Andrew Hollins brings you a round-up of the latest Corporate Treasury Data Insights, including the Fed’s efforts to manage inflation, the likelihood of a recession in the US and UK, and the topics that will shape the sustainable finance agenda in 2023 and beyond.
- With inflation rates in flux, interest rates are likely to follow suit. Refinitiv’s Interest Rate Probability app provides Corporate Treasurers insight into the likelihood, timing and magnitude of changes to central bank policy rates.
- The UK has avoided two consecutive quarters of negative growth – one way of defining a recession. Using a variety of equity market signals and measures of consumer and business confidence, our partners at Fathom Consulting assess the situation in the U.S.
- We look at which trends are top-of-mind for those in the fintech and sustainable finance spaces.
For more data-driven insights in your Inbox, subscribe to the Refinitiv Perspectives weekly newsletter.
Chart of the Month
Every year the global team at Reuters Breakingviews dust off their crystal balls, and with some previous successes (and misses) are brave enough to predict the future. The 2023 Breakingviews Predictions were published earlier this year under the title: Scanning the Horizon: Scenarios for 2023.
The very first prediction in this year’s publication relates to a shift in inflation goalposts by central bankers. Will stubborn inflation force their hands? Some monetary authorities are facing price increases not seen since the 1980s, with inflation in the eurozone five times the ECB’s target in November.
With inflation rates in flux, interest rates are likely to follow suit. As in 2022, managing interest rate risk remains high on corporate treasury agendas.
How can Refinitiv’s Interest Rate Probability app help you manage interest rate risk?
The Refinitiv Interest Rate Probability app (IRPR) provides insight into the likelihood, timing and magnitude of changes to central bank policy rates at future central bank meeting dates.
The app displays a probability distribution table containing all possible future values for the target rate at each meeting date.
Calculating probabilities based on expected effective rates has a good record for reliably predicting changes in central bank policy and managing interest rate risk.
Expectations of disinflation
Is inflation expectations beginning to shift? Investors in the inflation swaps market are expecting sharp disinflation across the major economies this year. UK inflation declined by more than expected last month, triggering a sharp fall in sterling as investors reduced their bets on further rate hikes by the Bank of England. See the chart.
In the case of the U.S., market pricing through last month implied a fall of some five percentage points from 7.1 percent in November 2022 to just over 2.0 percent in November 2023. See the chart.
News in Charts: Can the U.S. avoid recession?
Recent data suggest the risk of recession is lower than previously thought, but it remains our central case for the UK and the EU. The UK posted zero growth in Q4, avoiding two consecutive quarters of negative growth, which is one way of defining a recession. So, has the US avoided recession?
How will sustainable finance evolve in 2023?
With 2023 gearing up to be a momentous year for sustainable finance, this blog explores the key topics that will help to shape the industry now and into the future. What are the five topics that could shape the sustainable finance agenda in 2023 and beyond? Read on.
How are fintech combating anti-money laundering challenges?
A recent white paper from Refinitiv – produced in collaboration with global consultancy, FINTRAIL – discusses the key elements currently shaping the evolving fintech space and the key trends that will be shaping the fintech landscape in 2023. Discover what anti-money laundering challenges fintech are facing.
Refinitiv Corporate Treasury Newsbeat
- LSEG and Thomson Reuters announce joint commitments to enhance the value of financial and markets news service as part of long-term partnership | LSEG (London Stock Exchange Group) and Thomson Reuters have announced a multi-faceted expansion of their long-term partnership, sharing a number of joint commitments to enhance the value of financial and market news services to LSEG customers. Read more here.
- Refinitiv commences publication of new versions of USD IBOR Cash Fallbacks | Refinitiv has commenced publication of new USD IBOR Cash Fallbacks that are consistent with the Federal Reserve Board and ARRC benchmark replacements for FHFA-regulated-entity contracts (except Federal Home Loan Bank advances) and Federal Family Education Loan Program (FFELP) Asset-Backed Securitizations (ABS). Read more here.
- Refinitiv plans to supplement existing fallback rates with new Federal Reserve Board selected benchmark replacements | In Q1 2023, Refinitiv intends to publish new USD IBOR Cash Fallbacks that are consistent with the Federal Reserve Board’s benchmark replacements for FHFA-regulated-entity contracts (except Federal Home Loan Bank advances) and Federal Family Education Loan Program Asset-Backed Securitizations. Read more here.