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Open-ended debate over US debt ceiling

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8 år sedan

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26 september, 2017

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Open-ended debate over US debt ceiling The additional supply of US Treasuries is likely to be partly offset by rising international demand as the global economy recovers.

ETF Securities Fixed Income Research: Open-ended debate over US debt ceiling

Highlights

The December vote for US government funding bill for fiscal 2018 is critical for investors.

President Trump’s deal with the Democrats reduces the likelihood of a tax reform.
The additional supply of US Treasuries is likely to be partly offset by rising international demand as the global economy recovers.

Open-ended debate over US debt ceiling

The US federal government has already reached the congressionally mandated debt ceiling – the total amount of money that the US government is allowed to borrow to meet its existing legal obligations and interests on its debt – of US$19.8tn in November last year.

In November 2015, the US Congress suspended the debt limit through March 2017. Since March, the US Treasury has been using tax revenues and funds that do not count toward federal debt, the so-called “extraordinary measures”, to meet its legal obligations. These measures were expected to be exhausted by October 2017, forcing President Trump and the Congress to negotiate a deal.

Early in September, President Trump made an unexpected deal with the Democrats to raise the debt limit, including US$15bn of emergency aid after hurricane Harvey hit the Texan coast in late August. The move also temporarily funds the government into early December, so-called “continuing resolution”.

However, the Appropriations funding legislation for 2018 has to pass the Congress vote on December 8 to avoid a government shutdown and a possible default. Therefore, while the debt ceiling debate might go beyond next year’s midterm elections, the December vote is critical for investors.

We believe Trump’s intentions go beyond the immediate need for funding, as he pledged to ”explore ways to depoliticize it [debt ceiling]”, ultimately questioning its legitimacy. For a new long-term debt ceiling bill to pass it needs 60 votes in the Senate. Because the Republicans hold only a slim minority in Senate with 52 seats, a bipartisan deal will be required. The last deal made by Trump with the Democrats suggests the President will compromise with its own party, notably on federal spending cuts, to ensure the debt ceiling will be increased. The political consequences of such a deal has threatened Trump’s credibility within its own camp and his plans on infrastructure spending and tax reforms.

Renewed fears of US fiscal cliff

The “safe haven” status of the US Treasury bills is at stake. The rating agencies Standard & Poor’s and Moody’s warned that a failure by Congress to increase the debt limit in a timely manner would likely imply a review of the current AAA (highest level) rating of the US sovereign debt. The Federal Reserve Bank of Philadelphia’s Partisan Conflict Index has risen to record highs in August along with the risk premiums on US Treasury short-term securities.

Market angst over the debt ceiling has significantly diminished since President Trump signed the temporary budget resolution earlier this month but we expect it to return as we approach December. The spread between 1- and 3-month Treasury bills has tightened after climbing as high as 27bps early September as investors repriced higher the default risk just before President Trump signed the debt relief bill.

In the worst-case scenario, a US default would trigger a disastrous financial crisis as US Treasuries account for about two-thirds of the US repo market. This market played a key role in the recent financial crisis as the difficulties for Bear Stearns and Lehman Brothers to borrow in this market led to their collapse. In the past, the US Congress has always lifted the debt ceiling to avoid default, although often at the very last minute such as after the government shut-down in October 2013.

Increased supply of US Treasuries

The Congressional Budget Office (CBO) projects the US deficit to rise from 3% of GDP to 8% of GDP over the next decade, with growth in revenues outpaced by growth in spending for federal benefits programs (Medicare and Medicaid) due to the aging US population and higher service costs on the government’s debt. Furthermore, the CBO estimated that in the absence of a change in the fiscal trajectory, the public debt would rise from 77% today to 150% of the GDP in three decades.

President Trump’s intended tax cuts and increased military spending would have an even greater impact on the US debt, in particular if there were no spending cuts elsewhere notably in benefits programs unchanged. For example, the tax plan Trump proposed during the campaign would add about US$7.2tn to the debt over a decade, as estimated by the Tax Policy Center.

Those accumulating deficits would significantly increase the issuance of US Treasury bonds and risk premiums are likely rise along with it due to degradation of the fiscal outlook. Some FOMC member such as former Fed’s Vice President Stanley Fischer have warned that “uncertainty about the outlook for government policy in health care, regulation, taxes, and trade can cause firms to delay projects until the policy environment clarifies” and ultimately hurts economic growth. The increased financing needs coupled to the Fed’s normalisation of its balance sheet potentially followed by other central banks might result in a higher supply of Treasuries in years to come.

The US Treasury market is concentrated, with China being the second biggest buyer, after Japan, holding just above US$1tn of US Treasuries (20% of the foreign holding of US government bonds). After declining since 2014, China’s holdings of US Treasuries have strongly rebounded since the beginning of the year as Chinese economy has recovered, the Renminbi appreciates and capital outflows have eased. We expect Chinese holdings of Treasuries to continue to grow towards US$1.3tn – total holdings prior to the currency devaluation in August 2015.

In addition, investors have reported high quality liquid assets (HQLA) shortage resulting from central banks’ large-scale purchase of government bonds. With improving economic conditions, banks assets are likely to rise in tandem with the demand for HQLA to meet the capital requirements under Basel III. Overall, we expect this additional supply to be partly offset in the medium term by an increasing international demand as the global economy recovers.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

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Gold’s rally may signal what’s ahead for BTC

Publicerad

17 timmar sedan

den

21 april, 2025

Redaktionen

Amid ongoing market volatility, gold has surged to a new record high above the $3,400 threshold, fueled by growing demand for safe-haven assets. With a YTD performance that places it as the top-performing major asset class, gold has benefitted from concerns over inflation, macro uncertainty, and a weakening US dollar. Investors have sought protection in stores of value, driving strong inflows into gold despite mixed equity performance and sluggish economic indicators. This shift reflects a broader trend that began in 2023, when both gold and bitcoin started showing strong price momentum amid rising global instability.

As digital assets continue to gain legitimacy in global finance, bitcoin increasingly stands alongside gold as a modern alternative store of value. Given gold’s significantly larger market cap, it’s reasonable to expect that fundamentals-driven triggers—such as the opening of the US institutional market and the establishment of a BTC strategic reserve—could have an even more pronounced impact on bitcoin’s price trajectory. With the same macro tailwinds now propelling gold, BTC may be poised for an outsized rally in the coming months as investors seek resilient, decentralized hedges against systemic risk.

Source: Hashdex Research with data from CF Benchmarks and Bloomberg (from Dec 31, 2022, to April 20, 2025). The last price for bitcoin and gold is from April 20 as the month is not closed yet.

MARKET HIGHLIGHTS

Apr 14 2025 – Apr 20 2025

Powell signals easing of crypto rules for banks

• Federal Reserve Chair Jerome Powell signaled the potential easing of crypto-related regulations applicable to banks.

• Such a shift could facilitate greater institutional adoption of digital assets globally, as cryptocurrencies become more closely integrated into the traditional financial system of the world’s largest economy.

Arizona advances crypto reserve legislation

• Arizona’s Senate Bill 1373, which seeks to establish a state-managed digital asset reserve, has passed a House committee.

• This development positions Arizona as a leader in state-level crypto initiatives and may set a precedent for other states to follow.

Hyperliquid dominates on-chain perp market

• It was recently disclosed that the decentralized exchange Hyperliquid has captured 70% of the on-chain perpetual contracts market.

• This underscores the growing relevance of perpetual contracts for this protocol within DeFi and signals the emergence of another potential blue-chip in the digital assets space.

• The emergence of solid players in this niche could trigger a shift from centralized derivatives platforms to decentralized alternatives highlights the evolving landscape of crypto trading.

MARKET METRICS

The Nasdaq Crypto Index™

NCI™ constituents delivered mixed results last week. SOL (+6.9%) and LINK (+6.1%) stood out as top performers, while ADA lagged behind with a 3.3% decline—underperforming all other constituents. This divergence likely reflects a neutral macro backdrop, combined with token-specific catalysts, such as software company Janover (JVNR) purchasing $10.3 million of SOL as part of its Solana-focused digital asset treasury strategy.

Source: Hashdex Research with data from Messari (from April 13, 2025 to April 20, 2025).

MARKET METRICS

The Nasdaq Crypto Index™

This week, the NCI™ had relatively flat performance, rising 0.8% and helping it close the gap with the Nasdaq 100 and S&P 500, which saw declines of 2.3% and 1.5%, respectively. The standout performer, however, was gold — the top-performing asset class of the year — which surged 4.7%, reaching a new record high above $3,400 amid rising global uncertainty. Gold’s strong performance may signal that other store-of-value assets, such as bitcoin, could see upward momentum soon, as it continues to lag behind gold YTD.

Source: Hashdex Research with data from CF Benchmarks and Bloomberg (from December 31, 2024 to April 20, 2025).

MARKET METRICS

Indices tracked by Hashdex

Source: Hashdex Research with data from CF Benchmarks and Vinter (from April 20, 2024 to April 20, 2025).

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HANetfs kommenterar guldpriset som når nya rekordnivåer

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18 timmar sedan

den

21 april, 2025

Redaktionen

Tom Bailey, analyschef på HANetf, kommenterar nedan om guldpriset som når nya rekordnivåer: ”Guldpriset har återigen nått nya rekordnivåer, då investerare ser ädelmetallen som en säkring mot risk. Guld har blivit en ö av stabilitet i en till synes mer kaotisk värld. Trumps tullar utlöste prisfall på aktier och obligationer, vilket lämnade guld som en säker hamn. Traditionellt sett kommer en kris att se investerare flockas till amerikanska tillgångar, särskilt obligationer, med tanke på landets rykte om säkerhet och stabilitet. Men med tanke på att Trumps tullar av vissa ses som ett angrepp på den efterkrigsledda USA-ledda ordningen, utmanas detta rykte. Guld blir därför en gynnad tillgång. Efter en fantastisk prestation 2024 visar guld potential att bibehålla detta momentum 2025, och vi förväntar oss ytterligare uppsida härifrån.

”Sedan början av året har europeiska investerare lagt till 4 miljarder dollar till sina guld-ETC-innehav.” Det representerar en markant skillnad jämfört med förra året, då guld-ETCer registrerade utflöden. Vi har också sett en ökning av flödena i våra valutasäkrade guld-ETCer hos The Royal Mint, vilket tyder på att investerare vill öka sin guldexponering men minska sin exponering mot dollarrörelser.

”HANetfs The Royal Mint Responsibly Sourced Physical Gold ETC (RM8U), och dess valutasäkrade versioner (RMEH i euro och RMPH i pund), erbjuder ett unikt sätt för investerare att få tillgång till guldmarknaden. RM8U backas upp av ansvarsfullt anskaffat guld, inklusive återvunnet guld, och det fysiska guldet förvaras säkert i The Royal Mints valv, vilket ger oöverträffad sinnesro. Som Storbritanniens äldsta företag med över 1 100 års historia ger The Royal Mint en nivå av förtroende och arv som saknar motstycke på ETC-marknaden.”

Handla RM8U ETC

HANetf The Royal Mint Physical Gold ETC Securities (RM8U ETC) är en europeisk börshandlad fond som handlas på bland annat London Stock Exchange och tyska Xetra.

Det betyder att det går att handla andelar i denna ETC genom de flesta svenska banker och Internetmäklare, till exempel Nordnet, SAVR, DEGIRO och Avanza.

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BE27 ETF bara företagsobligationer med förfall 2027

Publicerad

19 timmar sedan

den

21 april, 2025

Redaktionen

Invesco BulletShares 2027 EUR Corporate Bond UCITS ETF EUR Dis (BE27 ETF) med ISIN IE000XOS4OJ6, försöker följa Bloomberg 2027 Maturity EUR Corporate Bond Screened-index. Bloomberg 2027 Maturity EUR Corporate Bond Screened Index följer företagsobligationer denominerade i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller under det angivna året (här: 2027) i indexet. Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade. Löptid: december 2027 (Denna ETF kommer att stängas efteråt).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,10 % p.a. Invesco BulletShares 2027 EUR Corporate Bond UCITS ETF EUR Dis är den billigaste ETF som följer Bloomberg 2027 Maturity EUR Corporate Bond Screened index. ETFen replikerar resultatet för det underliggande indexet genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Ränteintäkterna (kuponger) i ETFen delas ut till investerarna (kvartalsvis).

Invesco BulletShares 2027 EUR Corporate Bond UCITS ETF EUR Dis är en mycket liten ETF med tillgångar på 2 miljoner euro under förvaltning. ETF lanserades den 18 juni 2024 och har sin hemvist i Irland.

Produktbeskrivning

Invesco BulletShares 2027 EUR Corporate Bond UCITS ETF Dist syftar till att tillhandahålla den totala avkastningen för Bloomberg 2027 Maturity EUR Corporate Bond Screened Index (”Referensindexet”), minus avgifternas inverkan. Fonden har en fast löptid och kommer att upphöra på Förfallodagen. Fonden delar ut intäkter på kvartalsbasis.

Referensindexet är utformat för att återspegla resultatet för EUR-denominerade, investeringsklassade, fast ränta, skattepliktiga skuldebrev emitterade av företagsemittenter. För att vara kvalificerade för inkludering måste företagsvärdepapper ha minst 300 miljoner euro i nominellt utestående belopp och en effektiv löptid på eller mellan 1 januari 2027 och 31 december 2027.

Värdepapper är uteslutna om emittenter: 1) är inblandade i kontroversiella vapen, handeldvapen, militära kontrakt, oljesand, termiskt kol eller tobak; 2) inte har en kontroversnivå enligt definitionen av Sustainalytics eller har en Sustainalytics-kontroversnivå högre än 4; 3) anses inte följa principerna i FN:s Global Compact; eller 4) kommer från tillväxtmarknader.

Portföljförvaltarna strävar efter att uppnå fondens mål genom att tillämpa en urvalsstrategi, som inkluderar användning av kvantitativ analys, för att välja en andel av värdepapperen från referensindexet som representerar hela indexets egenskaper, med hjälp av faktorer som index- vägd genomsnittlig varaktighet, industrisektorer, landvikter och kreditkvalitet. När en företagsobligation som innehas av fonden når förfallodag kommer kontanterna som fonden tar emot att användas för att investera i kortfristiga EUR-denominerade skulder.

ETFen förvaltas passivt.

En investering i denna fond är ett förvärv av andelar i en passivt förvaltad indexföljande fond snarare än i de underliggande tillgångarna som ägs av fonden.

”Förfallodag”: den andra onsdagen i december 2027 eller sådant annat datum som bestäms av styrelseledamöterna och meddelas aktieägarna.

Handla BE27 ETF

Invesco BulletShares 2027 EUR Corporate Bond UCITS ETF EUR Dis (BE27 ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och Borsa Italiana.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.

Börsnoteringar

Börs	Valuta	Kortnamn
Borsa Italiana	EUR	BE27
XETRA	EUR	BE27

Största innehav

Namn	CUSIP	ISIN	Kupongränta	Vikt %
Volkswagen International Finance N 1.875% 30/03/27	N93695MD8	XS1586555945	1,875	2,94%
Enel Finance International NV 0.375% 17/06/27	N30706EJ5	XS2066706909	0,375	2,10%
RCI Banque SA 4.75% 06/07/27	F7S48DRZ9	FR001400B1L7	4,750	1,65%
Intesa Sanpaolo SpA 4.375% 29/08/27	T5R13TRQ5	XS2673808486	4,375	1,62%
Pernod Ricard SA 3.75% 15/09/27	F7202GAN9	FR001400KPB4	3,750	1,59%
Societe Generale SA 4% 16/11/27	F8586SEP8	FR001400DZM5	4,000	1,59%
Kering SA 3.625% 05/09/27	F5433LBY8	FR001400KHZ0	3,625	1,58%
Vonovia SE 4.75% 23/05/27	D9581TAX8	DE000A30VQA4	4,750	1,58%
Nestle Finance International Ltd 3.5% 13/12/27	L6S79FP42	XS2595410775	3,500	1,58%
Credit Agricole SA 3.375% 28/07/27	F2R125DC6	FR001400E7J5	3,375	1,57%