2025-07-16 09:12

Official institutions increase buying at euro zone bond sales Bloc offers more stability than US, bankers say Too early to conclude major shift in FX reserves - bankers LONDON, July 16 (Reuters) - Central banks have ramped up buying at euro zone bonds sales this year, data shows, in a positive sign for the euro as the bloc looks to benefit from diversification away from U.S. markets. U.S. President Donald Trump's confrontations with longstanding allies over trade and security, along with attacks on the Federal Reserve, have raised concerns around the safe- haven status of the U.S dollar, the world's No.1 reserve currency, which has tumbled 9% this year . Sign up here. The euro meanwhile has surged 12% and policymakers are keen to seize the moment to boost its role as a reserve currency. Higher demand from central banks, which manage trillions of dollars in currency reserves, is therefore notable. Official institutions, which include central banks and sovereign wealth funds, have bought a fifth of euro zone government debt sold at syndications year-to-date, up from 16% for the whole of last year, a Barclays (BARC.L) , opens new tab analysis showed, using debt management office data. Debt sales where official institutions were allocated large shares include 55% of a 30-year German bond sale a day after the country announced a historic shift to looser fiscal policy in March, and 27% of a 10-year Spanish bond sale in May. Syndications, through which governments hire banks to sell bonds directly to investors, allow for results to be closely tracked to monitor shifts in demand. Syndicated sales raised over 200 billion euros ($232.40 billion) last year for euro zone governments, and are a key source of funding. Allocations to official institutions did not increase in 2024, the data showed, after rising from 8% in 2021, following which euro zone interest rates turned positive after almost a decade of below-0% rates. ASIA DEMAND Bankers who run the debt sales said demand from Asian institutions stood out this year and was spread across the board. "Some Asian clients in particular are coming back into the euro zone government bond space," said Benjamin Moulle, global head of primary credit for sovereigns, supranationals and agencies at Credit Agricole CIB. "Large Asian central banks are very confident, more comfortable than previously when it comes to investing in EGBs." Political stability in Europe, relatively lower budget deficits and lower inflation which gives the European Central Bank more room to cut rates further if needed, made the region's debt attractive to central banks, Moulle said. Carla Diaz Alvarez de Toledo, director general for treasury and financial policy at Spain's economy ministry, told Reuters the country was seeing higher demand for its bond sales over the last two years from official institutions in the Nordics, Middle East and Asia. While rising demand for the bloc's debt is positive, bankers stressed it was too soon for central bank reserve managers to be shifting currency allocations meaningfully in response to developments this year. Central banks may be shifting their euro zone bond holdings into longer maturities as they had not really been buying long paper in recent years, said a second banker who arranges government debt sales. They remain U.S. dollar-focused and usually adjust their asset allocation models later in the year, so a major change will not have happened yet, the banker said, asking not to be identified. "What's actually happening on the ground, that is incredibly hard to say," said Rohan Khanna, head of euro rates strategy at Barclays. "I have had these conversations with sovereign wealth funds out of China, out of Europe. Their viewpoint has been that it's too early." While such investors are considering whether to invest incremental flows they received outside the U.S., they acknowledged that the U.S. Treasury market does not have a real alternative, Khanna said. ($1 = 0.8606 euros) https://www.reuters.com/business/finance/central-banks-ramp-up-buying-euro-zone-bond-sales-2025-07-16/

2025-07-16 08:48

Foreign investors divest $2.11 billion from Asian bonds in June US tariffs and Middle East tensions impact investor sentiment South Korean bonds see $2.68 billion foreign inflows, defying regional trend July 16 (Reuters) - Foreign investors pulled funds from Asian bonds in June for the first time in five months, as concerns over a U.S. tariff deadline and heightened tensions in the Middle East weighed on sentiment. They divested a net $2.11 billion worth of local bonds during the month, registering the first monthly net sales since January, data from regulatory authorities and bond market associations in India, Indonesia, Thailand, Malaysia and South Korea showed. Sign up here. Foreigners have, however, still pumped a net $31.97 billion into Asian bonds, so far this year, the biggest figure for the first six months since 2021. U.S. President Donald Trump last week, postponed his tariff deadline to August 1, but announced 25% tariffs for key regional trade partners Japan and South Korea. Last month, Indonesian bonds witnessed approximately $1.9 billion worth of foreign outflows, the largest amount since November 2024. President Donald Trump said on Tuesday, the U.S. would impose a 19% tariff on goods from Indonesia under a new agreement with the Southeast Asian country. Foreigners also shed $1.29 billion of Malaysian bonds, $883 million of Thai bonds and $717 million of Indian bonds last month. "Foreign investors sold debt assets from Indonesia, Malaysia and Thailand as elevated geopolitical tensions led investors to shift to safer assets in June," said Khoon Goh, head of Asia research at ANZ. Bucking the trend, South Korean bonds attracted a net $2.68 billion worth of foreign inflows, with net cross-border purchases extending into a fifth successive month. "We continue to believe that Asia’s local government bonds are well positioned for a decent performance, supported by accommodative central banks amid an environment of benign inflation and moderating growth," said Nikko Asset Management in a report last week. https://www.reuters.com/world/china/asian-bonds-see-first-monthly-foreign-outflow-five-months-2025-07-16/

2025-07-16 08:01

Key rate cut by 25 bps to 5.25% BI sees room to continue trimming policy rate Trade deal with U.S. positive for economy, governor says Economist sees 75-bp more rate cuts by 2026 JAKARTA, July 16 (Reuters) - Indonesia's central bank cut rates on Wednesday for the fourth time since September and said a revised tariff deal with the United States was positive for Southeast Asia's biggest economy amid weakening global trade and slowing domestic demand. Bank Indonesia (BI) cut the benchmark 7-day reverse repurchase rate (IDCBRR=ECI) , opens new tab by 25 basis points to 5.25%, as expected by a slim majority of economists polled by Reuters, and also cut two other key rates. Sign up here. Governor Perry Warjiyo said the central bank would continue to observe room for more rate cuts, citing an expectation of low inflation through to 2026, a stable rupiah and bleak global economic outlook. "BI is already all out in boosting economic growth, including in supporting loan growth," the governor told a press conference. President Donald Trump's announcement of a tariff deal on Tuesday gave BI another reason to ease monetary policy, some analysts said. "External caution was counterbalanced by the fresh news over the trade deal," DBS Bank senior economist Radhika Rao said. "Policymakers have been opportunistic this year, prudently tapping periods of market stability to lower rates, with the latest move also coming against the backdrop of the successful completion of a trade deal with the U.S." The central bank welcomed the trade deal, where Indonesian exports would incur a 19% tariff instead of the 32% rate initially proposed by Washington, Warjiyo said. The deal was a positive development that would support exports and broader economic prospects as the central bank maintained its GDP growth forecast for 2025 at a range of 4.6% to 5.4%, he said. Warjiyo expressed optimism about Indonesia's export outlook after the revised U.S. tariff deal. "This deal will of course increase imports, but in our view, these are imports for productive purposes, which will in turn increase economic growth going forward," he said, adding certainty from the decision will also help with business decision making and prospects for capital inflows. Sluggish household spending saw Indonesia's growth weaken in the first quarter, while the outlook for subsequent quarters has been clouded by the impact of U.S. tariffs on global trade. In its easing cycle since September, BI had taken pauses in between rate cuts to try to head off volatility in the rupiah triggered by Trump's trade policies and geopolitical tensions, even as Indonesia's inflation remained muted. The rupiah , which has been rangebound so far this month, barely moved after BI's announcement, while the main stock index (.JKSE) , opens new tab extended gains to trade almost 1% up. Brokerage Mandiri Sekuritas expects another 25-bp cut this year and 50-bp more in the first quarter of 2026 to counter weakening economic activity, its economist Rangga Cipta said. "BI maintained a dovish tone, emphasising the need to support economic growth," he said. https://www.reuters.com/world/asia-pacific/indonesia-cbank-cuts-lending-facility-rate-by-25-bps-6-2025-07-16/

2025-07-16 07:44

MUMBAI, July 16 (Reuters) - Cooling inflation in India and tariff-induced price pressures in the U.S. are cementing a downward bias on dollar-rupee forward premiums, according to analysts. India's retail inflation hit a six-year low in June, while U.S. consumer prices rose at their fastest pace since February, with higher goods costs hinting at tariff effects. Sign up here. This divergence is likely to persist. Economists project India's consumer price index inflation to touch a record low in July, while the tariff impact is seen becoming more pronounced in the U.S. inflation prints for July and August. Cooling domestic inflation is prompting calls for at least one more interest rate cut by the Reserve Bank of India, while analysts believe the rising U.S. price pressures due to tariffs may keep the Federal Reserve from cutting rates. BofA Global Research sees no Fed rate cuts in 2025 and urges investors to "fade" the 2025 easing priced in. Markets currently expect just under two cuts this year. Diverging rate outlooks for the two central banks, shaped largely by the contrasting inflation trajectories, would put the squeeze on dollar-rupee forward premiums, which reflect the U.S.-India interest rate differential. "The odds of another rate cut have increased in India and inflation will likely fall below 2% in July, so these bets will rise going into the August meeting. This could keep USD/INR forward premia under stress," ANZ forex and rate strategist Dhiraj Nim said. On Wednesday, dollar-rupee forward premiums were a tad lower, with the one-year implied yield down 2 basis points at 1.96%. The odds of U.S. rate cuts are "going lower, while India's rate cut chances are rising. This builds the case for 1-year to be squeezed lower to 1.90%," a swap trader at a mid-sized private bank said. The rupee , meanwhile, was modestly higher at 85.78 per dollar, comforted by broad-based interbank dollar sales. https://www.reuters.com/world/india/india-us-inflation-reports-reinforce-downward-bias-dollar-rupee-forward-premiums-2025-07-16/

2025-07-16 07:16

DUBAI, July 16 (Reuters) - Abu Dhabi National Oil Company said on Wednesday it plans to transfer its 24.9% shareholding in Austria's OMV AG (OMVV.VI) , opens new tab to its XRG investment unit ahead of the establishment of a chemicals company combining existing OMV and ADNOC firms. ADNOC last year bought a 24.9% stake in OMV from Abu Dhabi sovereign wealth fund Mubadala, without disclosing the financial terms. Sign up here. Earlier this year, ADNOC and OMV agreed to merge their polyolefin businesses to create a chemicals company with a $60 billion enterprise value. The merged entity, Borouge Group International (BGI), is set to be the world's fourth-largest polyolefins firm by production capacity, behind China's Sinopec and CNPC and U.S.-based ExxonMobil (XOM.N) , opens new tab, ADNOC Downstream CEO Khaled Salmeen told Reuters in March. BGI will combine two joint ventures - Borealis, 75% owned by OMV and 25% by ADNOC, and Borouge (BOROUGE.AD) , opens new tab, 54% owned by ADNOC and 36% by Borealis, the company announced in March. In its statement on Wednesday, ADNOC said it is progressing with preparation for the proposed establishment of BGI. ADNOC's proposed 46.94% shareholding in BGI is expected to be held by XRG upon completion of the transaction, subject to regulatory approvals, the statement said. https://www.reuters.com/business/energy/abu-dhabis-adnoc-plans-transfer-249-stake-omv-xrg-unit-2025-07-16/

2025-07-16 07:02

US crude stockpiles fall, gasoline and distillates build US gasoline demand eases during peak driving season OPEC bullish on oil demand outlook HOUSTON, July 16 (Reuters) - Oil prices settled marginally lower on Wednesday as U.S. fuel inventory builds and concerns about wider economic impact from U.S. tariffs outweighed some signs of increasing demand. Brent crude futures settled 19 cents, or 0.3% lower, at $68.52 a barrel. U.S. West Texas Intermediate crude futures were down 14 cents, or 0.2%, at $66.38. Sign up here. U.S. gasoline stocks rose by 3.4 million barrels last week, the Energy Information Administration said. Analysts had expected a draw of 1 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 4.2 million barrels, EIA data showed, far surpassing expectations for a 200,000-barrel rise. Crude inventories fell by 3.9 million barrels to 422.2 million barrels last week, the EIA said, exceeding forecasts for a 552,000-barrel draw. "I think the market is disappointed to see large builds in gasoline and distillate inventories as refiners are operating at near their highest levels of the year turning oil into refined products," said Andrew Lipow, president of Lipow Oil Associates, referring to refinery rates of nearly 94% of total capacity. "I think investors are also disappointed to see gasoline demand fall just after July 4 as we are now in the peak summer driving season," he added. The amount of products supplied for gasoline, a proxy for demand, eased 670,000 barrels per day to 8.5 million bpd. U.S. President Donald Trump's tariff war continued, with the European Commission preparing possible retaliation if talks with Washington fail to secure a trade agreement for the European Union. On Monday, Trump said the U.S. will impose "very severe tariffs" on Russia in 50 days if there is no deal to stop the war in Ukraine. Short-term U.S. interest-rate futures rose after a report that Trump was likely to fire Federal Reserve Jerome Powell soon, with traders now betting on rate cuts starting in September and at least one more by December. Trump said he was not planning to fire Powell, but declined to rule out anything. Interest rate cuts typically boost economic activity and energy demand. Helping keep a floor under prices, U.S. economic activity increased slightly in recent weeks, but the outlook was neutral to slightly pessimistic, the Federal Reserve said on Wednesday, as businesses reported the Trump administration's higher tariffs were putting upward pressure on prices. OPEC's monthly report on Tuesday forecast that the global economy would do better in the second half of the year. Brazil, China and India are exceeding expectations while the United States and EU are recovering from last year, it added. Chinese state-owned refiners are ramping up output after completing maintenance to meet higher third-quarter fuel demand and to rebuild diesel and gasoline stocks at multi-year lows, traders and analysts said. Barclays estimated that Chinese oil demand in the first half of the year grew by 400,000 bpd year-on-year to 17.2 million bpd. On the supply side, drone attacks for a third day on oilfields in Iraq's semi-autonomous Kurdistan region have slashed crude output by 140,000 to 150,000 barrels per day, two energy officials said on Wednesday, as infrastructure damage forced multiple shutdowns. https://www.reuters.com/business/energy/oil-prices-gain-demand-expectations-amid-improving-economy-2025-07-16/