Latest news with #LeeHardman
Mint
3 days ago
- Business
- Mint
Weak UK Jobs Data Sends Down Pound and Boosts BOE Rate Cut Bets
The pound fell and UK bonds rallied as traders added to bets on interest-rate cuts from the Bank of England after data showed a sharp deterioration in the labor market. Sterling fell as much as 0.7% to $1.3456 on Tuesday, heading for its worst day in a month and leading losses among Group-of-10 currencies. Gilts outperformed euro-area peers, with yields down five to six basis points across the curve. UK employment plunged by the most in five years and wage growth slowed more than forecast, data released on Tuesday showed. That increased traders' conviction that the BOE will deliver two more quarter-point rate cuts this year. 'The UK labour market does seem to be weakening at the margin,' said Mike Riddell, a portfolio manager at Fidelity International, who has a small long position in gilts up to the 10-year maturity and a moderate short position in the pound. If the weakening continues at this pace, the BOE will 'resort to quarterly cuts,' he added. The BOE has already lowered borrowing costs twice this year, bringing the benchmark to 4.25%. Money markets are now fully pricing another reduction in September and see a 90% chance of anoter move by December, up from about 60% on Monday. Gilt yields fell six to seven basis points across the curve. The two-year rate — the most sensitive to monetary policy chances — dropped seven basis points to 3.94%, the lowest in a month. Expectations of lower interest rates and falling bond yields reduced the appeal of the pound, which hit its lowest level against the euro in nearly three weeks. That marks its strongest reaction to a UK payrolls report since September. Still, sterling is one of the highest yielding G-10 currencies and has been bolstered by an uptick in risk sentiment and demand for carry trades. The currency last week touched its strongest level since February 2022. 'The dovish repricing of BOE rate-cut expectations takes some of the shine of the pound,' said Lee Hardman, a senior currency analyst at MUFG. But it's 'unlikely on its own to reverse the recent upward trend unless the BOE signals it is more willing to speed up rate cuts.' What Bloomberg Strategists Say... 'While both headline and private-wage growth slowed, investors need to keep in mind that numbers above 5% are patently incompatible with the idea of 2% inflation, so it's premature to conclude that the path is clear for continued rate cuts.' — Ven Ram, Macro Strategist, Dubai Options markets indicate traders are increasingly divided on the pound's near-term direction. One-week risk reversals — which reflect the difference in demand for bullish versus bearish bets — are trading near parity, signaling uncertainty after six straight days of waning upside momentum. While the softer employment data may help ease concerns among BOE policymakers that pay rises are fueling inflation, consumer price growth remains sticky at 3.5%, above the target. The data 'puts the BOE in an exceptionally challenging situation,' said Zara Nokes, global market analyst at JP Morgan Asset Management. The labor market is 'clearly deteriorating' but inflation is still-elevated and that could keep the BOE 'firmly on hold' until there's more evidence of cooling inflation. The pound's slide helped boost UK stocks, with the export-heavy FTSE 100 index set to close at a record high. About 75% of revenue for the gauge's companies comes from abroad. With assistance from Sujata Rao. This article was generated from an automated news agency feed without modifications to text.
Yahoo
09-04-2025
- Business
- Yahoo
Oil drops to four year low as fears of global recession rise
The pound moved higher against the dollar in early European trading on Wednesday, up 0.4% to $1.2795. The greenback fell to a six-month low as investors questioned whether the world's biggest economy would fall into recession. The dollar extended its losses, with the dollar index ( which measures the greenback against a basket of six currencies, losing 0.6% to 102.31, its lowest point in half a year. Lee Hardman, a senior currency analyst at MUFG, said: "The unfavourable price action has cast some doubt on the safe haven status of the US government bond market and the US dollar at a time when the global trade war is intensifying. "We expect foreign exchange market volatility to remain elevated in the near-term and continue to expect the traditional safe-haven currencies of the yen and Swiss franc to outperform." Read more: FTSE 100 LIVE: Stocks plunge into the red as Trump's 104% China tariffs take effect Markets fear the US might be heading into a recession as Trump imposed the highest US tariffs since the early 20th century. US Customs and Border Protection confirmed that it is prepared to begin collecting country-specific tariffs from 86 trade partners. The 'liberation day' import duties came into full effect at 5am London time. In other currency moves, sterling was down 0.12% against the euro, trading at €1.1624. The single currency has found some support as the European Commission considers slapping tariffs of up to 25% on a broad range of exports from the US worth around €22.1bn (£19bn) based on the EU's 2024 imports. The list features agricultural and industrial commodities such as soybeans, meat, tobacco, iron, steel and aluminium, according to an internal document seen by POLITICO. Most of the tariffs would apply from 15 May, unless blocked by a large majority of member states. Gold prices climbed as US tariffs came into effect, including a huge 104% levy on Chinese goods, with the bullion buoyed by its safe-haven appeal and a weaker dollar. Gold futures gained 2.3% to $3,059.40 per ounce at the time of writing, while the spot price rose 1.2% to $3,043.01 an ounce. "The downward shift in the dollar on tariff worries effectively paved the way for gold to reclaim the $3000 level," KCM Trade chief market analyst Tim Waterer said. "Due to global growth and inflation uncertainties, gold is still on track to pursue new all-time highs despite experiencing a few bumps in its progress over the last week." Read more: Should you buy gold as Trump tariffs sparks surge in demand? The dollar lost ground, making greenback-priced gold cheaper for overseas buyers. "Despite falling for three consecutive sessions, gold remains bullish with trade tensions and the prospect of lower US interest rates boosting its allure. A solid breakout above $3,055 may open the doors back toward $3,100 and $3,130. Sustained weakness below $3,000 could see gold slip toward $2,950 and $2,930", said Lukman Otunuga, senior research analyst at FXTM. Also, investors now have a rather dovish view of the Federal Reserve's future monetary policy, providing an additional fundamental boost to the precious metal. "The significant rise in rate cut expectations in recent days suggest that the gold price will soon rise again", Commerzbank said in a note. Oil prices fell for the fifth consecutive day on Wednesday, reaching their lowest level in four years as recession concerns mount amid an escalating global trade war. Brent crude prices lost 2.8% to $61.03 a barrel at the time of writing. US West Texas Intermediate (WTI) crude retreated by more than 3% to $57.72 a barrel. "China's aggressive retaliation diminishes the chances of a quick deal between the world's two biggest economies, triggering mounting fears of economic recession across the globe," Ye Lin, vice president of oil commodity markets at Rystad Energy, told Reuters. "China's 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses." China has vowed to take 'firm and forceful' steps to protect its interests, after US tariffs of 104% came into effect. Stocks: Create your watchlist and portfolio Beijing's foreign ministry spokesman Lin Jian insisted that 'the Chinese people's legitimate right to development is inalienable'. The world's second-largest economy was the hardest hit by Trump's 'liberation day' tariffs, which followed sweeping 10% levies that came into force at the weekend. In broader market movements, the FTSE 100 (^FTSE) lost 2.6% to 7,702 points on Wednesday morning. For more details, check our live coverage here.
Yahoo
09-04-2025
- Business
- Yahoo
Global Stocks in Turmoil, Bond Yields Soar as Trump Tariffs Go Into Effect
Global stocks are in turmoil and bond yields are spiking after President Donald Trump's "Liberation Day" tariffs went into effect, with Chinese imports facing a 104% levy. MUFG Bank's Lee Hardman said in a note that there is now "some doubt on the safe haven status of the US government bond market and the US dollar." China said that it was "willing to communicate with the U.S. side on key bilateral economic and trade issues." Global stocks are in turmoil and Treasury yields are spiking after President Donald Trump's "Liberation Day" tariffs went into effect at 12:01 a.m. ET Wednesday, with Chinese imports facing a 104% levy. A day after U.S. stock indexes closed lower following a brief surge, Dow Jones Industrial Average futures are about 1% lower, S&P 500 futures are falling 0.6%, and Nasdaq futures are little changed. Meanwhile, the Stoxx Europe 600 index is down about 3%, the Nikkei closed down nearly 4%, and Hong Kong's Hang Seng finished 0.7% higher. Investors' disposal of their most liquid assets are causing a sell-off of U.S. bonds, and sending the 10-year Treasury yield up to 4.39%. The U.S. dollar, meanwhile, is down against the euro, yen, and pound. "The unfavourable price action has cast some doubt on the safe haven status of the US government bond market and the US dollar at the time when the global trade war is intensifying," MUFG Bank's Lee Hardman said in a note Wednesday. China reiterated it would 'fight to the end' but said it was "willing to communicate with the U.S. side on key bilateral economic and trade issues." The Ministry of Commerce said China "hopes the United States will immediately remove its unilateral imposition of tariffs, and work with China to strengthen dialogue, manage differences, and promote cooperation," the official Xinhua News Agency reported Wednesday. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
09-04-2025
- Business
- Yahoo
Oil drops to four year low as fears of global recession rise
The pound moved higher against the dollar in early European trading on Wednesday, up 0.4% to $1.2795. The greenback fell to a six-month low as investors questioned whether the world's biggest economy would fall into recession. The dollar extended its losses, with the dollar index ( which measures the greenback against a basket of six currencies, losing 0.6% to 102.31, its lowest point in half a year. Lee Hardman, a senior currency analyst at MUFG, said: "The unfavourable price action has cast some doubt on the safe haven status of the US government bond market and the US dollar at a time when the global trade war is intensifying. "We expect foreign exchange market volatility to remain elevated in the near-term and continue to expect the traditional safe-haven currencies of the yen and Swiss franc to outperform." Read more: FTSE 100 LIVE: Stocks plunge into the red as Trump's 104% China tariffs take effect Markets fear the US might be heading into a recession as Trump imposed the highest US tariffs since the early 20th century. US Customs and Border Protection confirmed that it is prepared to begin collecting country-specific tariffs from 86 trade partners. The 'liberation day' import duties came into full effect at 5am London time. In other currency moves, sterling was down 0.12% against the euro, trading at €1.1624. The single currency has found some support as the European Commission considers slapping tariffs of up to 25% on a broad range of exports from the US worth around €22.1bn (£19bn) based on the EU's 2024 imports. The list features agricultural and industrial commodities such as soybeans, meat, tobacco, iron, steel and aluminium, according to an internal document seen by POLITICO. Most of the tariffs would apply from 15 May, unless blocked by a large majority of member states. Gold prices climbed as US tariffs came into effect, including a huge 104% levy on Chinese goods, with the bullion buoyed by its safe-haven appeal and a weaker dollar. Gold futures gained 2.3% to $3,059.40 per ounce at the time of writing, while the spot price rose 1.2% to $3,043.01 an ounce. "The downward shift in the dollar on tariff worries effectively paved the way for gold to reclaim the $3000 level," KCM Trade chief market analyst Tim Waterer said. "Due to global growth and inflation uncertainties, gold is still on track to pursue new all-time highs despite experiencing a few bumps in its progress over the last week." Read more: Should you buy gold as Trump tariffs sparks surge in demand? The dollar lost ground, making greenback-priced gold cheaper for overseas buyers. "Despite falling for three consecutive sessions, gold remains bullish with trade tensions and the prospect of lower US interest rates boosting its allure. A solid breakout above $3,055 may open the doors back toward $3,100 and $3,130. Sustained weakness below $3,000 could see gold slip toward $2,950 and $2,930", said Lukman Otunuga, senior research analyst at FXTM. Also, investors now have a rather dovish view of the Federal Reserve's future monetary policy, providing an additional fundamental boost to the precious metal. "The significant rise in rate cut expectations in recent days suggest that the gold price will soon rise again", Commerzbank said in a note. Oil prices fell for the fifth consecutive day on Wednesday, reaching their lowest level in four years as recession concerns mount amid an escalating global trade war. Brent crude prices lost 2.8% to $61.03 a barrel at the time of writing. US West Texas Intermediate (WTI) crude retreated by more than 3% to $57.72 a barrel. "China's aggressive retaliation diminishes the chances of a quick deal between the world's two biggest economies, triggering mounting fears of economic recession across the globe," Ye Lin, vice president of oil commodity markets at Rystad Energy, told Reuters. "China's 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses." China has vowed to take 'firm and forceful' steps to protect its interests, after US tariffs of 104% came into effect. Stocks: Create your watchlist and portfolio Beijing's foreign ministry spokesman Lin Jian insisted that 'the Chinese people's legitimate right to development is inalienable'. The world's second-largest economy was the hardest hit by Trump's 'liberation day' tariffs, which followed sweeping 10% levies that came into force at the weekend. In broader market movements, the FTSE 100 (^FTSE) lost 2.6% to 7,702 points on Wednesday morning. For more details, check our live coverage in to access your portfolio
Yahoo
03-03-2025
- Business
- Yahoo
Traders place record bet on rising Japanese yen, eyeing further rate hikes
By Harry Robertson LONDON (Reuters) - Speculators have mounted their biggest ever wager that the Japanese yen will continue to rise as they position for further Bank of Japan interest rate hikes, an abrupt reversal from huge bets against the currency last year. The yen has strengthened by 4% this year as stronger inflation data has pointed to more rate hikes, calling into question the once hugely popular yen carry trade, which drove investors to position heavily against the currency over the last two years. Net long positions in yen futures among non-commercial traders - such as hedge funds and other speculators - soared to 96,000 contracts in the week ended February 25. That was up from 61,000 a week earlier, data from the U.S. Commodity Futures Trading Commission showed on Friday, and was a record on data stretching back more than 30 years. In cash terms, the long position - a bet the currency will rise - amounts to around $8 billion, LSEG data shows. The yen rose to an almost five-month high of 148.56 per dollar last week as a fall in U.S. Treasury yields and a rise in Japanese bond yields dented the attractiveness of the U.S. currency. Growing expectations that the Bank of Japan will keep hiking interest rates have been boosted by stronger-than-expected inflation data and comments from BOJ officials. "The BOJ has definitely been more hawkish than people had anticipated at the start this year, hiking rates again and strongly signaling that they're likely to continue to hike rates going forward," said Lee Hardman, senior currency analyst at Japanese bank MUFG. The BOJ has been going in the opposite direction to other major central banks, hiking interest rates to a 17-year high of 0.5% in January. Rates were negative for eight years until 2024 as Japan battled low growth and deflation. Speculators built their biggest bet against the Japanese currency in 17 years last July, as U.S. bond yields soared compared to those in Japan. The difference in yields made it highly profitable to borrow in Japanese yen to invest in dollar assets, in a so-called carry trade, effectively shorting the currency. Hardman said higher volatility, along with a rising yen and Japanese yields have made such a trade less attractive. "The yen is still a low-yielder, but it's more risky now to go short the yen," he said. Analysts at JPMorgan said in a note that the yen rally was part of a "broader carry-to-value rotation" in currency markets. However, Kamal Sharma, senior FX strategist at Bank of America, said he expects the yen's gains to be limited and for it to fall back to around 160 per dollar, in part because of foreign direct investment outflows. "We're still bearish on the yen, and a large part of this has been the idea that the structural outflow that we've seen from the Japanese economy continues at pace," he said.
