March 24, 2023
United States:
Fed Swaps Fully Price Out a Rate Increase in May as Yields Slide
Traders further downgraded the odds of any further rate increases by the Federal Reserve and ramped up bets on rate cuts beginning in June.
Swap contracts referencing Fed meeting dates repriced to levels consistent with the US central bank leaving its policy rate unchanged in May. The Friday move comes two days after the central bank’s ninth straight rate increase, to a range of 4.75% to 5%.
Europe:
Deutsche Bank Slumps in Resurgence of European Bank Worries
Deutsche Bank AG became the latest focus of the banking turmoil in Europe as ongoing concern about the industry sent its shares slumping the most in three years and the cost of insuring against default rising.
The bank, which has staged a recovery in recent years after a series of crises, said Friday it will redeem a tier 2 subordinated bond early. Such moves are usually intended to give investors confidence in the strength of the balance sheet, though the share price reaction suggests the message isn’t getting through.
Asia:
India Raises Tax on Stock Options to Dampen Retail Frenzy
India raised the transaction tax on certain equity derivative products, a move that may help reign in the frenzied activity in such instruments from retail investors.
Selling an option on a security will attract a tax of 0.0625% from April 1, compared with 0.05% previously, a Finance Ministry official told reporters after amendments to the Finance Bill were approved by parliament on Friday. Tax on sale of a futures contract will be 0.125% against 0.01% now.
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