Latest news with #Euro-zone
Yahoo
4 days ago
- Business
- Yahoo
Treasury Rally Stalls as ECB Sparks Euro-Zone Bond Selloff
(Bloomberg) -- Treasury yields climbed Thursday as a selloff in European government bonds overshadowed weakening US labor market data. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract Next Stop: Rancho Cucamonga! The Global Struggle to Build Safer Cars US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Where Public Transit Systems Are Bouncing Back Around the World The price action highlighted the monetary-policy divergence between the regions. Euro-zone yields rose after the European Central Bank, which cut interest rates as expected, indicated it may not do so again, prompting traders to reposition. US yields rebounded from session lows reached after an unexpected increase in new jobless claims caused traders to briefly price in an earlier start to Federal Reserve interest-rate cuts — in September versus October. With more comprehensive May employment data to be released Friday, the claims figures highlighted the prospect that the Fed will act to prevent further labor-market erosion, even as short-term inflation expectations have picked up based on the Trump administration's tariff's agenda. 'Market pricing now shows a big gap between ECB and Fed rate-cut expectations for 2025,' said Hussain Mehdi, director of investment strategy at HSBC Asset Management. 'The Fed remains hamstrung by inflation amid the supply shock that is higher tariffs,' which likely 'keeps US yields sticky.' Related story: Bond Forwards Signal Tariff-Driven Inflation May Be Short-Lived Treasury yields were mostly higher at midday in New York, after erasing declines. The two-year note's yield, more sensitive than longer-dated yields to shifting expectations for Fed policy, was higher by about four basis points after erasing a similar-magnitude decline. Swap contracts ceased to fully price in a September rate cut, while continuing to price in at least two quarter-point cuts by year-end. Most euro-zone two-year yields ended higher by at least five basis points, after ECB President Christine Lagarde said the central bank was approaching the end of its monetary policy cycle and may revise its growth forecast higher in the future. Bond-market momentum also was sapped after reports US President Donald Trump and Chinese President Xi Jinping held their first official phone call since Trump took office in January. Trade tensions between the world's two largest economies have caused bouts of risk aversion and capital flows from stocks into bonds. The Treasury market rally sparked by the jobless claims data followed its biggest daily advance in two months on Wednesday, also in response to a weak job-market indicator. 'The economy is slowing,' Krishna Memani, chief investment officer for Lafayette College, said on Bloomberg Television. 'The hard data is softening. There is a substantial trend for slowing in the economy' that 'gives the Fed the path to cut rates, not today, but in the later half of the year.' As measured by the Bloomberg Treasury Index, Wednesday's gain — sparked by a sub-par gauge of private-sector job growth — was the biggest since April 3. Futures open-interest data released after the close indicated new long positions were set, and the 10-year note contract's price reached a level that was likely to cause shorts to cover, interest-rate strategists at Citigroup said. That may have amplified the market's reaction to the jobless claims data. 'The claims numbers are trending higher but it's not in alarming territory,' said Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities. Friday's employment data are expected to show nonfarm payrolls increased by 125,000 in May, following a 177,000 jump in April. Faranello said it would take an increase of less than 100,000 to spur Treasury yields to new weekly lows. Earlier Thursday, Treasuries firmed after a sale of Japanese 30-year bonds drew better-than-expected demand. Still, US bonds continue to struggle with investor concern about the nation's fiscal outlook. The 30-year Treasury yield remains more than 20 basis points higher since the end of April. Catalysts included Moody's Ratings stripping the nation of its last top-tier credit score and the US House of Representatives passing a multi-trillion dollar bill extending tax cuts. 'Fiscal concerns in the US will prevent any meaningful rally,' said Mohit Kumar, chief European strategist at Jefferies International. He expects 10-year yields to trade in a 4.25% to 4.75% range despite softening economic data. 'If we rally toward 4.25% in 10s we would use that opportunity to reset a short position.' --With assistance from Alice Atkins, Naomi Tajitsu, Aline Oyamada, Michael Mackenzie and Edward Bolingbroke. (Adds strategist comment, updates yield levels) Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Sign in to access your portfolio
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Business Standard
5 days ago
- Business
- Business Standard
Gold price outlook: Analyst suggests buying on dips; key levels to watch
Gold: Consolidating its gains Performance: Following a sharp rally of 2.33 per cent on Monday, Spot gold prices corrected lower on Tuesday as the US dollar recovered. Gold surged sharply higher on June 2, helped by a weaker dollar and renewed safe-haven demand triggered by escalating US-China tensions and Ukraine's massive drone attack on Russia. On June 3, gold, at the time of writing this report, was changing hands at $3,349, down around 1 per cent on the day, while MCX August gold at ₹97,649 was down roughly 0.31 per cent. The yellow metal was lower as the US dollar index strengthened and risk appetite, despite mostly negative news flow, remained healthy. US-China tensions escalate: On June 2, China accused the US of violating the US-China trade truce as the US imposed further chip technology curbs and halted the export of critical US jet engine parts and technology to China. It also plans to broaden restrictions on China's tech sector with new regulations to capture subsidiaries of companies under US curbs. The US also intends to revoke visas for Chinese students with connections to China's Communist Party and security issues. According to the White House, US President Trump and Chinese President Xi are likely to speak this week. Data roundup: US data released on June 3, were mostly mixed, markets gave more weightage to the JOLTs job openings though. Factory order (April) came in -3.7 per cent against the forecast of -3.2 per cent as the prior data was revised lower from 4.3 per cent to 3.4 per cent. Durable goods order (April final) at -6.3 per cent were in line with the forecast. JOLTs job openings (April) surprisingly beat the forecast as openings rose from 72,00,000 to 73,91,000 as against the forecast of 71,00,000. However, the internals of the JOLTs report was not so encouraging as layoffs increased from 1 per cent to 1.1 per cent and the quits rate dropped from 2.1 per cent to 2 per cent indicating reduced prospects of finding a new job. In addition, vacancies in industries like manufacturing and food services declined. The Euro-zone's inflation cooled more than expected as consumer prices rose 1.9 per cent y-o-y in May, trailing the forecast of 2 per cent; the reading was cooler than the prior data of 2.2 per cent. The data bolsters the case for the ECB cutting its key rates by 25 bps in its monetary policy meeting to be held on June 5. Elsewhere, China's Caixin manufacturing PMI (May) fell to 48.3, the lowest since September 2022, from 50.40 in April as trade frictions weighed on the nation's manufacturing sector. CATCH STOCK MARKET LIVE UPDATES TODAY US dollar index and yields: The US dollar index, at the time of writing, was 99.24, up around 0.60 per cent on the day, as the Index recovered from a six-week low ahead of the US ISM services and nonfarm payroll reports. US 10-year yields at 4.46 per cent were up by nearly 0.50 per cent OECD's warning: The OECD slashed its global economic forecasts on trade war leading to uncertainty on business confidence and investment. The organisation sees global economic growth at 2.9 per cent in 2025 from its earlier forecast of 3.1 per cent made in March as the US growth is expected to be 1.6 per cent as compared to its earlier estimate of 2.2 per cent. The OECD forecasts a global growth of 2.9 per cent in 2026, down from the previous forecast of 3 per cent. The organisation warned that fiscal risks are intensifying around the world with tremendous pressure for spending on defence, climate, and aging population. ETF: Total known global gold ETF holdings rose to 88.336MOz on June 2, which is the highest level since May 15. Gold ETFs recorded their first weekly inflow last week after five consecutive weekly outflows. Holdings are up nearly 6.6 per cent year-to-date (Y-T-D). Central Banks' gold buying: Global central banks bought a net 12 tons in April, 12 per cent lower than the previous month. Slower pace of buying could be due to high gold prices in April. Upcoming data: Today's US data on the card include crucial ADP employment change (May) and ISM services (May). Fed will release its beige book, too. Outlook: Spot gold is likely to range trade ahead of the US ISM services and nonfarm payroll reports. US-China tensions and worries over fiscal issues are likely to support the metal. It is advisable to 'buy the dips' for a possible test of $3,435 (₹1,00,000) resistance unless there is a clear improvement in US-China talks or the US nonfarm payroll report is stronger than expected. Support is at $3,325 (₹96,900)/$3,292 (₹95,900). Resistance is at $3,372 (₹98,300)/$3400 (₹99,100)/$3,415 (₹99,500).
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Business Standard
5 days ago
- Business
- Business Standard
Silver price outlook: 'Buy on dips' suggests analyst; check key levels here
Silver- Consolidation ahead of key US data On June 2, spot silver staged its sharpest intra-day rally since 2021 as it surged 5.39 per cent to close at $34.76, the highest daily closing level since October 22. The white metal consolidated its gains on June 3 as the US dollar index strengthened. At the time of writing, spot silver was trading at $34.54, down around 0.63 per cent on the day. The MCX July contract was trading at ₹102,260, up around 0.2 per cent. US-China tensions escalate: On June 2, China accused the US of violating the US-China trade truce as the US imposed further chip technology curbs and halted the export of critical US jet engine parts and technology to China. It also plans to broaden restrictions on China's tech sector with new regulations to capture subsidiaries of companies under US curbs. The US also intends to revoke visas for Chinese students with connections to China's Communist Party and security issues. According to the White House, US President Trump and Chinese President Xi are likely to speak this week. Data roundup: US data released on June 3, were mostly mixed, markets gave more weightage to the JOLTs job openings though. Factory order (April) came in at -3.7 per cent against the forecast of -3.2 per cent as the prior data was revised lower from 4.3 per cent to 3.4 per cent. Durable goods order (April final) at -6.3 per cent were in line with the forecast. JOLTs job openings (April) surprisingly beat the forecast as openings rose from 72,00,000 to 73,91,000 as against the forecast of 71,00,000. However, the internals of the JOLTs report was not so encouraging as layoffs increased from 1 per cent to 1.1 per cent and the quits rate dropped from 2.1 per cent to 2 per cent indicating reduced prospects of finding a new job. In addition, vacancies in industries like manufacturing and food services declined. The Euro-zone's inflation cooled more than expected as consumer prices rose 1.9 per cent year-on-year (Y-o-Y) in May, trailing the forecast of 2 per cent; the reading was cooler than the prior data of 2.2 per cent. The data bolsters the case for the ECB cutting its key rates by 25 bps in its monetary policy meeting to be held on June 5. Elsewhere, China's Caixin manufacturing PMI (May) fell to 48.3, the lowest since September 2022, from 50.40 in April as trade frictions weighed on the nation's manufacturing sector. ALSO READ | US dollar index and yields: The US dollar index, at the time of writing, was 99.24, up around 0.60 per cent on the day, as the Index recovered from a six-week low ahead of the US ISM services and nonfarm payroll reports. US 10-year yields at 4.46 per cent were up by nearly 0.50 per cent OECD's warning: The OECD slashed its global economic forecasts on trade war leading to uncertainty on business confidence and investment. The organisation sees global economic growth at 2.9 per cent in 2025 from its earlier forecast of 3.1 per cent made in March as the US growth is expected to be 1.6 per cent as compared to its earlier estimate of 2.2 per cent. The OECD forecasts a global growth of 2.9 per cent in 2026, down from the previous forecast of 3 per cent. The organisation warned that fiscal risks are intensifying around the world with tremendous pressure for spending on defence, climate and aging population. ETF: Total known global ETF silver holdings, as of May 2, stood at 741.23MOz—highest since 20 November 2024. Silver ETF holdings are up by 4.95 per cent this year as holdings recorded net inflows for four straight weeks. Robert Kiyosaki on Silver: According to the Rich Dad Poor Dad author, silver has the potential to triple in value, calling the asset the biggest bargain of 2025. Outlook: As risk appetite is healthy and silver ETF holdings are rising, silver is likely to do well unless the US dollar rises sharply, or extreme risk aversion takes center stage. In this scenario, it is advisable to 'buy the dips' as the metal is expected to test the key resistance at $35 (₹102,500). A decisive breach of these levels may take the metal quickly to $37 (₹1,08,000). In the near term, the $33.50-$33.70 (₹98,200-₹98,800) zone will act as a key support zone.
Kuwait Times
6 days ago
- Business
- Kuwait Times
Global economy remains vulnerable to US tariffs
KUWAIT: The global economy remains vulnerable to US tariff policy with the recent US court developments injecting a new layer of uncertainty. In effect, as long as tariff cases are in front of the courts, not much progress can be expected in terms of US trade negotiations with trading partners. In the US, irrespective of court developments, the administration is sticking with its plans to impose tariffs, utilizing, if need be, other routes. In the Euro-zone, the ECB is set to cut rates again while the EU's trade negotiations with the US will likely be very difficult. In the UK, despite positive deal-making with the US/EU/India, the outlook is shaky amid limited policy support and global trade uncertainty. In Japan, soaring bond yields further complicate the BoJ's job and bring the public finances to the limelight. Finally, despite the recent heightened China-US tensions, a resumption of the de-escalatory bias between them will not be surprising. Irrespective of how the current tariff-related legal developments will unfold, the US administration will likely stick with its plans to impose tariffs, utilizing, if need be, several other routes. However, until the courts' final say on the current cases is clear, President Trump's bargaining power in his ongoing negotiations with the US's key trading partners is weakened substantially. Importantly, this means that not much can be expected from the US's trade negotiations with its main trading partners as long as the cases are in front of the courts. And while policy uncertainty has already been very high since Trump took office, another layer of court-related legal uncertainty has now been added. Court developments aside, a key date is July 9, which is the date when the pause on the 'reciprocal' tariffs would end. Earlier, the US and China had diffused their trade war, but negotiations have since stalled, and tensions re-escalated recently. While further escalation following the 90-day window is possible, we think the more plausible scenario is that a de-escalatory bias will resume as the world's two largest economies got a feel of the enormous economic damage that will ensue from a full-blown trade war. Meanwhile, the House passed the GOP's 'Big, Beautiful Bill', which is a step in the wrong direction given that it worsens an already unsustainable debt trajectory, although it is positive for economic growth in the short term. The bill is now in front of the Senate, where it is expected to undergo some amendments although it will very likely remain a debt-increasing bill. Meanwhile, GDP contracted in Q1 on tariff front-running, but the labor market remains broadly resilient with three-month average job gains at 155K/month. Hence, the Fed will likely remain in a wait-and-see mode while markets are currently pricing-in around two 25 bps rate cuts by year-end. In our view, a US recession will be avoided on condition that a major tariff escalation does not get re-ignited. The prior tariff de-escalation drove a V-shaped rebound in the S&P 500 index although the US dollar index remains 10 percent below a recent high reached in January. The Euro-zone economy started the year on a good note, growing by a higher-than-expected 0.3 percent q/q in Q1, strengthening from 0.2 percent in the previous quarter. Meanwhile, headline inflation is almost at target, standing at 2.2 percent y/y although further progress is needed in terms of core and services inflation. Nevertheless, more recent indicators are starting to reflect the tariff-related headwinds with the PMI dropping below 50 (49.5 in May) for the first time this year. The ECB has carried on with its easing policy, cutting rates seven times since June 2024, and near certain to cut again in its meeting this week. Despite the bank, back in March, dropping reference to their policy remaining 'restrictive', the futures market is still indicating additional one-to-two cuts in the second half of the year, reflecting the magnitude of the trade-related uncertainties ahead. Obviously, the EU's (US's largest trading partner) trade-related developments are a key factor shaping the outlook, especially following Trump's threat to hike the 'reciprocal' tariffs on the EU to 50 percent. Even if the courts upheld the initial ruling of blocking Trump's reciprocal tariffs, sectoral tariffs on autos and steel/aluminum (soon doubling) remain in place, while many other sectoral tariffs are in the pipeline, meaning that the Euro-zone will not be immune to further trade-related shocks. Irrespective of the court rulings, Trump's statements, on several occasions, exhibited high animosity towards the EU, which coupled with a high merchandise trade imbalance in favor of the EU, mean that US-EU negotiations will likely be very difficult. The structure of the EU, and its generally slow decision-making process, is another factor making these negotiations challenging. Having said that, EU officials have exhibited a strong preference not to escalate matters with the US. Notwithstanding an above-consensus GDP growth in Q1 (0.7 percent q/q), UK's outlook remains uninspiring as the rise came mainly on manufacturing and exports front-running US tariffs, while domestic consumption remained stagnant. The UK managed to strike a trade framework with the US, which should benefit UK auto exporters among others, but the 10 percent baseline tariff remained in place, the status of which is in front of the courts now. Talks are continuing to finalize details with still several key sticking points. In other positive developments, the UK successfully reset its post-Brexit trade ties with the EU and signed a long-awaited trade agreement with India. Despite these favorable trade-related developments, the Bank of England (BoE) warned of US' tariff policies and their indirect impact through disruptions to global supply chains. A continued subdued growth outlook would further pressure the public finances, noting that Chancellor Reeves, in March, had reduced some welfare and other spending items to help maintain her fiscal rule. Moreover, the hike in employers' national insurance contributions could continue to adversely impact employment levels. Accordingly, the BoE, in May, trimmed its growth forecast for the coming quarters, to only 0.1 percent q/q in Q2 and around 0.3 percent in Q3/Q4 while cutting the policy rate by 25 bps to 4.25 percent, but simultaneously guiding for 'a careful and gradual approach' and anticipating 'temporary' spikes in inflation over the coming months. CPI inflation jumped to a 15-month high of 3.5 percent y/y in April from 2.6 percent in March mainly on higher utility and other government fees, which the BoE does not expect to persist next year. Amid an uninspiring economic landscape but still elevated wage growth (5.6 percent y/y) and slow progress on services inflation (5.4 percent y/y), markets are currently pricing-in one to two 25 bps rate cuts by end-2025. Soaring bond yields in Japan further complicate BoJ's job and bring the public finances to the limelight. Japan's economy contracted by 0.2 percent q/q in Q1, its first decline in a year, driven by flattening consumption, a 0.6 percent q/q decrease in exports, and a sharp 2.9 percent rise in imports. Despite a robust 5.4 percent wage hike from the 2025 Shunto negotiations that built on a similar increase last year, real wages decreased in Q1, weighing on household spending while export performance deteriorated under the strain of US tariffs. Meanwhile, inflationary pressures continued with the core CPI (excluding fresh food) rising by 3.5 percent y/y in April, the highest since January 2023 with food inflation remaining particularly acute. In response to these challenges, the government recently rolled out a relief package worth JPY2.8 trillion ($20 billion) to support households grappling with the rising cost of living and to counter the negative impact of higher US tariffs. Trade negotiations with the US are continuing with the US-imposed 25 percent sectoral tariff on autos, a key sector for Japan, one of several important sticking points. Prime Minister Ishiba and President Trump are scheduled to meet in mid-June on the sidelines of the G7 meeting in Canada, and agreeing on some sort of a trade framework by then remains a possibility although a limited one given the court developments in the US. Meanwhile, increasing fiscal vulnerabilities coupled with the Bank of Japan's (BoJ) ongoing tapering of bond purchases have contributed to pushing long-term bond yields to multi-year highs. This is putting the BoJ in an even more difficult position, which has already been grappling with major growth headwinds and inflation that has exceeded target for around three years. The steep rise in bond yields will strain public finances, dampen growth, and risk delivering large losses to institutional investors' balance sheets. Despite the headwinds, the Chinese economy grew 5.4 percent y/y in Q1, beating expectations and the 'around 5 percent' government's growth target for 2025. Exports continue to be a main growth driver, surging by 12 percent and 8 percent y/y in March and April, respectively, easily beating expectations as lower exports to the US were more than compensated by higher exports elsewhere, especially to East Asian countries. The prior de-escalation with the US, although supposedly temporary given the 90-day window, was a major relief. In our view, China has emerged having the upper hand as, even before the recent court rulings in the US, and excluding the original 20 percent fentanyl-related deemed tariffs, US tariffs on Chinese imports stood at 10 percent, equal to the Chinese tariffs on US imports. Comparatively, almost all countries globally were slapped with that 10 percent baseline US tariff, that none had retaliated against. While renewed escalation following the 90-day window is possible (especially given the current stalled negotiations), we think the more plausible scenario is that a de-escalatory bias will resume, as mentioned before. Prior to the de-escalation with the US, overall sentiment weakened with the official PMI decreasing to 50.2 in April with the manufacturing PMI falling to a 16-month low of 49.0, before both improved slightly in May. Meanwhile, domestic demand remains muted with CPI inflation in negative territory for the third straight month in April and the PPI in deflation for more than 2.5 years. Given the headwinds, the central bank eased policy in May, cutting several of its policy rates and the reserve requirement ratio, among other measures taken. Looking ahead, while a stronger fiscal and monetary policy support may be forthcoming, a sustained de-escalatory stance with the US will lower the scale of such support.
Qatar Tribune
6 days ago
- Business
- Qatar Tribune
Global economy remains vulnerable to US tariffs
Agencies The global economy remains vulnerable to US tariff policy with the recent US court developments injecting a new layer of uncertainty. In effect, as long as tariff cases are in front of the courts, not much progress can be expected in terms of US trade negotiations with trading partners. In the US, irrespective of court developments, the administration is sticking with its plans to impose tariffs, utilizing, if need be, other routes. In the Euro-zone, the ECB is set to cut rates again while the EU's trade negotiations with the US will likely be very difficult. In the UK, despite positive deal-making with the US/EU/India, the outlook is shaky amid limited policy support and global trade uncertainty. In Japan, soaring bond yields further complicate the BoJ's job and bring the public finances to the limelight. Finally, despite the recent heightened China-US tensions, a resumption of the de-escalatory bias between them will not be surprising. Irrespective of how the current tariff-related legal developments will unfold, the US administration will likely stick with its plans to impose tariffs, utilizing, if need be, several other routes. However, until the courts' final say on the current cases is clear, President Trump's bargaining power in his ongoing negotiations with the US's key trading partners is weakened substantially. Importantly, this means that not much can be expected from the US's trade negotiations with its main trading partners as long as the cases are in front of the courts. And while policy uncertainty has already been very high since Trump took office, another layer of court-related legal uncertainty has now been added. Court developments aside, a key date is July 9, which is the date when the pause on the 'reciprocal' tariffs would end. Earlier, the US and China had diffused their trade war, but negotiations have since stalled, and tensions re-escalated recently. While further escalation following the 90-day window is possible, we think the more plausible scenario is that a de-escalatory bias will resume as the world's two largest economies got a feel of the enormous economic damage that will ensue from a full-blown trade war. Meanwhile, the House passed the GOP's 'Big, Beautiful Bill', which is a step in the wrong direction given that it worsens an already unsustainable debt trajectory, although it is positive for economic growth in the short term. The bill is now in front of the Senate, where it is expected to undergo some amendments although it will very likely remain a debt-increasing bill. Meanwhile, GDP contracted in Q1 on tariff front-running, but the labor market remains broadly resilient with three-month average job gains at 155K/month. Hence, the Fed will likely remain in a wait-and-see mode while markets are currently pricing-in around two 25 bps rate cuts by year-end. In our view, a US recession will be avoided on condition that a major tariff escalation does not get re-ignited. The prior tariff de-escalation drove a V-shaped rebound in the S&P 500 index although the US dollar index remains 10 percent below a recent high reached in January. The Euro-zone economy started the year on a good note, growing by a higher-than-expected 0.3 percent q/q in Q1, strengthening from 0.2 percent in the previous quarter. Meanwhile, headline inflation is almost at target, standing at 2.2 percent y/y although further progress is needed in terms of core and services inflation. Nevertheless, more recent indicators are starting to reflect the tariff-related headwinds with the PMI dropping below 50 (49.5 in May) for the first time this year. The ECB has carried on with its easing policy, cutting rates seven times since June 2024, and near certain to cut again in its meeting this week.
