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Bloomberg
12 hours ago
- Business
- Bloomberg
Euro-Zone Firms' Loan Demand Stays Weak Amid Tariff Dispute
Euro-zone companies' appetite for loans remained subdued in the months after Donald Trump's tariff announcements, the European Central Bank said in a report that shows how the standoff with the US is weighing on the bloc's economy. 'Loan demand was supported by declining interest rates, but dampened by global uncertainty and trade tensions,' the ECB said Tuesday in its Bank Lending Survey. While lenders saw a 'slight net increase' in the second quarter, uptake remained 'weak overall,' it said.
Yahoo
22-07-2025
- Business
- Yahoo
Dollar Falls due to Lower T-note Yields
The dollar index (DXY00) on Tuesday fell by -0.47% and posted a 1.5-week low. The dollar was under pressure Tuesday from lower T-note yields. Losses in the dollar accelerated after the US July Richmond Fed manufacturing index unexpectedly fell to an 11-month low. The dollar found some underlying support Tuesday on comments from Treasury Secretary Bessent, who said, 'he sees no reason for Fed Chair Powell to step down right now.' The dollar has been under pressure due to concern President Trump might fire Powell, which could prompt foreign investors to shun dollar assets over questions of the Fed's independence. More News from Barchart Dollar Falls as Stocks Rally and T-note Yields Decline Dollar Slips Due to Strength in Stocks and Lower T-note Yields Dollar Weakens and Gold Rallies as T-note Yields Slide Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. The US July Richmond Fed manufacturing survey of current conditions index unexpectedly fell -12 to an 11-month low of -20, weaker than expectations of an increase to -2. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 5% at the July 29-30 FOMC meeting and 58% at the following meeting on September 16-17. EUR/USD (^EURUSD) Tuesday rose by +0.47% and posted a 2-week high. Dollar weakness on Tuesday boosted the euro. The euro also has support on expectations that the ECB will keep interest rates unchanged at Thursday's policy meeting. Gains in the euro were limited after Tuesday's quarterly Bank Lending Survey from the ECB said that loan demand remained weak, a dovish factor for ECB policy and negative for the euro. The euro is also under pressure on concerns that President Trump is pushing for a minimum tariff of 15%-20% in any trade deal with the European Union (EU), as Mr. Trump has remained unmoved by the latest EU offer to reduce car tariffs. Higher tariff rates on EU goods could undercut the Eurozone economy, a bearish factor for the euro. The ECB's quarterly Bank Lending Survey stated that 'Loan demand was supported by declining interest rates, but dampened by global uncertainty and trade tensions, and while lenders saw a slight net increase in loan demand in Q2, the uptake remained weak overall.' Swaps are pricing in a 2% chance of a -25 bp rate cut by the ECB at Thursday's policy meeting. USD/JPY (^USDJPY) Tuesday fell by -0.58%. The yen recovered from overnight losses and climbed to a 1-week high against the dollar Tuesday after T-note yields fell when Treasury Secretary Bessent said 'he sees no reason for Fed Chair Powell to step down right now.' The yen initially moved lower Tuesday after Bloomberg reported that BOJ policymakers will likely keep the policy rate at 0.5% at next week's BOJ meeting. The upside in the yen in the near term may be limited due to concerns that the LDP's loss of its majority in Japan's upper house in Sunday's elections may lead to fiscal deterioration in Japan's government finances, as the government boosts spending and implements tax cuts. A report from Bloomberg said that Bank of Japan (BOJ) officials see little need to shift their policy stance of gradually raising interest rates after Prime Minister Ishiba's election setback and that policymakers will likely keep the policy rate at 0.5% at next week's BOJ meeting. Policymakers also want to see how any trade deal between Japan and the US affects the inflation trend and the economy going forward before raising rates again. August gold (GCQ25) Tuesday closed up +37.30 (+1.09%), and September silver (SIU25) closed up +0.221 (+0.56%). Precious metals settled higher on Tuesday, with gold climbing to a 5-week high, Sep silver posting a contract high, and nearest-futures (N25) silver posting a nearly 14-year high. Tuesday's fall in the dollar index to a 1.5-week low was bullish for metals prices. Also, lower global bond yields on Tuesday were supportive for precious metals. In addition, precious metals garnered support from today's ECB quarterly Bank Lending Survey, which said loan demand remained weak in Q2, a dovish factor for ECB policy. Finally, precious metals have safe-haven support from global trade tensions, following President Trump's announcement last Wednesday that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1. Fund buying of gold continues to support prices after gold holdings in ETFs rose to a nearly 2-year high Monday. Silver prices were undercut Tuesday after the US July Richmond Fed manufacturing index unexpectedly fell to an 11-month low, a negative factor for industrial metals demand. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
Irish Examiner
22-07-2025
- Business
- Irish Examiner
Pause in ECB rate cuts anticipated amid uncertainty and steady inflation
The Governing Council of the European Central Bank will meet this week, with a pause in rate reductions largely anticipated after seven consecutive cuts in response to falling inflation. Policymakers will gather in Frankfurt on Thursday to consider the performance of the 20-country eurozone amid tariff threats from US President Donald Trump and ongoing political turmoil. After a total eight quarter-point moves that have brought the deposit rate to 2%, ECB President Christine Lagarde said last month that the cutting cycle is nearing its end, with the bank's deposit facility now at 2%. Inflation across the eurozone crept up marginally in June, rising to the ECB's target of 2%, up from 1.9% a month earlier, as energy and industrial goods continued to pull down prices, offsetting quick services inflation. Underlying inflation, a closely watched measure that excludes volatile food and fuel prices, meanwhile held steady at 2.3%, in line with expectations. Policymakers reckon they are well-positioned to sit out the elevated uncertainty, with borrowing costs at neutral levels that neither restrict nor spur economic activity. A key indicator of the influence rates are exerting will arrive on Tuesday with the ECB's quarterly Bank Lending Survey, the first since Trump unveiled his levies in April. Worried about growing risks, banks previously reported tighter credit standards, however, ECB Executive Board member Isabel Schnabel has said the last poll revealed a stimulative effect as lower borrowing costs boosted demand for mortgages. Speaking on the upcoming decision, Daragh Cassidy on said: "After seven consecutive rate cuts, and eight in total since last June, it's almost a given that the ECB will keep rates on hold at its next meeting. "Inflation is now pretty much bang on target at 2%. And with the ECB's key policy rate also at 2%, it's close to the level that's considered neutral for the Eurozone economy. "However, one further rate cut later in the year is still on the cards, probably in September. But the impact of Trump's tariffs on the Eurozone and global economy is creating huge uncertainty and making the outlook incredibly hard to forecast. "If the tariffs drag down Eurozone growth, or trigger a recession, the ECB could be forced to cut rates even further. We just don't know at this stage how it's going to all play out. But for now, the ECB is likely to keep rates on hold and adopt a 'wait-and-see' approach."
Reuters
17-04-2025
- Business
- Reuters
ECB live updates: Rate cut expected as Trump tariffs turmoil weighs
Summary European Central Bank expected to cut rates Decision due at 2:15 p.m. (1215 GMT) ECB's Lagarde press conference at 2:45 p.m. Trade turmoil expected to weigh on growth Read Reuters full wrapup on the decision here The ECB rate decision will be announced shortly a few seconds ago 08:13 EDT What to look out for from Lagarde 5 minutes ago 08:08 EDT Balazs Koranyi Investors will sift through Lagarde's comments for clues about future policy. They will want to see if the ECB maintains a reference to rates being restrictive. Such a phrase would signal that more policy easing remains the baseline. They are also looking for a possible update on the impact of trade barriers. While Lagarde offered some numbers late last month, ECB staff were working to refine estimates and she may choose to share more, even though new official projections are not due until June. Investors will also want to see if she offers any signal beyond the usual that ECB decisions are "data-dependent" and will be taken "meeting by meeting". Finally, Lagarde is likely to be asked if the central bank can estimate the impact of an expected surge in German government spending under the new coalition government, which has promised big defence and infrastructure investments. Lagarde is likely to deflect these questions, however, as the ECB tends to estimate only the impact of enacted policy rather than proposals. The spending is nevertheless likely to boost both growth and inflation further out, possibly forcing the ECB to reverse rate cuts. Trump again calls for the Fed to cut rates 15 minutes ago 07:58 EDT Meanwhile Trump called for the U.S. central bank to cut interest rates. In a post on his social media platform Truth Social, Trump also said Federal Reserve Chair Jerome Powell's termination "cannot come fast enough". He reiterated his stance on rate cuts, saying that Powell "should have lowered interest rates, like the ECB, long ago, but he should certainly lower them now." Euro zone banks tighten corporate credit access - ECB survey 17 minutes ago 07:56 EDT Balazs Koranyi Euro zone banks curbed firms' access to credit last quarter, the ECB's latest lending survey showed on Tuesday. It also showed banks expect to keep tightening credit standards due to increasing concerns about the economic outlook. Lending growth has been on a modest upward slope for most of the past year, helped by falling ECB interest rates, but the upside is now seen as limited given the global turmoil caused by erratic U.S. trade policy. Driven by a shift in Germany and several smaller euro zone nations, banks tightened credit standards – their internal guidelines or loan-approval criteria – for business loans in the first quarter, the ECB said. Although this tightening was smaller than banks earlier predicted, it was driven by higher perceived risks related to the economic outlook, the ECB said based on its Bank Lending Survey, a key input into Thursday's interest rate decision. Demand for corporate credit also decreased last quarter but banks see a small rebound in the current quarter despite higher risk perceptions reported by lenders in Germany, France and Italy. Euro eases ahead of ECB meeting 23 minutes ago 07:50 EDT The euro eased against the dollar ahead of the ECB's expected interest rate cut. Meanwhile the greenback lifted off seven-month lows against the yen after U.S.-Japan trade talks avoided the issue of foreign exchange. President Trump's erratic trade policy has clouded the outlook for global growth and inflation, putting central banks in a tricky position as they assess next steps as more tariffs loom. The euro eased 0.38% to $1.1359 after touching $1.14 earlier in the session, not far off its three-year high reached last Friday. Investor confidence in U.S. economic growth and stability has been shaken in the past few weeks due to the tariff-induced market turmoil, weakening the dollar as some moved money out of U.S. assets. The greenback attempted a bounce on Thursday against major peers ahead of the long Easter break, but was still on track to end the week in the red, making it four weekly losses in a row. The dollar index nudged up to 99.56. 34 minutes ago 07:39 EDT Jan Strupczewski Euro zone financial markets are functioning well despite global turbulence and the ECB is ready to deploy its financial instruments to maintain financial stability if necessary, Lagarde said last week. Global markets have been hit by wild swings last week as investors reacted to news following Trump 's announcement of sweeping tariffs. "In Europe and in the euro area in particular, we have observed that market infrastructures and... the bond market (are) functioning in an orderly fashion," Lagarde said. Lagarde said the ECB did not target any particular exchange rate but remained attentive to movements since they impact inflation and needed to be factored into economic models. The euro's trade-weighted exchange rate hit an all-time high last week, which is likely to lower inflation since these movements make imports cheaper but could also slow economic growth since exporting goods becomes more expensive. This is one of the key reasons why financial investors think a rate cut by the ECB is essentially a done deal, to be followed by more easing later in the year. Lagarde said the ECB was always ready to act and had a solid track record in devising new instruments when required. What is the ECB expected to do? 38 minutes ago 07:35 EDT Indradip Ghosh The European Central Bank is all but certain to cut interest rates for the seventh time in a year. The vast majority of economists polled by Reuters predicted a 25 basis point cut to 2.25%. Traders also fully price a 25 basis point cut, a move they had seen as more of a coin toss before catching on that Trump's reciprocal tariffs were really on the way. Societe Generale said it wouldn't rule out a larger 50 basis point cut to more clearly exit a restrictive monetary policy stance. an hour ago 07:23 EDT Here are some of the key questions for markets as the ECB meets: How will Trump's latest tariffs impact growth and inflation? Hard to say, given negotiations ahead. But even with the 90-day reprieve, the EU is still being hit by a broad 10% tariff, not to mention higher rates on steel, aluminium and cars, so they will certainly hurt growth. Before Trump's U-turn, ECB sources told Reuters a previous estimate of a 0.5-percentage-point hit to growth in the first year was too low and could even exceed 1 percentage point, which would wipe out all expected growth for 2025. The impact on inflation is more ambiguous and will depend on the degree of retaliation against Trump's tariffs and, longer term, on how fragmented global trade becomes. Will the ECB have to speed up rate cuts? Markets certainly think so. Traders now expect the ECB to cut rates twice more this year after Thursday. That's quite a change, given they had seen less than a full chance of another move this year and priced in the chance of a 2026 hike when the bank last convened in March. But economists see a more modest path. The median expectation in a Reuters poll was for just one further cut, putting rates at 2% in the second half of the year. How concerned is the ECB about financial stability? Policymakers don't seem alarmed yet, but have stepped up their monitoring of banks and markets. Euro zone bonds have also swung, but been less volatile than U.S. Treasuries, while the gap in borrowing costs between poorer member states and Germany, Europe's largest economy, has not widened to worrying levels. President Trump's policies in recent weeks have eroded confidence in the US dollar, ECB policymaker Francois Villeroy de Galhau said last week. Speaking on France Inter radio, Villeroy - who is also head of the Bank of France - said the protectionism and unpredictability of the Trump administration were "bad elements" for the U.S. economy. He was speaking after Trump said he would temporarily lower the hefty duties he imposed on dozens of countries while further ramping up pressure on China, sending global stocks rocketing higher. "The big element of constancy in U.S. policy of the past decades is the attachment to the central role of the dollar. I believe that the Trump administration also has that view, but it is very incoherent in the way it practices that. What has happened in recent days and weeks plays against the confidence in the US currency," Villeroy said. He added that this can be a positive factor in the development of the international role of the euro. "Thank God that Europe, 25 years ago, created the euro. We have created our own monetary autonomy, we can manage our interest rates in a way that is different from the Americans, that was not the case before," he said. an hour ago 07:05 EDT FILE PHOTO: ECB President Christine Lagarde in Frankfurt, Germany, March 6, 2025. REUTERS/Jana Rodenbusch Last month, the ECB lowered the deposit rate to 2.5%. The central bank warned of "phenomenal uncertainty" including the risk that trade wars and more defence spending could fuel inflation. ECB President Christine Lagarde declined to repeat her past guidance that the downward direction of rates was clear and emphasized that a cut or a pause were both possibilities. "Monetary policy is becoming meaningfully less restrictive," Lagarde said during her press conference last month. "It's not just an innocuous little change, it's a change that has a certain meaning." Lagarde said the central bank for the 20-country euro zone was watching how the transformational changes to fiscal rules announced in March by Germany and the European Commission to boost defence and infrastructure spending would play out. Lagarde said these would support growth. However, a potential trade war with the United States and the currency bloc's possible retaliation could work the other way around and hurt growth while boosting prices. The ECB is expected to cut rates again an hour ago 07:04 EDT Balazs Koranyi The European Central Bank is expected to cut interest rates for the seventh time in a year on Thursday to help the struggling EU economy as it faces new U.S. tariffs. Economists polled by Reuters predict a 25 basis point cut to 2.25% in the ECB decision due at 2:15p.m. (1215 GMT). U.S. President Donald Trump has paused most tariffs, but many remain in place and volatility in financial markets has already done damage. The ECB earlier estimated that growth across the 20 countries using the euro currency could fall by half a percentage point under Trump's tariffs. That estimate could still prove too optimistic. Investors will sift through ECB President Christine Lagarde's comments at a 2:45 p.m. press conference for clues about future policy. We'll bring you her remarks live on this page. But Lagarde may offer little guidance, sticking to her line that the bank will decide its next steps as data come in. The euro has risen 9% amid the volatility, while growth is slowing. Stick with us for the rate decision and reaction.
Reuters
15-04-2025
- Business
- Reuters
Euro zone banks tightening corporate credit access on rising economic risk, ECB survey shows
FRANKFURT, April 15 (Reuters) - Euro zone banks curbed firms' access to credit last quarter and expect to keep tightening credit standards due to increasing concerns about the economic outlook, the European Central Bank's lending survey showed on Tuesday. Lending growth has been on a modest upward slope for most of the past year, helped by falling ECB interest rates, but the upside is now seen as limited given the global turmoil caused by erratic U.S. trade policy. Hoping to at least prop up confidence, the ECB is expected to cut interest rates for the seventh time in a year on Thursday, and two or three times more later in the year, as tariffs curb trade and uncertainty weighs on consumption and investment. Driven by a shift in Germany and several smaller euro zone nations, banks tightened credit standards – their internal guidelines or loan-approval criteria – for business loans in the first quarter and said they expected a further tightening for all loan categories in the current quarter, the ECB said. Although this tightening was smaller than banks earlier predicted, it was driven by higher perceived risks related to the economic outlook, the ECB said based on its Bank Lending Survey, a key input into Thursday's interest rate decision. Demand for corporate credit also decreased last quarter but banks see a small rebound in the current quarter despite higher risk perceptions reported by lenders in Germany, France and Italy. "Loan demand decreased, mainly owing to a negative contribution from firms' inventories and working capital and despite the support from declining interest rates," the ECB said. For mortgages, banks continued to report a surge in demand and easing credit standards, primarily due to rising competition among lenders. Mortgage demand in the current quarter is expected to rise further.
