Tag Archives: Debt / Fixed Income Markets

Dollar tramples yen and safe-haven status, gold gains

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NEW YORK (Reuters) – The strong dollar got stronger on Thursday, rising to a three-year high against a basket of trading partner currencies, after a steep slide in the Japanese yen called into question its safe-haven status while the rally in U.S. equities took a pause.

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., February 6, 2020. REUTERS/Lucas Jackson

Gold prices hit their highest level in seven years as investors sought safe-haven assets after a rise in the number of new coronavirus cases in South Korea and the price of oil rose, supported by China’s efforts to bolster its virus-weakened economy.

The dollar has surged almost 2% since Tuesday against the yen, reaching its highest in almost 10 months, and the greenback climbed to near three-year highs against the euro.

The dollar index of the world’s most-traded currencies rose 0.12% to its highest level since May 2017.

The index is up 3.6% this year. It also gained to its best levels of the year against China’s offshore yuan and MSCI’s index of emerging-market currencies.

A host of reasons were cited for the dollar’s move, ranging from the outperformance of the U.S. economy and corporate earnings to potential recessions in Japan and the euro zone.

A run of dire economic news out of Japan has stirred talk the country is already in recession and that Japanese funds were dumping local assets in favor of U.S. shares and gold.

“The strongest explanation (for the yen’s decline) is a widespread selling by Japanese asset managers amid growing fears about the health of Japan’s economy,” said Raffi Boyadijian, investment analyst at XM.

The yen’s slide is unusual because the exchange rate with the dollar has been unraveling from its close correlation to the price of gold and U.S. Treasury yields, a development that must be watched, he said.

“This raises question marks about whether the yen is losing some of its shine as the world’s preferred safe-haven currency,” Boyadijian said.

China reported a drop in new virus cases and announced an interest rate cut to buttress its economy. But South Korea recorded an increase in new cases, Japan reported two deaths and researchers said the pathogen seemed to spread more easily than previously believed.

A rally that had lifted major U.S. and European stock indexes to record highs this week lost steam, as investors fretted about the spread of the coronavirus outside of China.

MSCI’s gauge of stocks across the globe shed 0.84% and emerging market stocks lost 0.95%.

The pan-European STOXX 600 index lost 0.62%.

The Dow Jones Industrial Average fell 283.03 points, or 0.96%, to 29,065. The S&P 500 lost 30.99 points, or 0.92%, to 3,355.16 and the Nasdaq Composite dropped 131.33 points, or 1.34%, to 9,685.85.

Morgan Stanley’s multibillion-dollar buyout for E*Trade Financial boosted the discount brokerage’s shares.

E*Trade jumped 24.4% after Morgan Stanley offered to pay $13 billion in an all-stock deal, the biggest acquisition by a Wall Street bank since the financial crisis.

Morgan Stanley’s shares fell 3.6%.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5% overnight, led by drops in Hong Kong’s Hang Seng and South Korea’s KOSPI.

Spot gold rose 0.3% to $1,616.74 an ounce, after hitting its highest since February 2013 at $1,622.19.

Oil prices rose further after a U.S. report showed a draw in gasoline inventories and a much smaller-than-anticipated rise in crude stocks.

U.S. gasoline stockpiles fell 2 million barrels in the week to Feb. 14. Analysts had estimated an increase of 400,000 barrels.

Data from the U.S. Energy Information Administration (EIA) showed that crude inventories rose only 414,000 barrels last week, compared with a 2.5 million-barrel rise that analysts had expected in a Reuters poll. [EIA/S]

Brent crude futures rose 58 cents to $59.70 a barrel and West Texas Intermediate gained 91 cents to $54.20 a barrel.

Demand for safe-haven U.S. Treasury debt was robust, driving the 30-year bond yield below the psychologically significant 2% level to its lowest since September 2019.

The 30-year bond last rose 39/32 in price to push its yield down to 1.9626%.

Benchmark 10-year notes last rose 17/32 in price to yield 1.5135%.

Reporting by Herbert Lash; additional reporting by Ritvik Carvalho in London; editing by Jonathan Oatis

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Trump touts stock market’s record run, but who benefits?

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(Reuters) – Donald Trump loves to trumpet the hot U.S. stock market as a key achievement of his presidency, and he was in full self-congratulatory mode on that front during Tuesday night’s State of the Union address.

U.S. President Donald Trump delivers his State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol in Washington, U.S. February 4, 2020. REUTERS/Leah Millis/POOL

“All of those millions of people with 401(k)s and pensions are doing far better than they have ever done before with increases of 60, 70, 80, 90 and 100 percent and even more,” Trump said in his address to a joint session of Congress.

While pensions and retirement funds were lifted by the rise in stock markets, the president has avoided talking about one key point about who really benefits when the market rallies: Most of the gains go to the small portion of Americans who are already rich.

That’s because 84% of stocks owned by U.S. households are held by the wealthiest 10% of Americans, according to an analysis of 2016 Federal Reserve data by Edward Wolff, an economics professor at New York University. So when the stock market has a blockbuster year – such as the nearly 30% rise in the S&P 500 benchmark index in 2019 – the payoff primarily goes to people who are already rich.

“For most Americans, a stock price increase is pretty immaterial to their well-being,” said Wolff, who published a paper about wealth inequality in the National Bureau of Economic Research in 2017.

Roughly half of Americans own some stocks through a brokerage account or a pension or retirement fund. But for most people, the exposure is too small for market gains to be life-changing or leave them feeling much better about their finances, Wolff said. “They’ll see a small increase in their wealth, but it’s not going to be anything to write home about,” he said.

Graphic: The stock boom’s unequal gains png, here

What’s more, nearly 90% of families who own stock do so through a tax-deferred retirement account, meaning they can’t access the money until they reach retirement age, unless they pay a penalty, Wolff said.

So who owns most of the stock market? The majority of corporate equities and mutual fund shares are held by investors who are white, college educated and above the age of 54, according to an analysis from the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis.

The typical middle-class family gets the bulk of its wealth from the housing market. Households in the middle three quintiles of wealth held 61.9% of their assets in their principal residence in 2016, according to Wolff’s analysis. That compares to households in the top 1%, who held 7.6% of their wealth in their homes.

Because most consumers accumulate the majority of their wealth through their homes, a rise in property values can provide a more substantial boost to household wealth than a stock market rally, said William Emmons, lead economist at the St. Louis Fed’s Center for Household Financial Stability.

Still, the recent revival in the housing market, spurred in part by the Federal Reserve’s interest rate cuts, is not helping all Americans equally. Rising property values benefit homeowners but make it harder for aspiring home buyers to break into the market, said Eugene Steuerle, co-founder of the Tax Policy Center, a joint venture between the Urban Institute and the Brookings Institution.

And some people who bought homes immediately before the recession hit may still be trying to recover their losses, Steuerle said. Their wealth may have been wiped out by foreclosure, meaning they then struggled to qualify for a new mortgage during the recovery, he said.

That’s in sharp contrast to well-off investors, whose overall wealth surged after the crisis thanks to strong returns on stocks, property and other investments. Some 72% of wealth accumulated between the third quarter of 2009 and the third quarter of 2019 went to the richest 10% of households, according to an analysis by Oxford Economics. Over that same time period, the poorest 50% of households reaped only 2% of wealth gains.

“There are a lot of families that have not yet recovered from the financial crisis,” Emmons said.

Some more evidence that the recent stock market boom is not making everyone feel richer: There has been little evidence of the “wealth effect,” which says that people tend to spend more when stock markets are up, said Lydia Boussour, a senior economist for Oxford Economics.

Since the recession, people have mostly continued to increase their savings even as the stock market rose. “Consumers are a lot more cautious,” she said.

Reporting by Jonnelle Marte; Editing by Dan Burns and Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

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China’s indebted HNA group names chairman’s son as president: Caixin

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A HNA Group emblem is seen on the constructing of HNA Plaza in Beijing, China February 9, 2018. REUTERS/Jason Lee

SHANGHAI (Reuters) – China’s indebted HNA Group has appointed its chairman’s son as president as a part of enterprise restructuring on the finance-to-aviation conglomerate, Chinese language monetary journal Caixin reported on its web site on Saturday.

Chen Xiaofeng, son of HNA Chairman Chen Feng, has been appointed president of the group, changing Zhang Ling, in accordance with Caixin.

HNA’s official web site named Chen Xiaofeng as president, in addition to a member of the board. Chen, a graduate of the College of Washington, can be chairman and CEO of HNA’s North American unit, in accordance with the web site.

Chen Feng has been HNA’s sole chairman after Wang Jian, the group’s co-chairman, died throughout a enterprise journey in France in July, 2018.

Since final 12 months, HNA has been ramping up gross sales of its property to stave off an intensifying money crunch as Beijing curbs abroad enlargement by personal corporations. By way of asset disposals, HNA is paring again an empire that when unfold from Deutsche Financial institution (DBKGn.DE) to Hilton Worldwide (HLT.N).

Reporting by Samuel Shen and John Ruwitch

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LSE informed Italy it will not transfer bond buying and selling platforms: central financial institution supply

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MILAN/ROME (Reuters) – London Inventory Change (LSE.L) has given assurances to Italy that it plans to proceed investing in its Italian buying and selling platforms and doesn’t intend to maneuver them in another country, a Financial institution of Italy supply stated on Thursday.

FILE PHOTO: Signage is seen exterior the doorway of the London Inventory Change in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls/File Picture

LSE Group owns Italian inventory trade Borsa Italiana, which in flip controls the MTS platform on which Italian authorities bonds are traded.

The Financial institution of Italy supply was responding to a Reuters story that stated LSE was contemplating shutting down a bond buying and selling platform referred to as BondVision and transferring the administration capabilities of Italian securities’ clearing operations from Milan to London.

LSE Chief Government David Schwimmer held talks with officers from the Italian central financial institution and market regulator Consob in Rome on Thursday.

“Within the assembly as we speak LSE gave ample reassurance about its willingness to proceed to put money into the Italian market infrastructures and that it has no intention to alter (their) location,” the Financial institution of Italy supply informed Reuters, talking on situation of anonymity.

“LSE has assured its full dedication to extend the effectivity of MTS and BondVision,” the supply stated, including that the LSE could be conveying the identical message to Italy’s economic system minister.

Two Italian sources with information of the scenario had earlier informed Reuters the LSE was mulling an overhaul of MTS forward of a possible merger with knowledge supplier Refinitiv.

LSE declined to touch upon Schwimmer’s go to to Italy and the content material of the discussions.

The British group is transferring forward with a $27 billion plan to purchase Refinitiv after Hong Kong’s bourse scrapped an unsolicited $39 billion bid for the London trade operator.

Thomson Reuters, an expert data firm that’s the mum or dad of Reuters Information, holds a 45% stake in Refinitiv.

The sources stated Italian authorities had been involved that the rumored overhaul could be a primary step towards centralizing precise clearing and post-trading operations exterior Italy and would ultimately result in MTS being dismantled.

Italy, which has the world’s third largest public debt, considers the Milan inventory trade and its authorities bond buying and selling unit MTS a strategic asset. Final month, it permitted a regulation giving the federal government particular powers to guard the Milan trade from potential exterior menace.

The BondVision buying and selling platform is utilized by institutional buyers, together with the Financial institution of Italy, and largely trades Italian authorities bonds, with a each day quantity of 5-6 billion euros.

The sources who spoke concerning the potential overhaul stated the plan the LSE was contemplating envisaged shutting down BondVision as a result of Refinitiv has an analogous bond buying and selling platform, Tradeweb TWO.O.

One of many sources stated that LSE was additionally contemplating transferring the administration capabilities of clearing home unit Cassa di Compensazione & Garanzia (CC&G) and settlement home Monte Titoli from Italy to London.

In London the LSE operates LCH, one of many world’s largest clearing homes.

Reporting by Elvira Pollina and Giuseppe Fonte, further reporting by Giselda Vagnoni in Rome and Huw Jones in London, modifying by Silvia Aloisi, Jane Merriman and Andrew Heavens

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On the spot View: U.S. September payrolls decrease than anticipated, jobless fee drops

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(Reuters) – U.S. job progress elevated reasonably in September, with the unemployment fee dropping to close a 50-year low of three.5%, which might assuage monetary market issues that the slowing economic system was on the point of a recession amid lingering commerce tensions.

KEY POINTS:

* Sept nonfarm payrolls +136,000 (consensus +145,000) vs Aug +168,000 (prev +130,000), July +166,000 (prev +159,000)

* Sept labor pressure participation fee 63.2 pct vs Aug 63.2 pct (prev 63.2 pct)

* Sept jobless fee 3.5 pct (consensus 3.7 pct) vs Aug 3.7 pct (prev 3.7 pct)

* Common hourly earnings all non-public employees unchanged (cons +0.Three pct) vs Aug +0.four pct (prev +0.four pct)

* Sept U-6 underemployment fee 6.9 pct vs Aug 7.2 pct (prev 7.2 pct)

* Sept non-public sector jobs +114,000 (cons +133,000), vs Aug +122,000 (prev +96,000)

* Authorities jobs +22,000 vs Aug +46,000 (prev +34,000)

MARKET REACTION:

STOCKS: S&P e-mini futures ESv1 flip barely larger and have been final up 0.18%, pointing to flat to barely larger open

BONDS: Treasury yields rose barely; 2- 12 months US2YT=RR at 1.4237% and 10-year US10YT=RR at 1.5477%

FOREX: The greenback index .DXY reversed slight losses and was about 0.05% larger

COMMENTS:

SHAWN SNYDER, HEAD OF INVESTMENT STRATEGY, CITI PERSONAL WEALTH MANAGEMENT, NEW YORK  

“Anytime you see the unemployment fee fall Wall Avenue goes to suppose it’s good.”

“Traders are on excessive alert for indicators of a recession … It doesn’t affirm the story. Optimistic payroll shouldn’t be in line with a recession.”

“It’s type of a goldilocks report. It’s not sturdy sufficient to maneuver the Federal reserve away from chopping charges on the finish of October however it’s not weak sufficient to make you involved concerning the labor market or the patron.”

SHAUN OSBORNE, CHIEF FX STRATEGIST, SCOTIABANK, TORONTO:

    “The quantity got here simply shy of expectations, however provided that market expectations have shifted after the ADP and ISM numbers, individuals have been bracing for one thing worse than this. So that is within the ballpark of what’s acceptable. Wage progress is a bit gentle, however unemployment dropped. In a broad sense, this was not that dangerous. It most likely provides the greenback a little bit of respiratory room after a little bit of a tough experience the final three or 4 days.”

JOSEPH SROKA, CHIEF INVESTMENT OFFICER, NOVAPOINT, ATLANTA

“The quantity got here up mild relative to consensus, however not too dangerous on the non-public information. However the fruits of the weak ISM information and the payrolls report is rising the percentages in traders mindset that the Fed has extra incentive to think about one other rate of interest discount on the subsequent assembly.”

“The economic system has been going by a low degree of deceleration during the last couple of months and whenever you take them in mixture some is trade-related and a few is time-related, which means you possibly can’t develop infinitely. The Fed’s been proactive on adjusting rates of interest earlier than we noticed the info like this month’s ISM. So possibly the problem that some modest fee adjustment from the Fed is sufficient to preserve the economic system from a deeper decline and lengthen growth, albeit at a slower tempo.”

SAMEER SAMANA, SENIOR GLOBAL MARKET STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, ST. LOUIS

“Headline job progress, non-public payrolls, and manufacturing payrolls, and wage progress all got here in weaker than anticipated and suggests some softening within the labor market.

  “This information most likely reinforces the case that the U.S. is now starting to really feel the results of the continuing international slowdown and doubtless strengthens the case for extra fee cuts, if the Fed chooses to go down that path.”

TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

“If individuals have been genuinely on the sting of the dialog about whether or not or not we’re slipping into recession or not, that is the sort of quantity that ought to pressure them to take a step again from that view. I by no means essentially thought that individuals must be holding that view, however I’m merely highlighting a market actuality. I believe that there was, from the market perspective, an actual threat that we have been slipping into recession. This isn’t a recessionary sort of quantity. This was a superbly sound report in most methods, not in each method. The one factor that I don’t like is that common hourly earnings have been flat. However however, the unemployment fee improved once more, we’re 3.5% on the unemployment report. This isn’t a dynamic that occurs with nice regularity in the USA, traditionally talking. The labor backdrop is definitely in actually fine condition, regardless of quite a lot of the noise that we proceed to listen to about these fears. This report throws quite a lot of chilly water on that.”

“I believe the Fed is locked stepping into October, virtually no end result was going to alter that. Whether or not the quantity was worse than anticipated and even fairly a bit higher than anticipated, I believe the Fed was going to go. The doves on the committee are clearly in management as a result of they’re the voters proper now.

KATHY JONES, CHIEF FIXED INCOME STRATEGIST, SCHWAB CENTER FOR FINANCIAL RESEARCH, NEW YORK

“I believe that the general image confirms the mild slowdown within the economic system that’s already priced into the bond market. However the lack of wage achieve, I believe, is a little bit of a shock. You’ll suppose that given the low degree of the unemployment fee, wages can be ticking up, however truly common hourly earnings have been down a bit. That may very well be a fluke, however they did peak in February…That raises quite a lot of questions – what’s the composition of jobs which can be being added? Is it that we’re pulling in quite a lot of people who’ve been on the margins and subsequently are extra low-wage jobs being added?”

“All in all, it’s not most likely a giant mover for the bond market, however it does go away the probability of a Fed fee minimize on the desk – maybe in October, maybe they’ll determine upon it in December and get extra information.”

“It’s fairly in line with what we noticed with the PMIs, the ISMs… The ISM was fairly gentle. The drop within the manufacturing payrolls was a affirmation of softness in there. We noticed a little bit of a drop in mining as properly, which isn’t stunning. Building, gentle. Total a gentle report, however that was anticipated.”

JOHN VELIS, GLOBAL MACRO STRATEGIST, BNY MELLON, NEW YORK

“Going into it and contemplating what we noticed with the 2 ISM surveys, it might have been so much worse. It’s most likely good for the market and never as dire as many individuals anticipated. It doesn’t imply that the economic system and the roles market are falling off a cliff. Then again, it’s not sturdy sufficient that it’s going to take out this extra Fed easing that has been priced into the curve the previous few days.”

DOUG DUNCAN, CHIEF ECONOMIST, FANNIE MAE, WASHINGTON

“The revisions being up is a optimistic as a result of sometimes when the employment market is slowing the revisions of prior months are down, and that has been the case for about 5 months. So, the truth that the revisions are up this time recommend that there’s not a precipitous slowing in unemployment. The truth that wage charges are holding is nice information, it’s help for the patron.

“There’s not a warning of a major slowdown within the economic system from these information. Our view is that with a purpose to keep the extent of unemployment steady we have to add someplace between 100,000 and 120,000 jobs a month, so this definitely matches that. It doesn’t recommend a major slowing in exercise at this level.

“I’d be stunned if there was a major response (from the market) in both course. What it does do is spotlight the variations of opinion on the Fed board about whether or not the economic system is slowing precipitously or not and also you had a number of dissents from the final fee minimize, that doesn’t assist make clear for them whether or not their disagreements are merited or not.”

JJ KINAHAN, CHIEF MARKET STRATEGIST, TD AMERITRADE, CHICAGO

“There’s a lot to love, particularly given the revisions that occurred. Retail shedding as many roles because it did once more, I don’t suppose it’s a huge shock. We proceed to see that pattern, everyone seems to be making an attempt to determine it out, so to talk, and once more the world they misplaced them in being primarily in clothes.

“Manufacturing could also be somewhat bit regarding, down 2,000 jobs not an enormous factor total. It’s a must to bear in mind this didn’t embrace the GM strike due to timing. In order that one will present up within the subsequent report, however it’s nice that we received a 45,000 revision larger between July and August and that is among the issues individuals actually favored about this. The 2 areas which have been unbelievable being healthcare and enterprise to enterprise providers are simply stud sectors. Each single month these two sectors present up and we simply proceed to see that. The opposite factor that was vital was transportation and warehousing, so once more, areas that take items from one place to a different, up 16,000 jobs. Most of this was an actual optimistic for the economic system regardless of a few of the different numbers we’re seeing.

“We’ve had such a string of dangerous information, that something that exhibits the economic system is doing higher than maybe individuals have been speaking about is properly acquired. I don’t suppose it clarifies the image any which method (for the Fed). It’s another piece of grey thrown into the image.”

Americas Economics and Markets Desk; +1-646 223-6300

Our Requirements:The Thomson Reuters Belief Rules.

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After LSE’s sharp rebuff, HKEX begins investor attraction offensive

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LONDON (Reuters) – Hong Kong Exchanges and Clearing (0388.HK) is embarking on a three-week attraction offensive with London Inventory Trade (LSE.L) traders because the Asian buying and selling home tries to salvage its proposed $39 billion takeover provide.

FILE PHOTO: The title of Hong Kong Exchanges and Clearing Restricted is displayed on the entrance in Hong Kong, China January 24, 2018. REUTERS/Bobby Yip/File Photograph

LSE’s board is refusing to have interaction with HKEX after emphatically rejecting its method on Friday. The LSE described HKEX’s provide as essentially flawed, saying it could not meet its strategic targets and got here with a excessive threat of being blocked by regulators.

LSE has stated it desires to stay with its plan of shopping for knowledge and buying and selling firm Refinitiv for $27 billion.

However HKEX has vowed to press on, and has arrange conferences with a collection of LSE’s high traders over the following few weeks, in response to two individuals acquainted with the matter, elevating the possibilities that it might make a hostile provide.

One top-25 investor advised Reuters that they had a gathering booked with HKEX later this month and that there might be a hostile method. Others stated they have been eager to listen to extra moderately than dismissing the deal instantly in favor of the Refinitiv tie-up.

“We’d count on there to be some synergy (within the HKEX deal) each when it comes to company overheads and expertise,” stated James Bevan, chief funding officer at CCLA. He added that whereas he was broadly supportive of the Refinitiv deal, he had some considerations in regards to the knowledge agency’s development technique.

HKEX has till Oct. 9 to make a agency provide or stroll away.

HKEX declined to touch upon the deal past its assertion on Friday that it could proceed to have interaction with LSE shareholders and that its provide was of their greatest pursuits.

LSE didn’t reply to a request for touch upon Sunday.

REGULATORY RISK

A supply near HKEX stated the Asian buying and selling home was assured some LSE traders have been fascinated by their provide and that it had an opportunity of success. They identified that round 15 of the highest 20 LSE shareholders additionally had stakes in HKEX.

However the previous decade has seen a collection of makes an attempt at cross-border change offers fail, thwarted by regulators and politicians even when each firms have favored the deal.

HKEX says it has had “constructive” preliminary discussions with regulators and policymakers. Nevertheless, regulatory sources in Britain and Italy – the place LSE owns Borsa Italiana – stated that they had but to carry substantive talks with HKEX on the deal.

HKEX will probably be relying on its lead banker – Moelis’s Caroline Silver – to assist it pull off what can be a significant coup if it succeeds.

One of the vital outstanding change bankers, Silver labored on LSE’s takeover of Borsa Italiana in 2007 when at Morgan Stanley, and represented London Metallic Trade when HKEX purchased it in 2012.

“Her modus is kind of easy: she is aware of everyone within the change and monetary infrastructure world, she understands the markets … and he or she runs a really disciplined course of,” stated Martin Abbott, London Metallic Trade’s former chief govt.

Further reporting by Sinead Cruise, Carolyn Cohn and Huw Jones; Writing by Rachel Armstrong; Enhancing by Dale Hudson

Our Requirements:The Thomson Reuters Belief Rules.

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PG&E evaluating proposal from hedge funds Knighthead Capital, Abrams Capital

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FILE PHOTO: PG&E works on energy strains to restore harm attributable to the Camp Hearth in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photograph

(Reuters) – Energy producer PG&E Corp (PCG.N) mentioned on Friday it’s evaluating a proposal from hedge funds Knighthead Capital Administration and Abrams Capital Administration to offer fairness capital commitments supporting a plan to reorganize the corporate.

“The Firm has acquired the financing proposal from Abrams and Knighthead and is evaluating it, together with the backstop dedication letters and associated supplies, in session with the Firm’s advisors. The Firm will reply to the proposal sooner or later,” PG&E mentioned in a press release.

Shareholders Knighthead Capital and Abrams in a letter to PG&E on Thursday proposed elevating $15 billion in fairness to fund a deliberate reorganization of the facility producer, which is going through big liabilities from California wildfires.

The proposed fundraising, a rights providing of latest shares, is the most recent effort to rescue PG&E, which sought Chapter 11 chapter safety earlier this 12 months after extreme wildfires in 2017 and 2018 resulted in additional than $30 billion in liabilities.

Knighthead and Abrams pledged to buy a portion of the provided fairness if shares are left unsold by way of a so-called backstop dedication.

Reporting by Kanishka Singh in Bengaluru; Modifying by Leslie Adler

Our Requirements:The Thomson Reuters Belief Rules.

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Inventory markets discover a ground as Chinese language information soothe nerves

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LONDON (Reuters) – Inventory markets loved a tentative restoration on Thursday after better-than-expected Chinese language export information and a steadying of the yuan restored some calm to world markets.

The German share worth index DAX graph is pictured on the inventory change in Frankfurt, Germany, August 7, 2019. REUTERS/Employees

European markets adopted Asia larger in early commerce, helped by information exhibiting Chinese language exports rose 3.3% in July from a yr earlier, beating an anticipated decline of two%. Chinese language imports fell by lower than forecast, regardless of the Sino-U.S. tariff wrestle.

China moved on Monday to permit the yuan to weaken past 7 yuan per greenback, after U.S. President Donald Trump mentioned he would impose extra tariffs on Chinese language imports. That despatched markets right into a tailspin.

Traders worry the commerce battle between the world’s two greatest economies will trigger a world recession. Bond markets have flashed purple and a carefully watched U.S. recession indicator reached its highest stage since March 2007.

On Thursday, the pan-European Euro STOXX 600 rose 0.87%. Germany’s DAX was up 0.84% and France’s CAC 40 1.03%.

The MSCI world fairness index, which tracks shares in 47 nations, rose 0.25%. It stays down greater than 3% because the begin of August.

“There’s a bit of little bit of calm again out there in the mean time,” mentioned Peter Kinsella, world head of FX technique at UBP. “However the ball may be very a lot in Trump’s court docket.”

Wall Road recovered earlier losses on Wednesday and completed the day larger. E-Mini futures for the S&P 500 gained 0.34%, suggesting it might construct on that restoration on Thursday.

RECESSION FEARS

Traders ran for the protection of bonds this week as fears of a recession grew.

Yields on U.S. 30-year bonds fell as little as 2.123% in a single day, not removed from a document low of two.089% set in 2016. Ten-year yields dropped additional beneath three-month charges, an inversion that has reliably predicted recessions up to now.

The most recent spasm started when central banks in New Zealand, India and Thailand stunned markets on Wednesday with aggressive rate of interest cuts.

“Monetary markets are elevating dangers of recession,” mentioned JPMorgan economist Joseph Lupton. “Equities proceed to slip and volatility has spiked, however the alarm bell is loudest in charges markets, the place the yield curve inverted probably the most since simply earlier than the beginning of the monetary disaster.”

Markets have ramped up their expectations for extra easing by the U.S. Federal Reserve, however the query stays how briskly Fed policymakers will transfer.

Futures moved to cost in a 100% chance of a Fed minimize in September and a close to 24% probability of a half-point minimize. Some 75 foundation factors of easing is implied by January, with charges finally reaching 1%.

European and U.S. authorities bond yields rose on Thursday, with German and French 10-year yields up from document lows after a rally in current periods.

The 10-year U.S. Treasury yield rose to 1.7155% from as little as 1.595% on Wednesday.

Gold additionally benefited this week as traders scrambled to seek out someplace secure to park their money, rising above $1,500 for the primary time since 2013. Spot gold was final at $1,498 per ounce, down from as a lot as $1,510 on Wednesday. Gold is up 16% since Might.

In overseas change markets, the Japanese yen rose once more, gaining 0.2% to 106.04 yen per greenback. The yen tends to achieve at instances of uncertainty, and its rise this week underlined investor fears.

China’s yuan additionally gained. Within the offshore promote it rose 0.2% to 7.07 yuan per greenback after touching as excessive as 7.14 yuan on Tuesday.

Individuals sit in entrance of a board exhibiting market data at a securities brokerage home in Beijing, China August 5, 2019. REUTERS/Thomas Peter

The greenback slipped, dropping 0.2% in opposition to the euro to $1.1223.

Oil costs regained some floor amid discuss that Saudi Arabia was weighing choices to halt its decline, offsetting a rise in stockpiles and fears of slowing demand.

Brent crude futures climbed $1.25 to $57.48, although that adopted steep losses on Wednesday, U.S. crude rose $1.46 to $52.53 a barrel.

Extra reporting by Wayne Cole in Sydney; modifying by Larry King

Our Requirements:The Thomson Reuters Belief Ideas.

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AB InBev beats earnings expectations as beer gross sales spike

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FILE PHOTO: The emblem of Anheuser-Busch InBev is pictured exterior the brewer’s headquarters in Leuven, Belgium February 28, 2019. REUTERS/Francois Lenoir/File Photograph

BRUSSELS (Reuters) – Anheuser-Busch InBev (ABI.BR), the world’s largest brewer, beat earnings expectations within the second quarter after beer gross sales grew at their quickest tempo in 5 years.

The maker of Budweiser, Corona and Stella Artois stated on Thursday that earnings earlier than curiosity, tax, depreciation and amortization (EBITDA) rose by 9.4% on a like-for-like foundation to $5.86 billion, in contrast with the $5.73 billion consensus primarily based on Refinitiv knowledge.

Reporting by Philip Blenkinsop; modifying by Gopakumar Warrier

Our Requirements:The Thomson Reuters Belief Ideas.

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