonable performance in August. In local currency terms, exports were down 5.6% while imports were up 2.2%. Exports fell across all markets, with an 8.1% decline in exports to the US, while exports to Europe dropped by almost 10%. Imports fell 1.9% to $142.5 billion, also down from a 1.5% rise in August; economists expected imports to rise 1%.
Industry figures for the single currency area could bring third-quarter economic growth in the 19-country Euro zone. European Union statistical agency Eurostat said output climbed 1.6% on the month on a seasonally adjusted basis and rose 1.8% from a year earlier, after contracting by 0.7% and 0.5%, respectively, in July. Moreover, the increase outperformed expectations of a 1.4% rise and the annual advance of 1.8% was also above consensus forecasts. Although, the solid recovery has demonstrated German production for August with output rising 2.5% on a monthly pace, while new orders also strengthened and there was a robust recovery in exports.
According to Mark Branson, director of FINMA, the Swiss banks are more focused on the question of money laundering, as the daily Tribune de Genève and 24 Heures reported today. "We know that illegal behavior usually relates to the customer and not the bank," says Branson. The Federal Authority tolerance of financial market supervision in particular ends when "the reports were not taken into consideration or when the control system has been deliberately omitted from the top management."
Italy is preparing to launch the voluntary disclosure-bis, which will have the green light in the budget law, as confirmed by the deputy minister of Finance Luigi Casero on the sidelines of the Tax Forum in Milan on Tuesday; the structure remains rather uncertain. According to rumors reported by italian agency press AGI, the sanctions will remain the same but there will be more an annuity in case of failure to declare. The Ministry of Finance aims for the voluntary return of funds held by Italians abroad, about €2 billion, which could also go up in the event that included cash, gold and precious.
In September, the main focus was once again the central banks, the ECB first of all, then the Bank of Japan and the Fed. Expectations were high in all three cases. To announce additional monetary easing in the first two, and guidance on anticipations and credibility in the third. The first two disappointed the market, announcing measures that fell well short of investor anticipations. Already in July, the BoJ opted to keep things as they stood even though a large proportion of investors expected to see further monetary easing. The Fed, for its part, struggled to overcome internal divisions and look beyond a month-by-month horizon, at the risk of making mistakes in its growth projections and damaging its credibility.
The Swiss National Bank (SNB) should close the third quarter with a profit oscillating between seven and nine billion francs, mainly due to the favorable performance of the stock markets, according to UBS estimates. The gold market, the foreign currencies position and bond markets are slightly wavy. The report on the exercise of the SNB for the July-September quarter is expected on October 31.
The common European currency traded below the 1.1050 level against the Greenback on Wednesday, as it had found resistance in the second weekly support level at 1.1043. Previously, as the currency exchange rate slowly moved through the first weekly and monthly support at 1.1121 and 1.1133, it plummeted down to the 1.1043, as soon as the before mentioned support levels were passed. It is most likely that the currency pair will move lower to mark new low levels, as it nears the Brexit low level.
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