Market roundup | Yen big winner as central banks trim holdings
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Central banks may be a substantial part of the reason why the dollar has come crashing down so rapidly this year, and for the surprising rallies in the yen and the Aussie. Data from the International Monetary Fund (IMF) shows that the total central bank reserves pile rose 1.8% to $10.9 trillion. Reserve managers with a record 81% of those holdings told IMF which currencies they are invested in.
Speaking of the yen, it stands out along with the Aussie as the big mover in the first quarter when it comes to a share in reserves—and the same goes for their performance in the period. They each had a much quieter second quarter, so it is possible central banks cooled on them and instead decided the euro (up 7.3%) was the place to be. Bloomberg
Euro area sees monetary accommodation ending
Last week, bond yields in the UK and Germany surged by over 20 basis points on fears the massive monetary accommodation by central banks in the euro area is about to end.
These fears emerged after a series of comments by central bankers; notably that of Mario Draghi, European Central Bank chief. Draghi said deflation has been replaced by inflation in the region although he tempered his stance by also saying that prudence is essential while unwinding accommodation. Bank of England governor Mark Carney also suggested monetary tightening is around the corner. This puts to rest the occurrence of negative yields and the move in only going to be upwards from here.
Active managers get growth boost in the US
Active managers of growth portfolios did well in the US this year. More than 70% of the active growth managers outperformed their benchmarks in the large, medium and small-cap stocks through May, global asset management firm AllianceBernstein Lp said in a blog citing Morningstar data.
Comparatively, only 6% of active managers in the large-cap growth equities beat their benchmarks last year. “Market conditions today warrant an active approach, in our view. Valuations are relatively high and volatility is very low,” AllianceBernstein said in the blog.