Oil prices are on the rise. One driver is the OPEC limits agreed in 2016 to kick in at the start of 2017. The OPEC basket of 14 crudes is trading at $60.49 (22/11/2017). Note that the OPEC basket excludes US and UK crudes (WTI and Brent) and includes Middle Eastern, North African, Southern African and South American crudes (example: Merey, Venezuela). Angolan Girassol (extracted by BP, ExxonMobil and other partners) is part of the basket. The OPEC basket is also known as the ORB (OPEC reference basket).
Wednesday, 22 November 2017
The Carry Trade Concretised - Uridashi Bonds
Uridashi bonds are bonds sold to Japanese household investors, giving returns in a high-yielding currency such as NZD or AUD, which offers a premium over the historically low domestic interest rates in Japan.
This has the follow risks
- credit risk of the issuer
- FX risk, as the foreign currency coupon payments have to exchanged into JPY
They became popular in the 2000s.
2015- market size was USD 33bn.
23/11/2017 - Bank of Japan benchmark rate, -0.1%
23/11/2017 - Reserve Bank of New Zealand benchmark rate 1.75%
23/11/2017 - Reserve Bank of Australia benchmark rate 1.5%
23/11/2017 - Swiss National Bank benchmark rate -0.75% (Banque Nationale Suisse)
The official benchmark rate in Switzerland is the "3m LIBOR CHF".
This has the follow risks
- credit risk of the issuer
- FX risk, as the foreign currency coupon payments have to exchanged into JPY
They became popular in the 2000s.
2015- market size was USD 33bn.
23/11/2017 - Bank of Japan benchmark rate, -0.1%
23/11/2017 - Reserve Bank of New Zealand benchmark rate 1.75%
23/11/2017 - Reserve Bank of Australia benchmark rate 1.5%
23/11/2017 - Swiss National Bank benchmark rate -0.75% (Banque Nationale Suisse)
The official benchmark rate in Switzerland is the "3m LIBOR CHF".
Thursday, 2 November 2017
Sidebar - Real Assets
The Carlyle Group has $40bn of real assets under management ($17bn, or 42%, of which is real estate) as well as energy, including renewable energy, assets. The US real estate team is spread across many metropolitan areas including Los Angeles.
The Fed has a New Future Boss - Jerome Powell
Jerome Powell has been chosen by President Trump to head up the Federal Reserve, replacing Janet Yellen from February 2018 or thereabouts.
The Fed conducts American monetary policy and promotes a stable financial system.
Jerome Powell is a former partner in the Carlyle Group. He is currently a member of the Federal Reserve Board of Governors. His undergraduate degree was in Politics at Princeton. He also has a JD from Georgetown, the second largest law school in the United States.
The Fed conducts American monetary policy and promotes a stable financial system.
Jerome Powell is a former partner in the Carlyle Group. He is currently a member of the Federal Reserve Board of Governors. His undergraduate degree was in Politics at Princeton. He also has a JD from Georgetown, the second largest law school in the United States.
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