2025-06-26 19:31

June 24 (Reuters) - Oilfield services company SLB (SLB.N) , opens new tab expects second-quarter revenue and core profit to be about the same as the previous quarter due to weaker drilling activity in Saudi Arabia and Latin America, CEO Olivier Le Peuch said on Tuesday. The CEO, speaking at the J.P. Morgan Energy, Power & Renewables Conference in New York, said the company's activity in Saudi had declined more than expected, with several rigs demobilized and operations paused at the Jafurah unconventional gas field. Sign up here. Short-cycle work in Latin America was also down, contributing to a less favorable geographic activity mix, impacting margins, the company said. Oil prices fell about 5% to a two-week low on Tuesday on expectations the ceasefire between Israel and Iran will reduce the risk of oil supply disruptions in the Middle East. "Barring any impact to activity in the Persian Gulf from the conflict, we still expect second-quarter revenue to be flattish sequentially," Le Peuch said. SLB's plan to return at least $4 billion to shareholders in 2025 remains unchanged. https://www.reuters.com/business/energy/slb-expects-flat-quarterly-revenue-profit-amid-weaker-activity-saudi-arabia-2025-06-24/

2025-06-26 19:24

Inflation projections based on private forecasts before rate hike Policymakers say they would not rule out rate increases Central bank stresses commitment to inflation target BRASILIA, June 26 (Reuters) - Brazil's central bank on Thursday said it was confident in its strategy to hold interest rates steady even as its updated projections showed it would not meet its 3% inflation target through 2027. Speaking at a press conference, Governor Gabriel Galipolo said the bank remains fully committed to the inflation goal. Last week it raised its benchmark interest rate by 25 basis points to 15%, a near two-decade high, and signaled a "very prolonged pause" at that level. Sign up here. The central bank's quarterly monetary policy report on Thursday projected annual inflation at 3.2% by the end of 2027, above the 3% target, which has a tolerance band of 1.5 percentage points in either direction. For the fourth quarter of 2026, the reference period for current policy decisions, annual inflation was forecast at 3.6%. Asked about inflation projections showing the target would not be reached even in 10 quarters, Galipolo said the central bank's inflation forecast took into account private economists' median estimate of interest rates in the weekly Focus survey. However, he emphasized that this does not necessarily represent the path the bank will follow. "There are several paths to reach the center of the target," he said. "We are absolutely committed to it." Economic policy Director Diogo Guillen stressed the central bank was not extending the timeline for meeting its inflation target. He did not specify what the timeline is. The bank's latest inflation projections were based on Focus survey estimates that assumed interest rates would have remained at 14.25% last week - a more dovish scenario than reality - until January 2026. Economists projected seven rate cuts next year, with the benchmark rate ending 2026 at 12.5%. Galipolo said he could not say how long rates would remain at the current 15% level, adding the central bank would stick to its data-dependent approach, a strategy he said "has paid off." He did not elaborate on how the most recent rate hike could affect the bank's inflation projections. In their policy statement, policymakers emphasized they would not hesitate to resume rate hikes if needed. Galipolo said the monetary authority would assess a broad set of indicators, rather than any single metric, when evaluating potential rate increases. He added that this week's foreign-exchange interventions addressed an issue with foreign-exchange coupons and did not signal any change in the bank's currency policy. https://www.reuters.com/world/americas/brazil-central-bank-stands-by-inflation-target-despite-forecast-gap-2025-06-26/

2025-06-26 19:23

Market expects more rate cuts than projected by Fed Investors speculate Fed policy may turn more dovish when Powell is replaced They warn against overestimating next Fed chief's ability to deliver rate cuts NEW YORK, June 26 (Reuters) - The gulf between where the Federal Reserve projects interest rates will be by the end of 2026 and the more aggressive cutting financial markets expect by then is partly due to the expectation that U.S. central bank chief Jerome Powell will be replaced by somebody more dovish next year, investors said. They, however, cautioned against assuming that a change of guard at the Fed would necessarily deliver as much policy easing as markets and U.S. President Donald Trump expect. Sign up here. In new economic projections released last week, Fed policymakers penciled in three quarter-percentage-point cuts by December 2026. That's two cuts short of the roughly 125 basis points of easing that fed funds futures suggest. The fed funds rate is what banks charge each other for overnight lending, and serves as the Fed's main policy lever. It has stood in the 4.25%-4.50% range since the last easing in December. Two of the projected quarter-percentage-point cuts were for 2025, with one more next year. While the difference stems from several factors, including expectations for how Trump's tariffs will affect the economy and inflation, hopes for a more accommodative Fed chief are part of the mix, investors said. "Powell's term is up in May, and he could be replaced by someone super friendly to the administration," Jack Ablin, chief investment officer of Cresset Capital in Chicago. "I think this is probably a bigger factor than a lot of investors believe," Ablin said. Trump has not decided on a replacement for Powell and a decision isn't imminent, a person familiar with the White House's deliberations said on Thursday. Chicago Fed President Austan Goolsbee told CNBC any move to name a "shadow" chair would be ineffective. On Monday, traders in futures tracking the Secured Overnight Financing Rate (SOFR), another key overnight rate, pushed the implied yield of futures contracts maturing in December 2026 65 basis points (bps) below those expiring in December 2025 , the most negative that spread has ever been. This development shows that a deeper economic slowdown than expected is also being priced in. Powell told Congress this week that higher tariffs could boost inflation this summer, and that the U.S. central bank isn't rushing to cut rates. Trump, who has repeatedly called for rate cuts, said on Tuesday that U.S. rates should be lowered by at least two to three percentage points. On Wednesday, he called Powell "terrible" in his latest attack on the central bank chief and said he has three or four people in mind as contenders for the top Fed job. "The administration is now laying the groundwork – including with the 'One, Big, Beautiful Bill' – to turbocharge economic, job, and investment growth, and it's high time for monetary policy to complement this agenda and support America's economic resurgence," White House spokesperson Kush Desai said. Trump has toyed with the idea of selecting and announcing Powell's replacement by September or October, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. Such a move would mean Powell would have a "shadow" for possibly the last six meetings of his tenure. A battered dollar took another beating on Thursday as investors fretted over fresh signs of an erosion in U.S. central bank independence. Still, such a move would back the market's more dovish view on future rate cuts. "It's a reasonable thesis that Trump will put up a person that will be more amenable to lower rates," said Mark Malek, chief investment officer of Siebert Financial. FED INDEPENDENCE According to online prediction market Polymarket, the top candidates to replace Powell are Fed Governor Christopher Waller, former Fed Governor Kevin Warsh, White House economic adviser Kevin Hassett, Treasury Secretary Scott Bessent and Judy Shelton, a former Trump pick for the Fed's Board of Governors whose nomination was withdrawn during the Biden administration. Another prediction site, Kalshi, lists Waller as having the best chance to be nominated, closely followed by Warsh. Waller recently said he felt the inflation risk from tariffs was small and that the Fed should cut rates as soon as its next meeting in July. Meanwhile, Warsh suggested last month a possible pathway to lower policy rates and criticized the Fed's conduct of monetary policy. Still, investors warned that the head of the Fed is only one of 12 voting members at the central bank's monetary policy meetings. Part of the role is to build consensus with a large group of policymakers, making excessive reliance on that person's ability to deliver lower rates risky. "Obviously the chair has a very big influence on what the committee does, but the chair is not the committee," Siebert Financial's Malek said. "The chair will always try to seek a consensus," he said. Nor is it a given that the next Fed chief would risk the central bank's independence. "The most important part about the Fed is its neutrality," said Jay Woods, chief global strategist at Freedom Capital Markets. "For the next Fed chair to get appointed, yes, you want to appease the president to get that nomination. But you still have to get everyone in that room to be behind a common narrative," Woods said. A rate-cutting trajectory not backed by data would hurt the next Fed chief's image, analysts said. "Whoever is appointed may have a cloud cast over his or her term that President Trump is pulling the strings," said Brian Jacobsen, chief economist at Annex Wealth Management. "I'm not too worried that we're going back to a period where the chair is in the pocket of the president, like under (President Richard) Nixon." https://www.reuters.com/business/finance/market-bets-more-dovish-fed-trump-eyes-powells-replacement-2025-06-26/

2025-06-26 18:51

Goolsbee says there is only one Fed chief Chicago Fed president says a nominee for top Fed job is free to have opinions Trump has indicated a short list of nominees WASHINGTON, June 26 (Reuters) - U.S. President Donald Trump has not decided on a replacement for Federal Reserve Chair Jerome Powell and a decision isn't imminent, a person familiar with the White House's deliberations said on Thursday, as one central bank policymaker said any move to name a "shadow" chair would be ineffective. The dollar dropped overnight and investors, also reacting to weaker economic data, increased their bets on Fed rate cuts this year after a Wall Street Journal story said Trump was considering naming Powell's replacement early in hopes that person could have immediate influence convincing the central bank to lower interest rates as the president has demanded. Sign up here. Powell's term as chair ends in May, and the next scheduled vacancy on the Fed Board of Governors, which requires Senate confirmation of the president's nominee to fill, is not open until January. The White House declined to comment, referring to the statements Trump has made publicly on the topic. Those have included regular beratings of Powell as "stupid" for not cutting rates, a June 6 statement that he would name Powell's replacement "very soon," resignation that a Supreme Court decision meant he could not fire Powell outright, and a statement this week that he had narrowed the list of replacements to "three or four." Potential nominees include former Fed Governor Kevin Warsh, who has close ties to the Trump organization and was almost named central bank chief in the president's first term in the White House, as well as Kevin Hassett, who is the director of the White House's National Economic Council, current Treasury Secretary Scott Bessent, and current Fed Governor Christopher Waller, according to the person familiar with the deliberations. But the person, who was not authorized to speak publicly about the matter, downplayed how fast Trump might act. There are doubts as well about how much difference naming an early replacement for Powell might make in monetary policy decisions subject to debate among 19 central bank officials with 12 of them voting at any given meeting of the rate-setting Federal Open Market Committee. "That would have no effect," Chicago Fed President Austan Goolsbee told CNBC's "Squawk Box" program, referring to the possibility Trump may put forth an early nominee. "We have a chair of the (Federal Open Market Committee) ... That's Jay Powell. What somebody who is not the chair thinks about monetary policy - they can have whatever opinion they want. We have to go every six weeks and have votes." Trump has become increasingly pointed in calling for the Fed to cut rates, even as most central bank policymakers feel they are handcuffed until the administration makes final tariff decisions and they can study the impact of those rising import taxes on inflation. In congressional hearings this week, Powell reiterated that the Fed is prepared to cut rates if the tariffs have no sharp effect on inflation, but that economists broadly anticipate the steep levies imposed so far and still in the offing will raise prices over the course of the year. The effect on inflation "could be large or small. It is just something you want to approach carefully. If we make a mistake people will pay the cost for a long time," Powell said. Since the Fed held rates steady at its meeting last week, several central bank officials have said they agree it is best to wait on rate cuts; Fed Vice Chair for Supervision Michelle Bowman and Waller, both Trump appointees, have said rates could be cut as soon as the July 29-30 meeting, given recent moderate inflation readings and the risk of the economy weakening. Among the possible replacements for Powell, Waller would have the added benefit to Trump that he already has a vote on policy and working relationships among other officials built since joining the Fed's Board of Governors in January 2020. RENEWED SPECULATION The debate about Trump's central bank plans is playing out amid both ambiguous data and increased political focus on Powell. Recent inflation readings have been better than expected, a fact cited by Trump in favor of lower rates, but company executives routinely insist prices are about to rise as they work off pre-tariff inventory. The unemployment rate remains low. But data released on Thursday showed the overall economy shrank more than initially estimated in the first quarter after consumer spending was revised lower, weakening a key economic prop cited by policymakers who favor delaying rate cuts. Meanwhile, the dollar has dropped amid talk of the "shadow" Fed chief idea and the possible implications for U.S. central bank independence. "Trump's desire to 'shadow' the Fed using a designated replacement for Chair Jay Powell isn't a good way to promote the perceptions of integrity and autonomy in U.S. policymaking and, by extension, that of the reserve currency status of the USD (U.S. dollar)," said Thierry Wizman, global FX and rates strategist at Macquarie Group. "Some of this narrative is seeping into perceptions of the USD and contributing to its sell-off this week." Powell's term as Fed chief does not end until next May, and a recent Supreme Court decision appeared to insulate him from being fired over a policy dispute - a fact that could also limit Trump's ability to reshape the central bank before his second and final term ends in January 2029. https://www.reuters.com/world/us/shadow-fed-chief-would-not-influence-policy-debate-goolsbee-tells-cnbc-2025-06-26/

2025-06-26 18:48

BRASILIA, June 26 (Reuters) - Brazil's central government posted a smaller-than-expected primary deficit in May, Treasury data showed on Thursday, supported by strong revenue and a decline in expenditures. The primary deficit totaled 40.6 billion reais ($7.4 billion) for the month, below the 41.1 billion reais shortfall forecast by economists polled by Reuters and well under the 60.4 billion reais deficit recorded in the same month last year. Sign up here. According to the Treasury, net revenue rose 2.8% in real terms, boosted by higher tax collections, stronger social security contributions, and the withdrawal of 5 billion reais from some federal funds. At the same time, total expenditures dropped 7.6% in real terms compared to May 2024, as the government maintained tighter control over spending. Over a 12-month period, the central government reported a primary surplus of 18.1 billion reais, equivalent to 0.15% of GDP, within the official fiscal target of a zero deficit, with a tolerance band of 0.25% of GDP in either direction. The shift to a surplus on a 12-month basis, however, was largely driven by a calendar effect, as the government postponed burdensome court-ordered debt payments to July, whereas in 2024 those payments were concentrated in the first half of the year. ($1 = 5.4966 reais) https://www.reuters.com/world/americas/brazil-posts-narrower-than-expected-may-primary-deficit-strong-revenue-lower-2025-06-26/

2025-06-26 17:37

China books first Argentine soymeal cargo since 2019 Move signals China's push to diversify due to trade war with US Traders call it a 'test case', more deals may follow Argentina chamber meets China delegation, discusses soymeal China currently imports mostly soy beans, very little meal BEIJING/SINGAPORE/BUENOS AIRES, June 26 (Reuters) - Chinese firms have booked the first soymeal cargo from Argentina since Beijing approved Argentine imports in 2019, as China's animal feed industry looks to broaden its supply options to mitigate potential disruptions from the U.S.-China trade war. Several Chinese feed makers have jointly signed the deal to purchase 30,000 metric tons of Argentine soymeal for July shipment, four trade sources told Reuters on Thursday. Sign up here. "This is just a test case," said one Singapore-based trader at an international trading company, which sells soybeans to China. "If it goes through China's inspection and quarantine, we expect more deals." The cargo, purchased at $360 per ton on a CNF (cost and freight) basis, is expected to arrive in southern Guangdong province in September, the sources said. China is the world's biggest consumer of the protein-rich animal feed raw material but produces most of it by crushing soybeans mainly imported from Brazil and the United States. Argentina is the world's top exporter of soy oil and meal. Chinese buyers have been scooping up Brazilian soybeans and shunning U.S. exports due to high tariffs imposed during the ongoing trade war between Beijing and Washington. Argentina's oilseed crushing and export chamber told Reuters on Wednesday it had met with a travelling Chinese delegation, including the director of China's National Food and Strategic Reserves Administration Liu Huanxin to discuss soymeal exports. "We spoke at length about the feasibility of exporting soybean meal, and he seemed open to it if commercial conditions allow," said Gustavo Idigoras, head of the CIARA-CEC chamber. The Singapore-based trader told Reuters that the Chinese feed makers' purchase from Argentina was part of an effort to safeguard supplies in the event the trade war has a lasting impact on imports of U.S. soybeans. Lower prices for Argentine meal compared with the locally produced product were also encouraging the move, traders said. China opened its market to Argentine soymeal in 2019 after years of resistance that was motivated by a desire to protect its domestic crushing industry. Market participants at the time said the decision was prompted by the U.S.-China trade war during U.S. President Donald Trump's first administration. Despite the approval, no purchases of bulk cargoes of Argentine soymeal had been recorded until now, according to Chinese customs data. Argentina's Idigoras hinted that there may still be some steps to finalise any soymeal deal formally and that the China market remained a "complex" and tough to crack, given Beijing's preference to crush its own beans. "There are many inquiries from Chinese firms over Argentine meal, but for now we have no confirmed transactions," he said. "Argentina exported 30 million tons of soymeal last year, so has very significant supply capacity for China's needs." China imported just 30,000 tons of soymeal for the entire year in 2024, mainly from Denmark, customs data showed. https://www.reuters.com/business/autos-transportation/chinese-feed-makers-sign-first-bulk-deal-argentine-soymeal-since-2019-sources-2025-06-26/