February 23, 2017

Critical updates from the Federal Reserve, Treasury and more

In the Spotlight

Treasury International Capital Data For December
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for December 2016.  The next release, which will report on data for January 2017, is scheduled for March 15, 2017.

The sum total in December of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $42.8 billion.  Of this, net foreign private outflows were $57.1 billion, and net foreign official inflows were $14.3 billion.

Foreign residents decreased their holdings of long-term U.S. securities in December; net sales were $13.9 billion.  Net sales by private foreign investors were $32.0 billion, while net purchases by foreign official institutions were $18.1 billion.

U.S. residents decreased their holdings of long-term foreign securities, with net sales of $1.1 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign sales of long-term securities were $12.9 billion.  After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $29.4 billion in December.

Foreign residents increased their holdings of U.S. Treasury bills by $11.1 billion.  Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $33.5 billion.

Banks' own net dollar-denominated liabilities to foreign residents decreased by $46.8 billion.
Press Release

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Global Highlights

SIFMA Releases US Foreign Activity Report, Fourth Quarter 2016
The US Foreign Activity report is a semiannual report and semiannual addendum that tracks purchases and sales of U.S. securities by foreign investors and U.S. purchases and sales of foreign securities. Both gross activity and net purchases are broken out by country and area.
Press Release

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U.S. MARKET HIGHLIGHTS

Federal Reserve to offer seven-day term deposits on February 23
The Federal Reserve plans to continue its previously announced periodic testing of the Term Deposit Facility (TDF) with one operation in February. These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a similar routine TDF test operation each quarter in 2017. The schedule and terms for future test operations will be announced at later dates.
Press Release

Minutes of the Federal Open Market Committee, January 31-February 1, 2017
The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on January 31-February 1, 2017.
Press Release

Federal Reserve Board announces annual adjustment to the asset-size threshold in Regulation I
The Federal Reserve Board on Wednesday announced the annual adjustment to the asset-size threshold in Regulation I that determines the dividend rate that certain member banks earn on their Federal Reserve Bank stock. The updated total consolidated asset threshold is $10,122,000,000.
Press Release

New York Fed Blog Post Examines Decline of Homeownership
In a recent blog post, the Federal Reserve Bank of New York analyzes the decline in the homeownership rate. As stated in the blog post, “The homeownership rate—the percentage of households that own rather than rent the homes that they live in—has fallen sharply since mid-2005. In fact, in the second quarter of 2016 the homeownership rate fell to 62.9 percent, its lowest level since 1965. In this blog post, we look at underlying demographic trends to gain a deeper understanding of the large increase in the homeownership rate from 1995 to 2005 and the subsequent large decline. Although there is reason to believe that the homeownership rate may begin to rise again in the not-too-distant future, it is unlikely to fully recover to its previous peak levels.” 
Press Release

Updated TRACE for Treasury Securities Specifications
FINRA has updated the TRACE CTCI Technical Specifications for Treasury Securities to reflect a change to the reporting of "Execution Time" that is consistent with Supplementary Material .04 to Rule 6730. For purposes of the TRACE rules, when reporting transactions in U.S. Treasury securities executed electronically, members report the time of execution to the finest increment of time captured in the member's system (e.g., milliseconds or microseconds) but, at a minimum, in increments of seconds. FINRA is not requiring members to update their systems to comply with a finer time increment; rather, members are simply required to report the time of execution to TRACE in the same time increment the member's system captures.
CTCI Specifications

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SIFMA NEWS

New SIFMA Research: US Municipal Credit Report, 4Q’16
According to Thomson Reuters, long-term public municipal issuance volume totaled $100.3 billion in 4Q’16, a 7.5 percent decrease from $108.5 billion in 3Q’16 and a 31.1 percent increase year-over-year. ($76.5 billion). In-cluding private placements ($4.5 billion), long-term municipal issuance for 4Q'16 was $104.9 billion. Full year issuance was $423.8 billion, an increase of 12.2 percent from 2015 well above the 10-year average of $372.0 billion. Including private placements, full year issuance was $445.8 billion. The municipal bond credit report is a quarterly report on the trends and statistics of U.S. municipal bond market, both taxable and tax-exempt. Issuance volumes, outstanding, credit spreads, highlights and commentary are included.
Report

Kenneth E. Bentsen Op-Ed in The Hill: “DOL Pending Fiduciary Rule Remains Flawed, Negatively Impacting the Marketplace”
SIFMA President and CEO, Kenneth E. Bentsen, Jr., penned an op-ed to The Hill setting the record straight about the industry’s position on the Department of Labor’s pending fiduciary rule.

“It is important to cut through the rhetoric and seek a policy solution that is in the best interest of the client.  We continue to support the establishment of a best interest standard that applies to all retail brokerage accounts.  We continue to believe the SEC is the right agency to undertake this task.  We believe the DOL rule has serious flaws, and those flaws are already resulting in negative consequences for the investors the rule seeks to help.  Just as our industry will continue to comply with the rules Congress and regulators establish, because they are the law, we will also continue to advocate for good policy that benefits our clients and marketplace.”
The Hill: “DOL Pending Fiduciary Rule Remains Flawed, Negatively Impacting the Marketplace”
DOL Fiduciary Resource Center

SIFMA and the SIFMA Foundation Kick-Off the 14th Annual  Stock Market Game™-Capitol Hill Challenge
The 14th annual Stock Market Game™-Capitol Hill Challenge (CHC) has begun! This national 14-week financial education competition organizes teams of middle and high school students by congressional and senatorial district and teaches them about saving, investing, and government. The competition uses the SIFMA Foundation’s curriculum-based Stock Market Game™, a program to help students develop a better understanding of the global economy, become college and career ready, and improve their knowledge of math, economics, and business. Be sure to check back weekly to view the updates in the rankings from this year’s participating schools, and see all the latest news about this year’s event.
Press Release
2016 Highlights
About the Capitol Hill Challenge

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Events

Starts next week: SIFMA’s IRLS Conference - Feb. 26-28 in Miami
There’s still time to register! SIFMA’s Insurance- and Risk-Linked Securities Conference brings together market participants to discuss insurance-linked securities and alternative capital, with subtopics covering technology disruptors including InsurTech, cyber and terror risk, structuring considerations, the Florida market, and more. Join us to participate in an interactive dialogue with industry experts, thought leaders, sponsors, and institutional investors over a two-day program. Featured speakers include Tom Ridge, the first Secretary of U.S. Department of Homeland Security, and Dr. Phil Klotzbach, Research Scientist of Atmospheric Science at Colorado State University.

Sign up for SIFMA's Signature Executive Education Program, SII at Wharton
The Securities Industry Institute® (SII) is the premier executive development program uniquely tailored for financial services professionals. For more than 65 years, SIFMA and The Wharton School of The University of Pennsylvania have partnered to equip SII participants with practical information, ideas and answers directly applicable to their present and future responsibilities. Registration is open for the March 5-10, 2017 program. Visit our website to learn more.

Join your peers at the C&L Annual Seminar 2017, March 19-22 in San Diego
This premier event, to be held March 19-22 in San Diego, provides an opportunity for the industry’s leaders and regulators to come together to educate, share ideas and address emerging trends impacting the compliance and legal community. Keynote speakers include: Preet Bharara, United States Attorney of Southern District of New York, U.S. Department of Justice; Robert W. Cook, President and Chief Executive Officer of FINRA; Suni Harford, Regional Head of Markets, North America, Citi; and Jan Lynn Owen, Commissioner of California Department of Business Oversight.

Register to attend in-person or via webinar: MiFID II Seminar, April 4
The revision of the European Union’s Markets in Financial Instruments Directive (MiFID II) is expected to go into effect in January 2018. This rule will significantly change the way broker dealers and asset managers comply with cross-border business requirements in Europe – especially in the area of payment for research. Join us at this half-day seminar in NYC or via webinar to discuss the key considerations of the framework for unbundling and the implications for cross border research.

Register at the early bird rate: Fixed Income Market Structure Seminar, April 27
SIFMA’s Fixed Income Market Structure Seminar in NYC brings together market participants and policymakers to discuss the latest regulatory and market developments in the fixed income markets. This half-day discussion will address the key questions and issues emerging from significant changes in market structure, including: Investment Grade New Issue Process, Fixed Income Pre-Trade Transparency and Price Discovery, and Execution and Order Management in Fixed Income. Early bird rates available.

Early Bird Ends Feb. 14: Operations Conference & Exhibition: May 8-11, Florida
Join your peers and industry leaders at the 44th annual Operations Conference and Exhibition to address industry changes driven by regulation, risk, and the evolution of technology. The program includes sessions, delivered by industry leaders, on top priorities such as: Implications of Regulatory Implementation; Managing Operational Risk; CAT Implementation; Cyber Threats and Industry Resiliency; The Current Status of the DOL Fiduciary Rule; Collateral Management & New Uncleared Swaps Margin Requirements; T+2 Implementation and Testing; and more. Register before discounted rates expire!

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Economic Calendar

Week of2/27

MONDAY

  • Durable Goods Orders 8:30 AM ET
  • Pending Home Sales Index 10:00 AM ET
  • Dallas Fed Mfg Survey 10:30 AM ET
  • 4-Week Bill Announcement 11:00 AM ET
  • 3-Month Bill Auction 11:30 AM ET
  • 6-Month Bill Auction 11:30 AM ET

TUESDAY

  • GDP 8:30 AM ET
  • International Trade in Goods 8:30 AM ET
  • Redbook 8:55 AM ET
  • S&P Corelogic Case-Shiller HPI 9:00 AM ET
  • Chicago PMI 9:45 AM ET
  • Consumer Confidence 10:00 AM ET
  • Richmond Fed Manufacturing Index 10:00 AM ET
  • State Street Investor Confidence Index 10:00 AM ET
  • 4-Week Bill Auction 11:30 AM ET
  • 52-Week Bill Auction 11:30 AM ET
  • Esther George Speaks 12:45 PM ET
  • Farm Prices 3:00 PM ET
  • James Bullard Speaks 6:30 PM ET

WEDNESDAY

  • Motor Vehicle Sales
  • MBA Mortgage Applications 7:00 AM ET
  • Personal Income and Outlays 8:30 AM ET
  • Gallup U.S. Job Creation Index 8:30 AM ET
  • PMI Manufacturing Index 9:45 AM ET
  • ISM Mfg Index 10:00 AM ET
  • Construction Spending 10:00 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Robert Kaplan Speaks 12:30 PM ET
  • Beige Book 2:00 PM ET

THURSDAY

  • Weekly Bill Settlement
  • Chain Store Sales
  • Jobless Claims 8:30 AM ET
  • Bloomberg Consumer Comfort Index 9:45 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • 3-Month Bill Announcement 11:00 AM ET
  • 6-Month Bill Announcement 11:00 AM ET
  • 3-Yr Note Announcement 11:00 AM ET
  • 10-Yr Note Announcement 11:00 AM ET
  • 30-Yr Bond Announcement 11:00 AM ET
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET

FRIDAY

  • Charles Evans Speaks
  • Stanley Fischer Speaks
  • PMI Services Index 9:45 AM ET
  • ISM Non-Mfg Index 10:00 AM ET
  • Baker-Hughes Rig Count 1:00 PM ET

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Featured Data and Resources

View all Rates Reference Data Aggregated by SIFMA Rates Group

Calendars
SIFMA’s New 2017-2018 Market Close Recommendations
CME’s Full 2017 Holiday Calendar and Related Notices
FICC’s 2017 Holiday Schedule for GSD

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