Investment Officer Luxembourg

Financial markets on Monday appeared to position themselves for a slower pace of rate hikes in the US, or even a pause, amid talk that the Federal Reserve may adopt a more cautious monetary policy following the collapse of Silicon Valley Bank. The European Central Bank this week still is expected to raise interest rates by 50 percent amid the global market turmoil caused by the collapse of SVB, which fell victim due to mismanagement of its interest rate risks. 

Luxembourg management companies are drawing attention to the increasing reporting burden that often lands on their shoulders when European level regulation, such as the cross-border fund distribution directive, is passed. These requirements, they argue, often simply serve to placate national authorities over their lost jurisdiction. “It’s creating an additional burden on the investment fund manager,” said Chloé Piquet, a senior manager in regulatory services at Deloitte.

Consulting and accounting firm PwC Luxembourg has announced its new “country leadership team” after a vote by the firm’s partners on 10 February 2023.

The Commission de Surveillance du Secteur Financier (CSSF) is working relentlessly to further build a financial system that is safe, transparent, and reliable. To achieve this goal, the supervisors of the Luxembourg financial sector collaborate closely with their peers in the EU and globally.

Powell opens the door to a 50-basis-point rate hike, interest rates shoot up and equities crash. And yet, at the time of writing, the VIX index is below 20, raising the question of whether equities are not a bit complacent.

You can probably already hear a little from my tone what my answer is going to be. Still, there is a good reason why implied volatility looks relatively low.

Inflows into global equity and bond ETFs have been declining for five months in a row, and for the first time since March 2018, money flowed out of US equity ETFs for two consecutive months.

Answering questions about the bank run on Silicon Valley Bank, the European Central Bank on Sunday underlined its concerns over how European banks are managing risks relating to increasing interest rates. The ECB reiterated that a recent supervisory review found weaknesses at banks, including ignoring consumer behaviour shifts that could lead to deposit withdrawals when rates rise. “Beyond a certain point, it could become an issue,” ECB chief bank supervisor Andrea Enria said in a Latvian interview last week.

Has the sudden collapse of Silicon Valley Bank ignited fears of a new financial crisis? Or is its demise incidental, offering investors an excuse to take profits on attractive gains that bank sector stocks booked in recent months?

As European financial markets closed on Friday, worried investment professionals were hard to find. The sentiment and rising interest rates however are clearly recognised as risk factors.