Daily Update: June 15, 2022

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

Major Central Banks In Action Today

Market participants are watching to see how the U.S. Federal Reserve and European Central Bank move following their policy meetings today. 

The Fed is widely expected to raise interest rates by 75 basis points (bps) this afternoon. At the same time, the ECB is holding an emerging policy session to tackle surging borrowing costs. 

“It’s a Fed day, and the ECB is joining the fun,” Benedek Vörös, director of index investment strategy at S&P Dow Jones Indices, said in a market note this morning. “Eurozone monetary wonks reconvene less than a week after their regular rate setting meeting for an emergency session to address a surge in yields across the eurozone, and in peripheral countries in particular.” 

In the U.S., S&P Global Ratings believes that persistently high inflation damping economic activity gives the Fed reason to raise interest again following its latest meeting. But monetary policy normalization in Europe will likely take more time despite similarly record-high levels of inflation, as the ECB hasn’t yet committed to ending reinvestments of maturing securities held under quantitative easing. 

The forthcoming central bank announcements come the VIX index stands at 33% implied volatility for the year ahead, and the benchmark S&P 500 equities index entered a bear market on Monday, according to S&P Dow Jones Indices. 

"The reality of the world we are in ... is that a recession may not be avoidable and the Fed is not the only risk," Diane Swonk, chief economist at Grant Thornton, told S&P Global Market Intelligence last week. "Geopolitical risks are intensifying, and developing economies are now being forced to choose between paying for food and energy or servicing their debt. Any one of those things could trigger a more severe blow to demand."

Today is Wednesday, June 15, 2022, and here is today’s essential intelligence.

Written by Molly Mintz. 

Economy

U.S. Charter Schools Sector Fiscal 2021 Medians: Schools Get A Booster From Pandemic Relief

S&P Global Ratings' median financial metrics for rated charter schools strengthened in fiscal 2021, as anticipated, following sizable amounts of pandemic relief, increased per pupil funding in most states, and overall steady demand trends. The third and largest round of Elementary and Secondary School Emergency Relief for public K-12 schools extends through September 2024, so we expect debt service coverage and liquidity metrics for charter schools will remain buoyed by this support in the near term, depending on broader economic conditions.

—Read the report from S&P Global Ratings

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Capital Markets

Loans, Deposits Continue To Grow At German, French Banks

Loans and deposits continued to increase markedly at French and German banks in the year to March, respectively spurred by demand for fixed investment and greater uncertainty causing depositors to park money. Total loans at French monetary financial institutions, or MFIs, rose by 9.3% year over year to €7.41 trillion, while those at German MFIs rose 5.95% to €6.41 trillion, according to European Central Bank data compiled by S&P Global Market Intelligence.

—Read the article from S&P Global Market Intelligence

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Global Trade

India May Allow Wheat Exports To Five Nations Soon; Third Tranche Since Ban: Sources

Indian government may allow fresh wheat exports to at least five countries, including Indonesia, in the next few weeks, senior government official sources told S&P Global Commodity Insights. "Following India's decision to restrict exports the government has received requests from several countries. The authorities are assessing domestic wheat requirement and availability of wheat," one official with food ministry said. According to officials, India received requests for wheat supplies from Bangladesh, United Arab Emirates, Indonesia, Yemen, and Oman.

—Read the article from S&P Global Commodity Insights

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ESG

Some Renewables Stock Prices Set Up For Growth Despite Inflated Capital Costs

Renewable energy developers could still see significant stock price upside despite inflation triggering higher capital costs that could drag estimated future cash flows, Morgan Stanley analysts said. Since November 2021 when inflation concerns intensified, the iShares Global Clean Energy ETF has plunged more than 24% compared to the S&P 500's 15.5% loss as the threat of an economic recession has exacerbated existing commodities bottlenecks and trade policy uncertainty.

—Read the article from S&P Global Market Intelligence

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Energy & Commodities

OPEC Finally Forecasts Russian Crude Output Fall; Faces Pressure To Ease Market Squeeze

OPEC on June 14 said it expects rising demand for its crude oil, forecasting robust global economic growth in the months ahead and projecting for the first time that Russia's production will fall year on year. In its closely watched monthly oil market report, the producer bloc kept its forecast of world demand steady at 100.29 million b/d for 2022 from its May estimate—basically back to pre-pandemic levels—but lowered its estimate of non-OPEC supply to 65.74 million b/d, a drop of 230,000 b/d.

—Read the article from S&P Global Commodity Insights

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Technology & Media

Listen: Next In Tech | Episode 69: Customer Success: Keys To The Subscription Transition

The shift to subscription sales models is sweeping across many industries, but it’s a change that requires more than just a new way to buy. Senior research analyst Bruce Daley joins host Eric Hanselman to explore the shift in mindset it requires and the organizational challenges that many have faced. While customer success approaches can be supported by software systems, there’s an underlying organizational and operational change that’s required.

—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence

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