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With a focus on liquidity, US dollar, sterling money markets have potential yet

With a focus on liquidity, US dollar, sterling money markets have potential yet

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Central banks provided economies with ample cash as the economic effects of the COVID-19 health crisis bit, driving down interest rates – and absolute returns – in the process, but as Philippe Renaudin, head of global money markets, tells senior investment strategist Daniel Morris in this interview, careful selection and diversification mean potential for competitive returns remains in money markets.

Daniel: Let’s first look at the money market in the US where the Federal Reserve (Fed) recently set out an updated monetary policy framework, adjusting to the new economic reality. How can we now expect the Fed to react to developments? Well, the new setup means low unemployment is no longer a reason to raise interest rates nor is fiscal stimulus.

On inflation, the Fed will allow an overshoot of its 2% target so that on average and over time, inflation is at 2%. For rates, this can be seen as implying that they will stay low for a very long time. In addition, quantitative easing (QE; buying assets to inject cash into the economy) is here to stay. In terms of asset classes, this setup is supportive of risk assets such as equities and gold; for the US dollar, the combination of higher inflation and low policy rates is not supportive.

What is the condition of US dollar money markets after March’s turmoil?

Philippe: In general, major central banks including the Fed have done a good job calming the markets and providing liquidity after markets reeled this spring. The Fed actively entered the market and injected liquidity, resulting in low US yields and spreads. CDs (certificates of deposits), for example, now trade at 15bp – that is a fraction of the 80-100bp at the height at the crisis in March. So for three-month paper issued by US banks and corporates, the cost is only 0.15%, down from 1% half a year ago.

How are you positioning your USD money market strategy?

Philippe: The key for us is to buy paper that is liquid. This accounts for 30-40% of our portfolios. This portion is invested in bank deposits with yields close to the fed funds fixing. The remainder is invested in paper with different maturities, particularly from banks, which are very active, especially in three to six-month maturities. We actually favour these securities. With this allocation, we have been able to provide a positive daily yield and we are confident that we can maintain this positive level for a couple of months.

What’s your outlook for rates in Europe?

Daniel: In the eurozone, we do not expect much change, especially after the recent ECB decisionto keep its monetary policy stance unchanged. In the UK, however, we believe that the monetary stance will need to remain loose for the foreseeable future, not least because the fiscal pendulum will soon swing back in the direction of budget consolidation, and given the backdrop of rising unemployment and greater uncertainty over the future relationship between the UK and the EU. We expect the Bank of England (BoE) to do more QE rather than cut interest rates significantly to below zero. Depending on economic developments in the interim, there is scope for a small cut to 0%, but no earlier than November and more likely in 2021.

What about the sterling money market? How do you avoid negative yield?

Philippe: Similar to the Fed, the BoE provided liquidity on a large scale in the crisis, leaving market rates at close to zero and pushing spreads to very low levels. In terms of volatility, the UK market is quieter now than the US market, with rates at zero to 20bp on all types of instruments. Rates have remained under pressure: recently, we saw the UK three-month T-bill rate at -1bp. In these circumstances, it is hard to have positive yields for money market flows. The UK is a small market in terms of outstanding amounts and the numbers of issuers, so constructing a well-diversified portfolio is a challenge. Nevertheless, in the market, we are seeing rates of close to 5bp on deposits. Again, we focus on liquid instruments, particularly fixed-rate ones. We believe that further BoE measures will increase the market liquidity. We will remain cautious as we may face a non-deal Brexit or new developments in the COVID crisis.


Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

Writen by Investors' Corner Team. The post With a focus on liquidity, US dollar, sterling money markets have potential yet appeared first on Investors' Corner - The official blog of BNP Paribas Asset Management.

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Medicine without Meds: Revolutionizing healthcare with digital solutions

Some patients with sleep disorders, back pain, diabetes, cancer, and attention-deficit/hyperactivity disorder are benefitting from digital health interventions…

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Some patients with sleep disorders, back pain, diabetes, cancer, and attention-deficit/hyperactivity disorder are benefitting from digital health interventions that use software programmes, often delivered through mobile apps or web-based platforms, to treat, manage, or prevent a medical condition. Designed to provide therapeutic benefits and backed by clinical evidence, these digital interventions often complement traditional healthcare approaches.

Credit: Institute for Digital Medicine, NUS Yong Loo Lin School of Medicine

Some patients with sleep disorders, back pain, diabetes, cancer, and attention-deficit/hyperactivity disorder are benefitting from digital health interventions that use software programmes, often delivered through mobile apps or web-based platforms, to treat, manage, or prevent a medical condition. Designed to provide therapeutic benefits and backed by clinical evidence, these digital interventions often complement traditional healthcare approaches.

“Medicine Without Meds: Transforming Patient Care With Digital Therapies” showcases this new approach, believed to be one of the most promising avenues for improving patient outcomes and the provision of healthcare on a global scale. It also provides a much-needed blueprint for accelerating digital innovation to patients.

While relatively new in the healthcare arsenal, digital therapeutics or DTx, is a new class of medicine akin to drugs. According to the book’s three authors, DTx has the potential to revolutionise patient care by improving access to healthcare, personalising treatment, and increasing convenience in achieving better health.

The book provides actionable ways of bringing digital therapy to fruition and inspiring new AI-driven innovations that could revolutionise the future of medicine. Written by researchers from the Institute for Digital Medicine (WisDM) at the Yong Loo Lin School of Medicine, National University of Singapore (NUS Medicine), the book claimed the top spot on Amazon Best Sellers list, in the Health Policy category and History of Medicine category, in May 2023, after it was first made available for pre-orders.

The Institute’s director and one of the book’s three co-authors, Professor Dean Ho, said, “Our vision is to build good digital solutions that are also cost-efficient and sustainable in the long run. From the birth of an idea to its successful implementation, it is critical to engage the key stakeholders closely, including patients, clinicians and investors. The book offers a roadmap on how digital innovation can be developed and implemented effectively, to serve patients, caregivers, and those who may not be in ill health and want to get better.”

Since the team was formed in 2018, researchers have developed digital health solutions to help a patient with advanced prostate cancer who was recommended a 50% reduction in dose of an investigational inhibitor drug for increased efficacy, and subsequently resumed an active lifestyle. In a larger cohort of solid cancer patients, personalised treatment with the CURATE.AI platform saw a marked reduction of nearly 20% on average. This digital solution was widely featured at the prestigious American Society of Clinical Oncology (ASCO) Annual Meeting and the ASCO Educational Book. The team also leveraged DTx to address ageing and illness-related challenges in cognitive and physical performance, such as brain cancer and cognitive decline.

In one of the team’s latest DTx projects, conducted in collaboration with local technology and service providers, an application is currently undergoing validation. The app assists patients with hypertension in managing their condition by tracking body vitals, including blood pressure and heart rate, all with just a phone’s camera. Mrs Jenny Pek, 77 years old and a participant of the ongoing study, said, “My doctor has advised me to monitor my blood pressure regularly, and I can easily do that with the help of the app. It provides me useful tips and recommendations that help me keep my diabetes under control.”

Co-author Mr Yoann Sapanel, Head, Health Innovation, WisDM, NUS Medicine, said, “DTx offers a high degree of personalisation tailored to an individual’s needs and progress. They adapt to the user’s specific condition by collecting valuable data on patient progress, which not only benefits patients but also aids healthcare providers in optimising treatment plans, enabling data-driven insights and informed decision-making for the most effective personalised treatment.”

Dr Agata Blasiak, Head, Digital Health Innovation, WisDM, NUS Medicine, is the third author. She said, “DTx plays an important role for Singapore and beyond, as it can allow for decentralised delivery of healthcare at home, for certain conditions. With DTx that can remotely deliver treatment and monitor outcomes, patients need not always visit the clinics or hospitals, and the overall costs of healthcare can be reduced. DTx often works by providing rewarding interactions and nudges through mobile apps, to empower patients to understand and take charge of their condition, make lasting changes in their lifestyle and develop habits for better health and a better life.”

Published as a trade book by the Johns Hopkins University Press, the oldest continuously running University Press in the United States, the book’s foreword is written by American musician and business executive D.A. Wallach, who is passionate about technologies poised to reinvent the practice and delivery of medicine. It also features contributions and insights from various entrepreneurs, executives, patients and clinicians globally, including Associate Professor Ngiam Kee Yuan, Group Chief Technology Officer, National University Health System (NUHS) and Deputy Director of WisDM; Associate Professor Robyn Mildon from NUS Medicine’s Centre for Holistic Initiatives for Learning and Development (CHILD) and Centre for Behavioural and Implementation Science Interventions (BISI), and Founding Executive Director of the Centre for Evidence and Implementation, Australia; Dr Eddie Martucci, CEO and Co-founder of Akili Interactive Labs, United States; and Owen McCarthy, President and co-founder of MedRhythms. The cover was artfully designed with Shian Ng, an acclaimed Singapore artist.

The book is available for pre-orders at SGD $58.36 at Kinokuniya Singapore, and at USD $32.95 at all major retailers in the US, Europe, Australia, and other markets like Taiwan, Japan, and Korea—including Amazon, Barnes & Noble, Books-A-Million, Hudson, Walmart, Waterstones, Books.com.tw, Book Soup, and Bookshop.org. Physical copies of the book are made available worldwide from today. All author proceeds from the sale of the books will be donated to the WisDM Patient Impact Fund, to help patients in Singapore.

More information on the book can be accessed at https://medicinewithoutmeds.tech/.


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Sustainable smart agriculture with a biodegradable soil moisture sensor

Osaka, Japan – Increasingly limited land and water resources has inspired the development of precision agriculture: use of remote sensing technology…

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Osaka, Japan – Increasingly limited land and water resources has inspired the development of precision agriculture: use of remote sensing technology to monitor air and soil environmental data in real time, to help optimize crop output. Maximizing the sustainability of such technology is critical to proper environmental stewardship and reducing costs.

Credit: 2023 Kasuga et al., Wirelessly powered sensing fertilizer for precision and sustainable agriculture. Advanced Sustainable Systems

Osaka, Japan – Increasingly limited land and water resources has inspired the development of precision agriculture: use of remote sensing technology to monitor air and soil environmental data in real time, to help optimize crop output. Maximizing the sustainability of such technology is critical to proper environmental stewardship and reducing costs.

Now, in a study recently published in Advanced Sustainable Systems, researchers from Osaka University have developed a wirelessly powered soil moisture sensing technology that is largely biodegradable and therefore can be installed in high densities. This work is an important milestone in removing the remaining technical bottlenecks in precision agriculture, such as safe disposal of used sensor devices.

With an increasing global population, it is imperative to optimize agricultural output yet minimize land and water use. Precision agriculture aims to meet these conflicting needs by using sensor networks to gather environmental information for properly allocating resources to cropland when and where these resources are needed. Drones and satellites can capture much information but are not ideal for deducing humidity and soil moisture levels. For optimum data collection, moisture sensing devices must be installed at ground level at high density. If the sensors are not biodegradable, they must be collected at the end of their service life, which can be labor-intensive, rendering them impractical. Achieving both electronic functionality and biodegradability in one technology is the goal of the present work.

“Our system comprises several sensors, a wireless power supply, and a thermal camera for acquiring and transmitting sensing and location data,” explains Takaaki Kasuga, lead author of the study. “The in-soil components are largely ecofriendly; composed of a nanopaper substrate, a natural wax protective coating, a carbon heater, and tin conductive lines.”

The basis of the technology is that the efficiency of wireless power transmission to the sensor corresponds to the temperature of the sensor’s heater and the moisture content of the surrounding soil. For example, at optimized sensor positions and angles on smooth soil, increasing the soil moisture content from 5% to 30% decreases the transmission efficiency from ~46% to ~3%. A thermal camera then captures images of the area to simultaneously collect soil moisture-content data and sensor location data. At the end of the crop season, the sensors can be tilled into the soil for biodegradation.

“We have successfully visualized areas of soil moisture deficit by using 12 sensors in a 0.4-meter by 0.6-meter demonstration field,” says Kasuga. “Thus, our system works at the high sensor densities needed for precision agriculture.”

This work has the potential to optimize precision agriculture for an increasingly resource-limited world. Maximizing the performance of the researchers’ technology under nonideal conditions (such as irregular sensor positions and angles on rough soil), and possibly for other soil environmental metrics besides soil moisture levels, might facilitate widespread adoption by the global agricultural community.

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The article, “Wirelessly powered sensing fertilizer for precision and sustainable agriculture,” was published in Advanced Sustainable Systems at DOI: 10.1002/adsu.202300314

 

About Osaka University

Osaka University was founded in 1931 as one of the seven imperial universities of Japan and is now one of Japan’s leading comprehensive universities with a broad disciplinary spectrum. This strength is coupled with a singular drive for innovation that extends throughout the scientific process, from fundamental research to the creation of applied technology with positive economic impacts. Its commitment to innovation has been recognized in Japan and around the world, being named Japan’s most innovative university in 2015 (Reuters 2015 Top 100) and one of the most innovative institutions in the world in 2017 (Innovative Universities and the Nature Index Innovation 2017). Now, Osaka University is leveraging its role as a Designated National University Corporation selected by the Ministry of Education, Culture, Sports, Science and Technology to contribute to innovation for human welfare, sustainable development of society, and social transformation.

Website: https://resou.osaka-u.ac.jp/en


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Canadian dollar eyes Cdn. inflation, US retail sales

Canadian inflation expected to remain unchanged US retail sales projected to ease The Canadian dollar is trading quietly in the European session. USD/CAD…

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  • Canadian inflation expected to remain unchanged
  • US retail sales projected to ease

The Canadian dollar is trading quietly in the European session. USD/CAD is trading at 1.3635, up 0.18%. We could see stronger movement in the North American session, with the release of Canada’s inflation report and US retail sales.

Canada’s inflation rate rose unexpectedly in August, rising from 3.3% y/y to 4.0%. This marked a second straight acceleration and if inflation rises again in today’s release, it will increase the likelihood of the Bank of Canada delivering another rate hike. The market estimate is that inflation will remain unchanged at 4.0%. The core rate is also expected to stay steady at 3.3% y/y.

The Bank of Canada meets next on October 25th, and today’s inflation release could be the make-or-break factor for the central bank. If inflation rises, that would support a rate hike. Conversely, no change or a drop in inflation would indicate that the rise in inflation over the past two months has been halted, lending weight to the BoC opting to hold rates.

Is the party over for US retail sales? Consumers have kept spending despite high inflation and elevated interest rates, but retail sales is expected to ease in September to 0.3% m/m, compared to 0.6% in August. On an annualized basis, retail sales are expected to drop to 1.5% in September, down sharply from 2.5% in August.

The Israel-Hamas war is causing plenty of anxiety for investors, but the US dollar, a traditional safe-haven asset, has not benefited from the turmoil. There is widespread concern that the Israel-Hamas war could spread to Lebanon and even to Iran. The US is determined to halt any contagion and has dispatched aircraft carriers to the region, while President Biden is on his way to Israel to show support.

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USD/CAD Technical

  • USD/CAD tested resistance at 1.3643 earlier. Above, there is resistance at 1.3716
  • 1.3585 and 1.3512 are providing support

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