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On September 16th, Deutsche Banks analysis of ETFs revealed that overseas investors are significantly reducing their dollar exposure at an "unprecedented rate" by using currency hedging when purchasing U.S. stocks and bonds. Citing data from over 500 funds, George Saravelos, the banks global head of FX research, noted that for the first time this decade, inflows into dollar-hedged ETFs buying U.S. assets have exceeded inflows into non-hedged funds. Saravelos believes this hedging behavior explains why the dollar has remained weak even as international investors poured money back into U.S. assets after Trumps tariffs disrupted markets earlier this year. At the time, there was speculation that trade war risks could dampen investor interest in U.S. stocks, bonds, and the dollar itself. Saravelos wrote: "The FX implication is clear: foreign investors may have returned to U.S. assets (albeit at a slower pace), but they are not willing to take on the dollar exposure that comes with it. For every dollar-hedged asset purchased, an equal amount of currency is sold to eliminate the FX risk."On September 16, the British government announced that Royal Air Force fighter jets will carry out air defense missions over Poland. The British Ministry of Defense stated that British fighter jets will join allied forces from Denmark, France and Germany to strengthen NATOs defense capabilities.On September 16th, the Swiss Federal Institute of Technology in Lausanne (EPFL), the Swiss Federal Institute of Technology in Zurich (ETH Zurich), and the Swiss National Supercomputing Center (CSCS) jointly released a large-scale open-source language model called Apertus. Apertus, meaning "open" in Latin, truly takes openness to its extremes. While major American models like OpenAIs GPT series, Metas Llama, and Anthropics Claude still play with "data black box" magic, Apertus makes its entirety, from model weights and architecture to training code, data recipes, and even complete training process documentation, completely public, without any hidden secrets.French Central Bank Governor François Villeroy de Villeroy: France should continue to maintain its deficit target at 3% in 2029.French Bank Governor Villeroy de Villeroy: The former Prime Ministers budget plan can be improved in terms of tax fairness.

Asian Shares Fall As Investors Analyze ECB Decisions

Charlie Brooks

Jun 10, 2022 11:14

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Asia-Pacific equities were predominantly lower on Friday morning. Ahead of U.S. inflation statistics, investors are analyzing the European Central Bank's signals for potential interest rate hikes.


At 10:49 PM ET (2:49 AM GMT), the Nikkei 225 was down 1.41 percent, and the KOSPI was down 1.08 percent.


In Australia, the ASX 200 index declined 0.99%.


The Hang Seng Index in Hong Kong fell 0.89 percent.


As a result of the Chinese government's response to a Bloomberg article, the sub-index for Hong Kong-listed IT giants opened 2.9 percent lower. Alibaba (NYSE:BABA) Group Holding Ltd.'s U.S.-listed shares plummeted after the China Securities Regulatory Commission dismissed a Bloomberg report that it was exploring a listing resurrection for the fintech company.


The Shanghai Composite rose 0.10 percent, but the Shenzhen Component rose 0.02 percent.


China's manufacturing factory-gate inflation slowed to its worst pace in 14 months in May, according to previously released data. In May, the producer pricing index (PPI) increased by 6.4% annually, compared to an increase of 8% in April. The reading was the lowest since March 2021. The cooling could be attributable to decreased demand for steel, aluminum, and other industrial commodities as a result of COVID-19-related production disruptions.


Meanwhile, the consumer price index (CPI) increased 2.1% annually.


The European Central Bank (ECB) announced on Thursday that it will prepare a quarter-point increase in interest rates in July and a larger increase in the fall if inflation remains high. Inflation in the eurozone has already surpassed 8 percent.


Short-term U.S. Treasury rates are near all-time highs for 2022 due to a selloff in the euro-area bond market in response to ECB rate rise indications.


The ECB also announced that net asset purchases will halt on July 1, 2022.


Now, investors have moved their attention to U.S. inflation data, due later in the day, for additional hints on the course of interest rate hikes by the U.S. Federal Reserve.


Bloomberg quoted Charles Schwab (NYSE:SCHW) & Co.'s chief financial strategist Liz Ann Sonders as saying, "We've reestablished the inverse relationship between bond rates and stock prices."


"There is a little more discussion, or whispering, about the CPI being a touch above forecasts. Add to that the ECB's more hawkish posture, and you get another bad day."


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