Latest news with #SecuredOvernightFinancingRate
Business Times
3 days ago
- Business
- Business Times
Traders trim Fed-cut bets as wholesale inflation clouds outlook
[NEW YORK] Wall Street traders dialled back expectations for an interest-rate cut next month, sending Treasury yields higher, after fresh data on wholesale prices signalled tariffs are pushing up inflation. Yields on short-term Treasuries, which tend to track expectations for monetary policy, rose sharply on Thursday (Aug 14), with the two-year note's climbing six basis points to 3.73 per cent. The benchmark 10-year yield jumped, and the US dollar gained against a basket of peers. The higher-than-expected increase in the producer price index (PPI), which suggests companies are passing along elevated import costs tied to tariffs, halted a Treasuries rally and surprised investors. Traders had piled into bets on a September rate cut, with some wagering on a 50-basis-point move, after a largely benign report on consumer prices this week and comments from Treasury Secretary Scott Bessent in which he said policymakers could bring down borrowing costs as much as 1.5 percentage points. 'Today's PPI makes you take a step back and just re-assess,' said Priya Misra, a portfolio manager at JPMorgan Asset Management. 'We are in the midst of a stagflationary shock.' Interest-rate swaps still show at least half a percentage point of rate reductions by the end of the year, but the odds of a September cut fell to around 85 per cent from more than 100 per cent before the day's developments. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Producer prices increased 0.9 per cent in July, Thursday's report from the Bureau of Labor Statistics showed, more than four times as much as the median economist forecast. Within the report, services costs increased 1.1 per cent. It followed a largely benign reading on consumer prices released on Tuesday. Fed officials, who last month left rates unchanged in a range of 4.25 to 4.5 per cent, have signalled they are weighing mixed signals from the economy ahead of their Sep 16 to 17 policy meeting. St Louis Fed president Alberto Musalem said on Thursday it was too early to decide whether he will support a cut. Investors are now watching for clues from the Fed's annual gathering in Jackson Hole, Wyoming, where chair Jerome Powell is set to speak later this month. US President Donald Trump has repeatedly criticised Powell for failing to bring down borrowing costs. Bessent on Thursday said that while he was not calling for the Fed to lower rates, economic models suggest there's room for rates to come down 150 basis points to a 'neutral' level at which policy is neither restraining nor stimulating the economy. For investors, Tuesday's consumer price reading was enough to solidify wagers on a quarter-price reduction in September, with some jumping into bets on an even bigger move of 50 basis points. Despite the reading on producer prices, they added to a position in the Secured Overnight Financing Rate (SOFR) on Thursday that would benefit from a move of more than 25 basis points. 'PPI is not going to change the overall narrative, but it does take off some of the 50-basis-point risk the marketplace had been thinking about,' said David Robin, an interest-rate strategist at TJM Institutional Services. BLOOMBERG
The Sun
4 days ago
- Business
- The Sun
Singapore's Temasek prices $1.5 billion US dollar fixed and floating-rate bonds
SINGAPORE'S state investor Temasek said on Thursday its unit priced two U.S. dollar-denominated bonds totaling $1.5 billion, a day after launching the offer under its $25 billion medium-term note program. The unit, Temasek Financial (I), priced two $750 million two-year bonds, one with a 3.75% fixed rate and the other priced at a spread of 38 basis points over the Secured Overnight Financing Rate, the state investor said in a filing on the Singapore Exchange. The unit intends to use the net proceeds from the bond issuance to support Temasek and its investment holding companies in funding their ordinary course of business, the company said. Citi, Bank of America, Morgan Stanley and Societe Generale are the joint bookrunners - REUTERS
The Star
4 days ago
- Business
- The Star
Singapore's Temasek prices US$1.5bil US dollar fixed and floating-rate bonds
An employee walks past the logo of Temasek Holdings Pte at the company's headquarters in Singapore — Bloomberg SINGAPORE's state investor Temasek said on Thursday its unit priced two U.S. dollar-denominated bonds totaling $1.5 billion, a day after launching the offer under its $25 billion medium-term note program. The unit, Temasek Financial (I), priced two $750 million two-year bonds, one with a 3.75% fixed rate and the other priced at a spread of 38 basis points over the Secured Overnight Financing Rate, the state investor said in a filing on the Singapore Exchange. The unit intends to use the net proceeds from the bond issuance to support Temasek and its investment holding companies in funding their ordinary course of business, the company said. Citi, Bank of America, Morgan Stanley and Societe Generale are the joint bookrunners. - Reuters Trading ideas: Yinson, Iris, MR DIY, ES Sunlogy, Avangaad, Magma, PetChem, VSTECS, Master-Pack, RCE Capital, Eonmetall
Mint
6 days ago
- Business
- Mint
Bond Traders' High Hopes for September Rate Cut Hinge on CPI
(Bloomberg) -- Bond investors betting on a Federal Reserve interest rate cut next month face a potential roadblock: inflation. July's consumer price index, due on Tuesday, will give traders clues on how President Donald Trump's tariffs are affecting costs. Economists surveyed by Bloomberg expect the annual core inflation rate to rise to 3%, the highest since February. 'The market is looking for further confirmation that changes to trade policy are passing through into higher goods inflation,' said Gennadiy Goldberg, head of US rates strategy at TD Securities, 'All else equal, a higher inflation print could leave the Fed wanting to see more data before cutting rates.' That would disappoint investors, who are betting on two rate cuts by the end of the year, starting as soon as September. Signs of a weakening US job market bolstered their belief that it was time for the first cut since December. Treasury yields have fallen to levels seen in late April and a gauge of their total returns delivered broad gains of 4% this year, on course for its best annual run since 2020. The 10-year benchmark yield was little changed at 4.28% in Asia trading Tuesday. Since the soft July payrolls report, bond traders' activity in the options market has largely targeted a deeper and longer path of rate cuts over the coming months. Investors have been actively betting that a quarter-point rate cut will remain likely for the Fed's Sept. 17 meeting. Meanwhile, some are positioning for inflation data that could give the Fed a green light for a half-point cut, shown by Monday activity in options linked to the Secured Overnight Financing Rate, which closely tracks the expected path of US monetary policy. If the CPI number is in-line with market expectations, the 'carry' on long positions on Treasury Inflation-Protected Securities will likely turn negative in September, JPMorgan Chase & Co. strategists said Monday, adding they remain neutral on breakeven rates ahead of the data. However, the risk of fast-rising prices is top of mind for Fed Chair Jerome Powell as well as some on Wall Street. Recent notes from Bank of America Corp., Apollo Global Management Inc. and Bank of New York Mellon Corp. have flagged stagflation as a significant concern. The combination of persistently high inflation and sluggish economic growth is also a risk to the dollar, which has weakened nearly 8% against a basket of peers this year. Strategists at TD Securities on Monday said the slump will deepen under a stagflation scenario. Sticky inflation would temper the Fed's ability to ease rates towards the 3% area being priced by swaps over the next 12 months. It could also put upward pressure on Treasury yields, which rose last week after a trio of soft auctions for the securities reflected waning demand for US government debt ahead of the CPI report. If inflation continued rising in July, that 'would reinforce what Powell has said about their dual-mandate — of stable employment and inflation — coming into conflict,' said George Catrambone, head of fixed income at DWS Americas. Policymakers will also have to consider the August CPI reading before the September decision, as well as a report on producer prices due Thursday. After the Fed held rates last month, Powell reiterated that officials needed more time to gauge the impact of tariffs before cutting rates, signaling patience in the face of Trump's relentless pressure on him to lower borrowing costs. However, Governors Christopher Waller and Michelle Bowman — both appointed by Trump — dissented, favoring an immediate rate reduction because of labor market weakness. If the president's economic adviser Stephen Miran is approved by the Senate to become a Fed Governor, that'll be one more dovish voice in the room, according to JPMorgan. What Bloomberg strategists say... 'The market is still pricing closer to two rate cuts this year than three, though September is discounted as something close to a done deal. To meaningfully sway that, it would probably take an upside surprise not only on tomorrow's inflation figure, but also on the August payroll figures to be released on Sept. 5.' — Cameron Crise, Markets Live. Click here for the full analysis. Despite forecasts showing that price growth will remain above the Fed's 2% target, Vanguard Asset Management's Roger Hallam expects rate-setters to focus on signs of a shaky job market, barring a big upside inflation shock. 'When push comes to shove, the Fed would prioritize the labor market in anything other than extreme inflation scenarios,' said Hallam, the firm's global head of rates. The labor market has shown enough softness that 'the probability of easing in September has gone up a lot,' he said. --With assistance from Edward Bolingbroke. More stories like this are available on
Globe and Mail
6 days ago
- Business
- Globe and Mail
Power Solutions International, Inc. Secured $135 Million Long-Term Committed Credit Facility to Support Strategic Growth
WOOD DALE, Ill., Aug. 11, 2025 (GLOBE NEWSWIRE) -- Power Solutions International, Inc. ('PSI' or the 'Company') is excited to announce a significant financial milestone. On July 30, 2025, PSI entered into a Second Amendment (the 'Amendment') to its existing Uncommitted Revolving Credit Agreement with Standard Chartered Bank, acting as administrative agent alongside participating lenders (collectively, the 'Lenders'). This newly Amended Credit Agreement increases PSI's committed borrowing capacity to $135.0 million, providing enhanced flexibility and strategic firepower to support our continued growth and innovation. The agreement now extends through July 30, 2027, solidifying our financial foundation for the next two years. Dino Xykis, Chief Executive Officer, commented, 'This milestone is a powerful affirmation of the trust and confidence our financial partners have in PSI's strong operational performance, disciplined financial management, compelling results, and our long-term strategy. The expanded and extended credit facility reinforces our robust capital structure, with the backing of world-class financial institutions and the commitment of our talented team, PSI is well-positioned to deliver sustainable value creation for all stakeholders including our customers, shareholders, employees, and strategic partners.' Kenneth Li, Chief Financial Officer, stated, 'The Company has achieved profitability, has been generating positive cash flows from operating activities for several years, and has successfully amended the Revolving Long Term Credit Agreement. The Company has concluded that its existing cash and cash equivalents and cash from operations will be sufficient for the Company to continue as a going concern for at least twelve months from the issuance of these condensed consolidated financial statements. As a result, the Company released valuation allowance previously recorded against its deferred tax assets, and increased net income and stockholders' equity $29.2 million from the tax benefits as of June 30, 2025.' The Amended Credit Agreement remains subject to customary events of default and covenants, including minimum adjusted EBITDA, minimum interest coverage ratio and maximum gross leverage ratio covenants. Borrowings under the Amended Credit Agreement will incur interest at the applicable Secured Overnight Financing Rate ('SOFR') plus 2.10% per annum. In the event the Company's majority shareholder, Weichai America Corp. ('Weichai') holds less than fifty percent (50%) of the common equity of the Company, the interest rate under the Amended Credit Agreement will increase to the applicable SOFR plus 2.60% per annum. The obligations under the Amended Credit Agreement remain unconditionally guaranteed, on a joint and several basis, by certain wholly-owned, existing and subsequently acquired or formed direct and indirect domestic subsidiaries of the Company, subject to customary exceptions. The obligations under the Amended Credit Agreement remain secured by substantially all assets of the Company and the Company's wholly-owned subsidiaries. Prior to entering into the Amendment, the Company paid all outstanding borrowings, including principal and interest, under the Shareholder's Loan Agreement, dated as of August 30, 2024 by and between the Company and Weichai (the 'Shareholder's Loan Agreement'). About Power Solutions International, Inc. Power Solutions International, Inc. (PSI) is a leader in the design, engineering and manufacture of a broad range of advanced, emission-certified engines and power systems. PSI provides integrated turnkey solutions to leading global original equipment manufacturers and end-user customers within the power systems, industrial and transportation end markets. The Company's unique in-house design, prototyping, engineering and testing capabilities allow PSI to customize clean, high-performance engines using a fuel agnostic strategy to run on a wide variety of fuels, including natural gas, propane, gasoline, diesel and biofuels. PSI develops and delivers complete power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, demand response, and microgrid solutions, as well as products and packages supporting the rapidly growing data center markets. PSI's industrial end market provides engine and battery powertrain solutions to serve applications such as forklifts, agricultural and turf, arbor care, industrial sweepers, aerial lifts, irrigation pumps, ground support, and construction equipment. PSI's transportation end market provides engine powertrain solutions to specialized applications such as terminal tractors, port equipment, military vehicles, and other non-road vocational vehicles. For more information on PSI, visit Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). These statements may involve risks and uncertainties. These statements often include words such as 'anticipate,' 'believe,' 'budgeted,' 'contemplate,' 'estimate,' 'expect,' 'forecast,' 'guidance,' 'may,' 'outlook,' 'plan,' 'projection,' 'should,' 'target,' 'will,' 'would' or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are not guarantees of performance or results, and they involve risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect the Company's results of operations and liquidity and could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the Company's forward-looking statements. The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking statements include, without limitation: the impact of the macro-economic environment in both the U.S. and internationally on our business and expectations regarding growth of the industry; uncertainties arising from global events (including the Russia-Ukraine and Israel-Hamas conflicts), natural disasters or pandemics, and their impact on material prices; the effects of strategic investments on our operations, including our efforts to expand our global market share and actions taken to increase sales growth; the ability to develop and successfully launch new products; labor costs and other employment-related costs; loss of suppliers and disruptions in the supply of raw materials; the Company's ability to continue as a going concern; the Company's ability to raise additional capital when needed and its liquidity; uncertainties around the Company's ability to meet funding conditions under its financing arrangements and access to capital thereunder; the potential acceleration of the maturity at any time of the loans under the Company's uncommitted revolving credit agreement through the exercise by any lender of its demand right in its Revolving Credit Agreement; the impact of rising interest rates; changes in economic conditions, including inflationary trends in the price of raw materials; our reliance on information technology and the associated risk involving potential security lapses and/or cyber-attacks; the ability of the Company to accurately forecast sales, and the extent to which sales result in recorded revenues; changes in customer demand for the Company's products; volatility in oil and gas prices; the impact of U.S. tariffs on imports and exports; the impact of supply chain interruptions and raw material shortages, including compliance disruptions such as the UFLPA delaying goods from China; the potential impact of higher warranty costs and the Company's ability to mitigate such costs; any delays and challenges in recruiting and retaining key employees consistent with the Company's plans; the potential effects of damage to our reputation or other adverse consequences if our employees, suppliers, sub-suppliers or other contract parties, agents or business partners violate anti-bribery, competition, export and import, trade sanctions, data privacy, environmental, human rights or other laws; the impact of unanticipated changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities; and the risks and uncertainties described in reports filed by the Company with the SEC, including without limitation its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and the Company's subsequent filings with the SEC. The Company's forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
