![]() ![]() "In equities, anything exposed to government spending will have a bit of a wobble" as the X-date approaches, Zverev said. Republican proposals for spending cuts may effect green investment initiatives signed into law last year. ![]() President Joe Biden's Inflation Reduction Act, a stimulus scheme now caught in the crosshairs of debt ceiling battles. Mikhail Zverev, manager of Edinburgh-based Amati Global Investors' strategic innovation fund, said that around 15% of his fund's holdings were companies broadly exposed to spending related to U.S. "If debt ceiling concerns grow we think markets will price in more Fed rate cut expectations, which means 5-year yields would fall," said Miyairi. Nomura currency strategist Yusuke Miyairi said another reason to expect yen outperformance if wrangling in Washington escalates is a strong correlation between dollar/yen and five-year Treasury yields. The safe-haven yen could be one beneficiary. 3/ BUY THE YENĭebt ceiling jitters are good timing for the yen, which slumped 1.6% last week as the Bank of Japan held fast to ultra-loose monetary policy. CDS protection buyers," said Voon Kiat Lai, senior portfolio manager at Redhedge Asset Management.Ĭlosing in on the X-date, the risk premium on CDS might rise, making this protection more valuable and, therefore, more profitable if sold on to others, he said. "Although a default is highly unlikely, the large potential pay out in the event of a CDS trigger on a technical default continues to attract U.S. Traders most commonly use 6-month CDS, which on Thursday were trading around 241 basis points (bps), double where they stood 14 days ago, according to one market participant. "So we've been arbitraging." 2/ RAINY DAY DEFAULT PROTECTIONĬredit default swaps (CDS), which work like insurance against a debt default, are seeing strong demand. For example, in April, yields on one-month T-bills were as low as 3.34% while six month bill yields approached 5.1%. Marciot said he had been taking advantage of a difference in yields between T-Bills of varying maturities as debt ceiling jitters had created an unmerited gap between bills that fall due before and after the expected X-date. Unigestion's head of investments, Olivier Marciot, said he was taking advantage of higher yields on longer maturity T-Bills likely to fall due after the "X-date" - when the government would exhaust its cash and borrowing capacity. īlackRock says (BLK.N) it's been buying Treasuries in anticipation of an economic slowdown and a protracted debt ceiling fight. Yields on some short-dated Treasury bills have shot up - two-month T-Bills have surged to over 5%, rising for six straight weeks. debt limit raises the risk of fresh turmoil for markets. In order to allow access to the trusted lists of all Member States, the Commission makes available to the public, through a secure channel to an authenticated web server, the trusted lists as notified by Member States, in a signed or sealed form suitable for automated processing.Stalemate in Washington over raising the U.S. However this is only at national level, and it must be clearly indicated that they are not qualified according to the eIDAS Regulation. Member States may add trust services other than the qualified ones in the trusted lists, on a voluntary basis. They aim at fostering the interoperability of qualified trust services by facilitating the validation of eSignatures and eSeals and more. Trusted lists are essential in ensuring certainty among market operators as they indicate the status of the service provider and of the service at the moment of supervision. The lists are to be published in a secured manner, electronically signed or sealed in a format suitable for automated processing. These lists should include information related to the qualified trust service providers for which they are responsible, and information related to the qualified trust services provided by them. Users, including citizens, businesses and public administrations, will benefit from the legal effect associated with a given qualified trust service only if the latter is listed as qualified in the trusted lists.Īrticle 22 of the eIDAS Regulation obliges Member States to establish, maintain and publish trusted lists. In other words, a trust service provider and the trust services it provides will be qualified only if it appears in a trusted list. Under the Regulation on electronic identification and trust services for electronic transactions in the internal market (eIDAS Regulation), national trusted lists have a constitutive effect. ![]()
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