Today is Tuesday, May 10, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we put the spotlight on the cryptocurrency sector. Nearly 100 countries are exploring central bank digital currencies pegged to their national fiat money, according to the IMF. In the U.S., advocates say that investing in cryptocurrencies can offer equal opportunities to groups of people who historically have experienced discrimination in accessing legacy banking systems. In Latin America, people are turning to cryptocurrencies and decentralized finance for their basic foreign exchange needs amid capital controls, rampant inflation and weakening currencies. As adoption of cryptocurrency spreads globally, regulators are taking a harder look at the sector and its risks to broader financial stability. The sector is also grappling with environmental issues as energy demand for crypto mining continues to surge.
Global green bond issuance fell 34.63% year over year to $83.8 billion in the first quarter, according to the Climate Bonds Initiative. The weak quarter ended a multiyear growth streak for the global green bond market, which was propelled by net-zero commitments from many countries. But as most central banks hike interest rates to tame inflationary pressures, financing costs for green bond issuers are increasing and creating uncertainties for investors, according to analysts.
Tight coal supplies and increased demand have driven up prices, allowing U.S. coal producers to reap profits after many faced bankruptcy and large debt loads in recent years. And with U.S. coal consumption on a path of long-term decline, coal companies are not investing in new production, but are instead returning much of their windfall gains to shareholders. With coal company share prices increasing as much as 986.2% in one year, some investors may now also collect the rewards of betting on the sector.
- In Focus: Cyrptocurrency Sector
-
Digital currencies gain traction among central banks
Central banks are realizing the importance of providing an alternative to booming cryptocurrencies. Here's a visual guide to how they are researching and developing their versions of digital money.
—Read the full article from S&P Global Market Intelligence
Crypto advocates warn of new digital divide as regulators begin inquiries
Marginalized crypto leaders say legacy institutions and Congress risk locking out certain demographics from the future of finance if outreach and education on decentralized assets are not provided. Banks could also suffer as a result.
—Read the full article from S&P Global Market Intelligence
Cryptocurrencies proliferate in LatAm as a refuge from economic instabilities
Peer-to-peer cryptocurrency transactions in Latin America have soared in the past two years, with some $353 billion received in cryptocurrencies in the 12 months through June 2021, Chainalysis data show.
—Read the full article from S&P Global Market Intelligence
Growth of cryptocurrency, stablecoins pushes regulators to ramp up scrutiny
U.S. and international agencies are taking on greater oversight of digital currencies, aiming to get ahead of any potential risks to the broader financial system.
—Read the full article from S&P Global Market Intelligence
Crypto mining industry's greening campaign raises new questions
Energy-hungry cryptocurrency companies turning to renewables are running into opposition from states protective of climate change goals and scarce clean energy supplies.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Credit and Markets
-
Fed risks breaking bond market as Treasury yields spike, liquidity falls
As the Fed prepares to reduce its historic presence in the Treasury market, volatility and liquidity fears spike.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Financials
-
Rate shock hits bank bond portfolios, dents capital
Surging interest rates have hammered the market value of banks' bond portfolios, eating into capital ratios and crimping the outlook for share repurchases. But banks argue the impact is an accounting mirage, and that cheap deposits will deliver a surge in spread income.
—Read the full article from S&P Global Market Intelligence
Securing deposit insurance from US FDIC proves tough for digital de novos
Securing deposit insurance from the FDIC is required for companies seeking bank charters from either a national or state regulatory agency. But securing deposit insurance from the FDIC, an agency that is used to reviewing more traditional community bank business models, can be a difficult journey for digital-focused financial institutions.
—Read the full article from S&P Global Market Intelligence
Small US banks could face challenges with 36-hour cyber reporting rule
Under a new rule, banks must report certain computer security incidents to regulators within 36 hours starting May 1, a reporting time frame that could prove challenging, especially for smaller companies.
—Read the full article from S&P Global Market Intelligence
Asia-Pacific finance M&A hit by geopolitics, supply chain disruptions in Q1
The number of finance-sector M&A deals in the Asia-Pacific region dropped to 123 in the first three months of 2022, from 165 in the same period last year, S&P Global Market Intelligence data show.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Insurance
-
Largest homeowners insurers' combined ratios above 100% in 2021
Homeowners insurance is a "rock hard market" where underwriting profits can swing by large amounts and surprise investors on both the upside and downside, Piper Sandler analyst Paul Newsome said in a research note.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Real Estate
-
US housing market: House prices rise 19.8% in February
The 20-City Composite index saw 20.2% year-over-year growth in February, while the 10-City Composite index rose 18.6% during the same period.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: ESG
-
Global green bond issuance slows amid rising interest rates, inflation
The issuance of green bonds globally in the first quarter fell 34.63% year over year to $83.8 billion, according to the Climate Bonds Initiative.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Technology, Media and Telecommunications
-
Ad-supported Netflix tier presents mixed opportunity for Europe
Targeting markets with low penetration and low affordability could boost growth, but such a strategy presents risks to revenue, analysts said.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Metals and Mining
-
'They've absolutely exploded': Coal investors win triple-digit US stock gains
The once beleaguered sector is seeing share prices swell as investors expect demand to continue to pressure a tight supply situation.
—Read the full article from S&P Global Market Intelligence
-
- Deep Dives: Energy and Utilities
-
Private equity expanding to renewable tech beyond wind, solar
Over the past decade, private capital has invested almost $150 billion in not only wind and solar, but also sustainable food management, waste management and water management, according to a report by the American Investment Council.
—Read the full article from S&P Global Market Intelligence
-
- This Week in M&A
-
Elon Musk's Twitter acquisition among four $10B-plus deals announced in April
Deal Profile: United Community Banks buying Alabama-based Progress Financial in $271.5M deal
First Internet deal termination highlights sellers' rising price expectations
Illinois remains hot as out-of-state credit union scoops up another bank
-
The Big Number
Trending
—Read more on S&P Global Market Intelligence and follow @ddimolfetta and @StefanJModrich on Twitter
Navigating Risks and New Realities
Geopolitical tensions are at an unprecedented high and markets are noticeably stressed. Explore the data and analysis you need to stay ahead of evolving conditions with insights on credit risk, supply chain, maritime & trade, economic & country risk, and more.