Week InReview
Friday | Jun 10, 2022
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Stocks face more pressure Friday after concerns about inflation again sparked a Wall Street slide while pushing up bond yields and the dollar. Equity futures point to declines in Japan, Australia and Hong Kong. A slump in Chinese shares traded in the US on uncertainty over the regulatory outlook and Covid lockdowns is an additional headwind for Asia. The next test for markets is the US inflation print Friday, which will provide clues about how aggressively the Federal Reserve will raise interest rates. The data are expected to show an annual consumer-price gain of more than 8%.
— Bloomberg Markets
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Commercial buildings in Buffalo, New York. Municipal bond index returns were negative 6.2% in the first quarter, the worst quarterly performance since 1981. Photo: Bloomberg |
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The pain in the US municipal debt market has finally started to subside after the worst start to the year in four decades, as cheap bond prices and fears about a slowing economy coax investors back. (Financial Times | Jun 8)
Wall Street’s top regulator previewed a set of sweeping changes to rules underpinning the US stock market, setting up a major clash with some of the biggest names in equity trading. Securities and Exchange Commission Chair Gary Gensler said he’s asked the agency’s staff to weigh the moves with the aim of making the $45 trillion US equities market more transparent and fair. (Bloomberg Law | Jun 8) see also SEC’s revamp of stock-trading rules faces criticism from Wall Street (The Wall Street Journal | Jun 8)
Traders’ ability to seamlessly buy and sell stocks, bonds and other financial products on Wall Street has deteriorated sharply this year, adding fuel to the big swings on the world’s biggest and deepest capital markets. (Financial Times | Jun 7)
U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expected inflation to remain high and the Biden administration would likely increase the 4.7% inflation forecast for this year in its budget proposal. During a Senate Finance Committee hearing, Yellen said that the United States was dealing with "unacceptable levels of inflation," but that she hoped price hikes would soon begin to subside. (Reuters | Jun 7)
Pension plans and other institutional investors are embracing a federal proposal that would force hedge funds and private-equity funds to provide more disclosures to investors. University endowments, insurance funds and retirement funds serving teachers and firefighters are urging the Securities and Exchange Commission to move forward with a proposed rule that would ensure private-fund investors receive annual audits and quarterly statements. (The Wall Street Journal | Jun 6)
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OFR finds sources of two Treasury market disruptions stemmed from similar vulnerabilities |
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(Jun 9) — A U.S. Office of Financial Research research brief, "Treasury Market Stress: Lessons from 1958 and Today" finds that sources of two disruptions to the U.S. Treasury market more than 60 years apart stemmed from similar vulnerabilities, such as low margins, little market transparency, and reliance on market-based financing.
While the stress Treasury markets experienced in March 2020 took many by surprise, it was not unprecedented. The OFR examined a similar episode of Treasury market stress that took place in the summer of 1958. Although different events triggered these episodes, the brief shows that they have many similarities in terms of the vulnerabilities they exposed: a high level of outstanding debt, dealers overloaded with Treasury securities, large positions (sometimes with minimal haircuts) funded using leverage in the repo market, a prevalence of carry trades, and sudden increases in margins.
The discussion in the brief covers the expansion of market-based financing in the Treasury market over the 1950s, including how it was driven by demands for short-term and highly liquid investment mediums from outside the financial sector. Finally, it reviews the challenges for reform policymakers faced in the wake of the crisis.
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Missteps by managers can lead to wasted resources, poor decisions and disastrous vulnerabilities to cyberattacks. Photo: Sonia Pulido | WSJ |
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The biggest mistakes companies make with cybersecurity — and how to avoid them
Every manager knows how dangerous and frequent cyberattacks can be. But they still get things wrong with cybersecurity all the time. Two MIT researchers who study cyber resilience have found a number of concepts that managers routinely get wrong, leading to wasted resources, poor decisions — and potentially catastrophic cyber vulnerabilities. Here's a look at six big mistakes and how to avoid them.
Ransomware thrives thanks partly to US market: CISA official
The US cybersecurity market has created a “perverse structure” that enables companies to easily pay extortion fees when they are hit with ransomware attacks, said Kiersten Todt, the chief of staff at the Cybersecurity and Infrastructure Security Agency. The US represents a thriving, strong market for ransomware gangs thanks in part to the bevy of services that help hacking victims, Todt said during an interview Wednesday at the Bloomberg Technology Summit.
CISA warning: Hackers are exploiting these 36 "significant" cybersecurity vulnerabilities — so patch now
The United States Cybersecurity and Infrastructure Agency has identified 36 new flaws that are known to be exploited by cyber criminals. Flaws in Microsoft, Google, Adobe, Cisco, Netgear, QNAP and other products have been added to CISA's known exploited vulnerabilities catalog.
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Patrons prepare to do a caviar bump at the Temple Bar in NoHo. “It’s decadence on decadence,” said a bar owner. Photo: Dolly Faibyshev | NYT |
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Caviar ‘bumps’ are all the rage
Why are some diners licking fish roe from their fists? Caviar bumps – in which a dollop of the fish roe is eaten (not snorted) off the back of one’s hand – have become a decadent and naughty way to consume the pricey delicacy at certain restaurants, fashionable bars, art festivals, and other showy gatherings.
Welcome to the 'Great Reinfection'
A repeat encounter with Covid used to be a rarity. But now that Omicron has changed the game, expect reinfections to be the new normal. If you're unfortunate enough to have had an intimate encounter with the dreaded Sars-CoV-2 virus, I’m afraid your dalliance with it might not have been your last. Get ready for round two (and three, and maybe four —maybe ad infinitum). Welcome to the Great Reinfection.
Are workers more productive at home?
A conversation with Stanford economist Nick Bloom on a surprising find from the pandemic: remote work is fueling economic growth.
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