Latest news with #FidelityInternational
Mint
2 hours ago
- Business
- Mint
Weak UK Jobs Data Sends Down Pound and Boosts BOE Rate Cut Bets
The pound fell and UK bonds rallied as traders added to bets on interest-rate cuts from the Bank of England after data showed a sharp deterioration in the labor market. Sterling fell as much as 0.7% to $1.3456 on Tuesday, heading for its worst day in a month and leading losses among Group-of-10 currencies. Gilts outperformed euro-area peers, with yields down five to six basis points across the curve. UK employment plunged by the most in five years and wage growth slowed more than forecast, data released on Tuesday showed. That increased traders' conviction that the BOE will deliver two more quarter-point rate cuts this year. 'The UK labour market does seem to be weakening at the margin,' said Mike Riddell, a portfolio manager at Fidelity International, who has a small long position in gilts up to the 10-year maturity and a moderate short position in the pound. If the weakening continues at this pace, the BOE will 'resort to quarterly cuts,' he added. The BOE has already lowered borrowing costs twice this year, bringing the benchmark to 4.25%. Money markets are now fully pricing another reduction in September and see a 90% chance of anoter move by December, up from about 60% on Monday. Gilt yields fell six to seven basis points across the curve. The two-year rate — the most sensitive to monetary policy chances — dropped seven basis points to 3.94%, the lowest in a month. Expectations of lower interest rates and falling bond yields reduced the appeal of the pound, which hit its lowest level against the euro in nearly three weeks. That marks its strongest reaction to a UK payrolls report since September. Still, sterling is one of the highest yielding G-10 currencies and has been bolstered by an uptick in risk sentiment and demand for carry trades. The currency last week touched its strongest level since February 2022. 'The dovish repricing of BOE rate-cut expectations takes some of the shine of the pound,' said Lee Hardman, a senior currency analyst at MUFG. But it's 'unlikely on its own to reverse the recent upward trend unless the BOE signals it is more willing to speed up rate cuts.' What Bloomberg Strategists Say... 'While both headline and private-wage growth slowed, investors need to keep in mind that numbers above 5% are patently incompatible with the idea of 2% inflation, so it's premature to conclude that the path is clear for continued rate cuts.' — Ven Ram, Macro Strategist, Dubai Options markets indicate traders are increasingly divided on the pound's near-term direction. One-week risk reversals — which reflect the difference in demand for bullish versus bearish bets — are trading near parity, signaling uncertainty after six straight days of waning upside momentum. While the softer employment data may help ease concerns among BOE policymakers that pay rises are fueling inflation, consumer price growth remains sticky at 3.5%, above the target. The data 'puts the BOE in an exceptionally challenging situation,' said Zara Nokes, global market analyst at JP Morgan Asset Management. The labor market is 'clearly deteriorating' but inflation is still-elevated and that could keep the BOE 'firmly on hold' until there's more evidence of cooling inflation. The pound's slide helped boost UK stocks, with the export-heavy FTSE 100 index set to close at a record high. About 75% of revenue for the gauge's companies comes from abroad. With assistance from Sujata Rao. This article was generated from an automated news agency feed without modifications to text.
The National
4 days ago
- Business
- The National
Bond market is sending out distress signals, but investors don't need to panic
Investors tend to fixate on the stock market, but there are times when the bond market cries out for our attention, too. That's definitely the case today, because it's sending out distress signals. The global bond market is actually the bigger of the two, worth about $140 trillion, compared with $115 trillion for equities. And when bond yields surge, the ripple effects can shape everything from mortgage rates to stock valuations and government solvency. In recent weeks, yields on long-dated US government bonds, or Treasuries, have jumped to their highest levels since the global financial crisis. Investors are demanding more interest to lend to governments awash with debt, at a time when sticky inflation deters central bankers from slashing interest rates. Tom Stevenson, investment director at Fidelity International, said the US 30-year Treasury yield climbed above 5 per cent in May as markets recoiled at US President Donald Trump's new tax cut proposals, known as the 'Big, Beautiful Bill'. That package alone could add more than $3 trillion to US debt, which already stands at a mountainous $36 trillion. It could lift the country's debt-to-GDP ratio from about 100 per cent today to 125 per cent within a decade. 'The prospect of higher borrowing and unsustainable debt servicing costs led Moody's to downgrade the US prized triple-A credit rating. Debt interest payments, already at $880 billion a year, will rise further as a result,' Mr Stevenson says. He sees trouble ahead. 'The US has lived beyond its means thanks to strong global demand for its debt. But confidence is beginning to wane, with investors seeking to diversify elsewhere.' Vijay Valecha, chief investment officer at Century Financial in Dubai, says a similar story is unfolding elsewhere. In Japan, 30-year yields have climbed towards 3 per cent following the weakest demand in a decade. In the UK, 30-year gilt yields briefly touched 5.55 per cent as government borrowing soared. Yet at the same time, stock markets have rallied after Mr Trump paused his 'liberation day' trade tariffs on April 9, Mr Valecha says. 'US markets enjoyed a V-shaped recovery with the S&P 500 up almost 20 per cent, while the tech-focused Nasdaq rose 27 per cent.' The UK's FTSE 100 and Japan's Nikkei 225 are both trading above key technical levels, he adds. But investors shouldn't assume this will continue. 'Global government debt is rising fast, pushing 95 per cent of GDP," he says. "If this continues, debt could reach 100 per cent of GDP by the end of the decade.' Global inflation is also proving sticky, driving up interest rates and yields. That's a warning shot for stock markets. Mr Valecha flags up something called the 'equity risk premium', which measures the difference between what investors can expect from shares and the yield from lower-risk bonds. 'As bond yields rise that gap gets smaller, it becomes harder to justify paying high prices for shares, especially when valuations are already stretched.' The equity rally may continue but it will be bumpier, and careful stock picking is required, Mr Valecha says. Near-zero interest rates Near-zero interest rates allowed governments to borrow freely in the past decade, but that era is now over, says Charu Chanana, chief investment strategist at Saxo Bank. 'Rising sovereign debt is arguably one of the most underappreciated long-term risks to global financial stability.' If interest rates remain elevated, this could crowd out public investment, put pressure on social spending and, ultimately, reduce economic dynamism, she says. High debt levels also suppress growth, which fuels more borrowing in a vicious cycle. 'The fiscal space to respond to future crises is being eroded,' Ms Chanana says. The risk is amplified in emerging markets, many of which have borrowed heavily in US dollars, making debt harder to service if their currencies weaken. Corporate earnings remain resilient but the equity rally may have run its course, she says. 'Further equity upside may require either stronger earnings growth or a clearer path towards monetary easing.' While cash and bonds offer short-term comfort, don't overdo the flight to safety. Ms Chanana warns that higher inflation will chip away at the real return. 'Increased exposure to cash or bonds may not be sufficient to preserve or grow wealth over the long term.' Instead, she favours a diversified approach. 'Equities, particularly those tied to structural themes like AI and digital infrastructure, continue to offer compelling growth opportunities.' While gold has stood bright as a hedge against inflation and economic and political volatility, it also has one big drawback as yields rise – it doesn't pay interest or dividends. Higher yields increase the opportunity cost of holding gold, but that hasn't deterred investors yet, with the price up 26 per cent this year. 'Gold still plays a strategic role as a hedge against systemic risk, currency debasement and geopolitical uncertainty,' Ms Chanana says. Should investors turn back to bonds? Tony Hallside, chief executive of Dubai-based brokers STP Partners, agrees that gold still has a role to play in a diversified portfolio but suggests rebalancing towards high-quality fixed income. 'Investment-grade bonds, especially with shorter durations, provide attractive yields while preserving capital. They offer stability and liquidity when markets turn turbulent." 'That doesn't mean abandon stocks entirely, but it does mean being more selective." Amol Shitole, head of fixed income at Mashreq Capital, sees an opportunity in emerging market bonds, particularly in the Middle East and North Africa. Mena bonds continue to enjoy haven status due to their superior credit quality, he says. 'We favour the UAE, Qatar, Oman and Morocco for their strong fundamentals and ongoing structural reforms.' He says Mashreq remains underweight on Saudi Arabia and Bahrain, citing fiscal risks and tight valuations. He doesn't expect US yields to spiral uncontrollably. 'We believe US Treasuries will continue to benefit from flight-to-safety demand during slowdowns or uncertainty.' In equities, he sees opportunities in small caps and value stocks, particularly as higher interest rates pressure growth sectors. 'A well-diversified multi-asset portfolio including equities, fixed income, gold and alternatives can yield attractive returns of 7 per cent to 7.5 per cent a year.' There is little prospect of a return to ultra-low interest rates, but at least this means bond investors are being rewarded gain. Equity investors must be more careful, but strong companies still offer solid long-term value. Gold remains a valid hedge. As ever, diversification is the best defence.
Time of India
6 days ago
- Business
- Time of India
What's tech-ing in Delhi-NCR! powering global financial services
AI image (TIL creatives) Long before global capability centres (GCCs) became a buzzword, American and European banks, insurance companies and conglomerates such as GE were setting up back offices in Delhi-NCR to do a range of business processes related to financial services. American Express and Bank of America were among the early ones. Some of those captive units have not only expanded but many more have followed, to run global banking and insurance operations out of their units here. Today, the Delhi-NCR region supports the who's who of global finance – Fidelity International, NatWest, Barclays, Macquarie, BlackRock, MetLife, Guardian Life, Sun Life and others. Even niche players like Baker Tilly ASA, specialist in tax services, and Osttra, which offers post trading services, are banking on talent here to run global operations. They have established largescale GCCs to support tasks like loan processing, financial risk modelling, compliance, data analytics, AI-led research, HR functions and building mobile apps. Some have offices in multiple cities in India. But for more than 25 major global players in banking, insurance, and asset management, NCR is either the sole India hub or their largest base outside home markets. Lots of CAs, including from Jaipur A mix of talent availability at scale, cost efficiency, and connectivity has made Delhi-NCR attractive. 'Delhi-NCR today boasts of the country's largest concentration of chartered accountants and financial analysts – key roles in banking and insurance ecosystems,' says Ajay Sethi, managing partner at Baker Tilly ASA India, part of Baker Tilly International, a global top10 accounting network. Jaipur, 250 km away, is a major hub for chartered accountancy (CA) preparation and practice, and is a big source of such talent. Cost advantage is also significant. 'Work that costs $100 in New York can be done for $30-$35 in Noida or Gurugram,' says Manoj Marwah, financial services GCCconsulting leader at EY India. London-headquartered Barclays has operations in five Indian cities including Noida. 'India is home to Barclays' largest workforce outside the UK,' says Praveen Kumar, CEO of Barclays Global Services India. The Noida team contributes to AI-led transformation and is exploring GenAI use cases from code generation to data automation and digital assistants to improve speed, productivity and personalisation. 'We've led innovations like QR code adoption and cloud transformation while our analytics capabilities continue to sharpen our understanding of customer behaviour and emerging market trends,' Kumar says. Fidelity International, which offers investment solutions and services to more than 2.8 million customers globally, set up a GCC in Gurugram in the early 2000s, and now has 4,500 people across Gurugram, Bengaluru and Mumbai. Upasna Nischal, India site head, says India is Fidelity International's largest location outside the UK. 'Our centres of excellence for areas like AI and tax are based here,' she says. Global functions including process excellence, HR information systems, data management and investment research are also based out of India. For UK-based post-tradeservices provider Osttra, the Delhi-NCR team is the largest globally. Osttra provides services to global banks and investment managers. Babu Thiagarajan, head of technology for India, says Osttra's Gurugram office is responsible for core product development, client services, and global operations across its 9,000-member network. The Osttra team processes over 80 million trades a month. The GCC led the creation of an AI model based ₹dynamic credit distribution capability' that improves credit allocation in post-trade finance. 100k BFSI GCC employees in NCR EY India estimates that DelhiNCR hosts around 100,000 employees in financial services GCCs, roughly 18% of India's GCC headcount, second only to Bengaluru (30%). Delhi-NCR centres handle a rich mix of tasks: about 65% in operations and 35% in technology. Talent hired includes risk analysts, PhDs in economics developing credit scoring models, etc, and thousands in compliance, finance and procurement roles. 'There are a lot of patents filed related to financial risk modelling and analytics from this region,' notes Marwah. The region is also seeing increasing demand for mobile app developers and talent that can help improve user interface and user experience (UI/UX). Sethi of Baker Tilly ASA India says employee attrition rates in the region are also lower – averaging 9.1% versus the national average of 18%. 'The narrative is shifting,' says Sethi. 'NCR is no longer just a low-cost back office. It's a centre of excellence that powers the global financial engine.'
Business Times
22-05-2025
- Business
- Business Times
Rajeev Mittal appointed CEO of Prudential's asset management arm
[SINGAPORE] Rajeev Mittal will lead Prudential's asset management business, Eastspring Investments, from Jul 1. He will replace Bill Maldonado, who will retire and return to the United Kingdom where his family has been living for the past four years, said Prudential in a press release on Thursday (May 22). Mittal will report to Prudential's CEO Anil Wadhwani. He will also be part of the Prudential group executive committee. Mittal was the managing director, Asia Pacific ex-Japan, of Fidelity International for six years before leaving the investment management services firm in October 2024. Prior to Fidelity, he spent 26 years at AIG and PineBridge Investments, where he served as CEO of both PineBridge Europe and PineBridge Asia Pacific. Wadhwani, Prudential's CEO, said that Mittal's 'deep expertise' in the Asian markets, as well as his track record in managing and scaling asset management businesses and client relationships, will contribute to the growth of Eastspring. Meanwhile, Maldonado will remain as an adviser to the business until the end of September 2025 to ensure a seamless leadership transition. He will also continue to serve as a board member of ICICI Prudential Asset Management Company.
Daily Mail
19-05-2025
- Business
- Daily Mail
Borrowing costs soar as US debt fears hit markets - and dollar tumbles after Moody's slashes credit rating
Borrowing costs rose sharply yesterday as fears mounted over America's debt pile worth £27trillion. Long-term US bond yields hit an 18-month high after Moody's last week downgraded the credit rating of the world's largest economy. Concerns that debt will spiral were fuelled by Donald Trump's plan for tax cuts, which passed a key committee stage in Washington over the weekend. Higher yields on US government bonds – a benchmark for borrowing costs – push up mortgage and loan repayment rates for US households and businesses, and affect other countries. Yields on 30-year Treasury bonds passed the psychologically important barrier of 5 per cent to a high of 5.037 per cent. The rates have only breached 5 per cent a handful of times in 20 years. The UK's long-term borrowing costs also rose with yields on 30-year government bonds, known as gilts, now 5.5 per cent. Japan's 30-year bond yield reached a 25-year high of 2.99 per cent. Its 40-year bond yield hit a two-decade peak of 3.46 per cent. Meanwhile, the dollar tumbled against currencies around the world – pushing sterling above $1.34 at one point. Stock markets slumped early on amid rising debt fears but the FTSE 100 recovered to close up 0.2 per cent, or 14.75, points at 8699.31. On Wall Street, the S&P 500 rose 0.1 per cent, the Dow Jones 0.3 per cent and the Nasdaq 0.1 per cent. Ed Monk, associate director at Fidelity International, said: 'The US bond market is signalling distress. It is telling the government that if it wants to borrow for 30 years, it will have to pay 5 per cent a year for the privilege.' He added: 'What the American government pays to borrow influences the yield on British government debt, too.' Rising borrowing costs are a headache for Chancellor Rachel Reeves, who may have to impose punishing tax hikes this autumn to make her sums add up. Financial services firm Moody's cut America's credit rating on Friday from AAA to AA1, citing more than a decade of rising debt and interest costs. The US held an AAA rating since 1917. Rivals Fitch and S&P stripped the country of its perfect rating in 2023 and 2011 respectively. Susannah Streeter, at Hargreaves Lansdown, said: 'Given the pledge by Trump to cut taxes, it's feared the situation could deteriorate further.' David Morrison, analyst at broker Trade Nation, said: 'The timing is significant – in the midst of a global trade war and as the Trump administration attempts to pass a new tax package which could add between $3 to $5trillion to the budget deficit.'
