In Munich is the Hofbräuhaus:
One, two, drink up!
There so many kegs are emptied:
One, two, drink up!
There is always some good man:
One, two, drink up!
Who wants to show how much he can drink
He starts in the early morning
And late in the evening he comes out
Becasue it’s so nice at the Hofbräuhaus.
Hey “supply and demand” believers:
Will house prices go UP or DOWN if:
Supply is up 65%
and
Demand is down 43%?
(Apparently it “defies expectations” but doesn’t specify whose)
Thanks to @richard_donnell and the @Zoopla data. https://t.co/DaAYuNLUIw
— Moving Home with Charlie (@moving_charlie) April 5, 2023
value of the Libor their value is based upon the Libor but that is supposed to
be no longer reported after June 30th and so all of the contracts would then
be attached to sopher and they have not been able to come up with a formula to
make them match exactly and so the value of all of those contracts are about to
shift overnight and they might each contract might be off Pennies on the dollar which
doesn’t sound like a lot but we don’t even know how large how many of those contracts
are actually out there at one reading it was 610 trillion that still needed to
https://www.newyorkfed.org/markets/reference-rates/sofr
Stylized Facts, Affordable Homes and Bank Liquidity. #LIBOR #TINA #MREL @MartinSewell
2 for thought there are structural movements in the Debt markets. The Residential Market is driven by New homes Price inflation and is a shallow market with less than 5% roughly of stock turning over annually with New Homes being a small fraction of that. https://t.co/H8lesNiEPB
— Real-Estate Land Development Limited (@RealEstateLand3) April 6, 2023
On 9 May 2022, the CFTC issued a consultation in which they proposed amendments to the US swap clearing requirement (the US equivalent of the clearing obligation) to address the cessation of certain interbank offered rates (IBORs) and the market adoption of alternative RFRs.footnote[8] The CFTC’s proposal includes the addition of SOFR OIS with a maturity range of 7 days to 50 years, to come into force 30 days after the publication of the final rule, and the removal of contracts referencing USD Libor from the clearing requirement, to come into force on 1 July 2023.
1.2: Summary of proposal
In light of the increase in trading activity in SOFR contracts since the turn of the year (see Section 2.2 below),footnote[9] the Bank now considers it appropriate to consult on changes to the clearing obligation in relation to USD interest rate swaps. This is in line with the commitment made in the previous PSs to consult on changes relating to USD interest rate swaps in 2022 and, in doing so, to coordinate with the CFTC on changes to our respective clearing obligations (where possible).
The Bank therefore proposes to modify the contract types which are subject to the clearing obligation in the onshored BTS 2015/2205. Specifically, the Bank proposes to:
- add OIS contracts that reference SOFR, to come into force on 31 October 2022; and
- subsequently remove contracts that reference USD Libor, to come into force around the same time as a number of CCPs contractually convert these contracts and remove them from their list of contracts eligible for clearing.
The SOFR OIS contract type in the clearing obligation will cover broadly the same maturity range as the USD Libor contracts currently cover. However, as with the addition of TONA OIS to the clearing obligation in January 2022, the Bank proposes a minimum maturity for the SOFR OIS contract type of 7 days (as opposed to 28 days for the USD Libor contracts currently subject to the clearing obligation). This reflects the differences in the types of transactions these contract types have historically been used in.
As with the changes made last year, it is proposed that the date on which the removal of USD Libor contracts will come into force will coincide with the contractual conversion of USD Libor contracts by a number of CCPs and the removal of these contracts from their list of contracts eligible for clearing. CCPs are either currently consulting or are due to consult on the precise timings, but have indicated that these changes will likely occur in Spring 2023. However, given the current volume and liquidity of cleared SOFR OIS contracts, the Bank is of the view it would be appropriate to add the SOFR OIS contract type to the scope of the clearing obligation before CCPs’ contractual conversions have taken place. We therefore propose to add SOFR OIS to the clearing obligation on 31 October 2022.
https://www.gbm.hsbc.com/ibor
Overview
Interest rate benchmarks including, among others, the London Interbank Offered Rate (LIBOR), the Euro Interbank Offered Rate (EURIBOR), the Euro Overnight Index Average (EONIA) and certain other Interbank Offered Rates (IBORs) have been or are being reformed.
The financial services industry has commenced the transition towards ‘Risk-Free Rates’ also known as ‘Near Risk-Free Rates’ (“RFRs”)1 and other alternative rates.
The following rates have ceased to be published or are no longer representative as of 31 December 2021:
- Sterling2, Euro, Swiss Franc, and Japanese Yen2 LIBOR settings in all tenors
- US Dollar LIBOR 1-week and 2-month settings
EONIA has ceased to be published on 3 January 2022.
The following rates will either cease or no longer be representative immediately after 30 June 2023:
- US Dollar LIBOR Overnight, 1-month3, 3-month3, 6-month3 and 12-month settings.
- SOR, THBFIX and MIFOR will also be impacted because these benchmarks use USD LIBOR as an input. Our dedicated Asia-Pacific page provides further information.
IBOR reforms may impact the HSBC products and services you currently use and those we may provide in the future. The content of this page reflects HSBC’s understanding of the reforms as at 3 May 2022. It is not exhaustive and does not constitute any form of advice or recommendation. You should contact your professional advisors about the possible implications of the changes such as financial, legal, accountancy or tax consequences. Please read the content of this page carefully, together with any other communications you may have received from HSBC. Please contact us if you wish to discuss any of these changes further.
Background
A wide range of financial products such as derivatives, bonds, loans, structured products and mortgages use benchmark rates to determine interest rates and payment obligations. Benchmark rates are also used to value certain financial products and as a performance tracker for funds, among other purposes.
LIBOR, probably, up until recently, the most widely used benchmark, has been used in financial products denominated in a number of currencies and published in GBP (British Pound), USD (US Dollar), EUR (Euro), JPY (Japanese Yen) and CHF (Swiss Franc).
Certain currencies use other benchmarks such as EURIBOR for EUR, the Tokyo Interbank Offered Rate (TIBOR) for JPY, the Hong Kong Interbank Offered Rate (HIBOR) for the Hong Kong Dollar and the Singapore Interbank Offered Rate (SIBOR) for the Singapore Dollar.
In 2014, the Financial Stability Board (FSB) recommended a reform of IBORs and their replacement by RFRs that are based on more active and liquid overnight lending markets.
RFRs are typically backward-looking overnight rates based on actual transactions and reflect the average of the interest rates that certain financial institutions pay to borrow overnight either on an unsecured basis from wholesale market participants for unsecured RFRs, such as the Sterling Overnight Index Average (SONIA), or the average rate paid on secured overnight repurchase or “repo” transactions for secured RFRs, such as the Secured Overnight Financing Rate (SOFR).
What are the replacement benchmarks and which benchmarks have changed?
A period of "Mexican Standoff" or "Phony War" Between Sellers and price expectations, and Buyers, LTV's Deposit LTV's ratios, and Rental inflation all play into the Buyer's Side of the equation.
I expect to see depressed transaction levels for some time, with prices Stagnating— Real-Estate Land Development Limited (@RealEstateLand3) April 6, 2023
and even if rates come down again an affordability correction is overdue in many areas, but of course not all.https://t.co/OmZIjWKIWN
— Real-Estate Land Development Limited (@RealEstateLand3) April 6, 2023
The Hofbräuhaus-Lied (Hofbräuhaus Song) is a classic of the German oom-pah form and a principal ode to Munich’s famed beer hall.
It was written in 1935, not by a Munich local, but a Berliner known as Wilhelm “Wiga” Gabriel.
Wiga’s other “hits” were unfortunately patriotic marching anthems for the Third Reich.
But sod that, no-one seems to remember when the song comes ’round at Oktoberfest anyway.
Here’s a rather campy version performed by local duo Michael Hartl and Marianne Reiner.
https://finance.yahoo.com/quote/DB?p=DB
All of the World’s Money and Markets in One Visualization https://t.co/yT000tIfOK via @visualcap
— Real-Estate Land Development Limited (@RealEstateLand3) April 6, 2023
Summary
- Investors are fearful Deutsche Bank is the next domino to fall.
- DB is a picture of rude health coming into this banking crisis.
- Some point to worries around its EUR42 trillion derivatives book.
- I believe the fears over the derivatives exposures are way overblown.
- However, loss of confidence may trigger a self-fulfilling prophecy.
Nothing to see here , Every little thing gonna be alright.
In Munich is the Hofbräuhaus:
One, two, drink up!
https://t.co/cN5cMSdIao In Munich is the Hofbräuhaus:
One, two, drink up! Ein Svie #Sofr 1 July 2023 , #Sonia , #Libor— Real-Estate Land Development Limited (@RealEstateLand3) April 6, 2023
1 thought on “Ein Svie Sofr, Sonia , Libor . 610 Trillion Derivatives market ready for a remark to Market moment? Bets on Bets on the Market. #GoingDirect In Munich is the Hofbräuhaus: Duetsche Bank”