2025-05-13 11:58

Reuters poll graphic on U.S. Treasuries safe haven status BENGALURU, May 13 (Reuters) - Concerns for the safe haven status of U.S. Treasuries are rising with benchmark 10-year yields expected to drift sideways over the coming year, pinned between trade war-driven recession and inflation, according to a Reuters poll of bond strategists. Since U.S. President Donald Trump’s April 2 reciprocal tariff announcement, the 10-year Treasury yield has whipsawed in a 75-basis-point range, plunging to a six-month low and then rebounding to a two-month high within a week, driving a key bond volatility index (.MOVE) , opens new tab to an 18-month high. Sign up here. Battered investor sentiment has only partially recovered since an earlier 90-day tariff reprieve and a U.S.-China trade truce announced on Monday. Interest rate futures are now pricing two Federal Reserve rate cuts this year compared to three just a few days ago. Over 54% of bond strategists, 19 of 35, in a May 8-13 Reuters survey said they were concerned about the traditional safe haven status of U.S. Treasuries, which provide the benchmark for pricing in global capital markets. That was up from about 47% in an April poll, and in line with the over-55% of FX strategists who expressed similar worries about the U.S. dollar a week ago. "I believe the appeal of Treasuries as a safe haven has eroded due to two key factors: the potential for a significant increase in supply and the (Trump) administration’s tariff policies," said Jabaz Mathai, head of G10 rates and FX at Citi. "Right now, tariffs are the dominant driver, but as we move through the rest of the year, fiscal policy will also come into play," he said. "If the administration manages to push through tax cuts — and not just extensions of the 2017 cuts, but also other promises like eliminating taxes on Social Security benefits, tips and possibly lowering corporate taxes — that could further unsettle investors." U.S. debt currently stands at $36.2 trillion, according to the Treasury Department. "Investors are more worried now about the long-term fiscal situation. It doesn't look like they have a plan to pay what they owe or at least keep the fiscal deficit from increasing," said Lars Mouland, chief rates strategist at Nordea. Despite contracting last quarter on a record-high trade deficit driven by businesses scrambling to get ahead of tariff hikes, the world's largest economy is chugging along, leaving policymakers in no hurry to ease rates, recent official data suggest. But sagging investor and consumer sentiment has markets betting on an economic slowdown. Asked which would have the bigger impact on their yield forecasts, a near-60% majority - 19 of 33 fixed-income strategists, chose recession risks over higher inflation. "As we expect the Fed to hold rates steady until December in our baseline forecast, we are clearly biased for the Fed choosing to fight the inflation side of its mandate," said Steven Zeng, senior U.S. rates strategist at Deutsche Bank. "But in the context of our 10-year yield forecast, whether or not the U.S. enters into recession this year will have the bigger impact." Median forecasts from over 50 analysts in the survey showed the U.S. 10-year yield, currently 4.46%, would decline to 4.26% in three months, tread sideways to 4.27% at end-October and to 4.25% in a year. "The U.S. administration is realizing the economic harm high tariffs can cause, and it appears they're probably more sensitive to bond yields than equity markets," said Citi's Mathai. "So it would seem logical we are past the peak in tariffs and the downside to the economy will probably be less severe than we thought in the beginning of April." Mathai added: "We might be stuck in a range over the next few months, but by the time we turn the corner into 2026, bond yields will likely be lower than they are now." The interest rate-sensitive U.S. 2-year yield was forecast to decline more sharply, by 30 bps to a median 3.69% in six months and to 3.50% in a year. https://www.reuters.com/markets/us/safe-haven-concerns-mount-us-treasuries-face-twin-recession-inflation-risks-2025-05-13/

2025-05-13 11:47

IQE considers dual sourcing to mitigate tariff impact CEO Meier discusses potential US production move CEO says a full sale of Taiwan ops makes timing sense May 13 (Reuters) - Apple supplier IQE (IQE.L) , opens new tab is looking at moving some production to the United States, expanding its supplier base, and sharing tariff costs with customers as it guards against potential U.S. duties on the chips sector, its new CEO told Reuters on Tuesday. U.S. President Donald Trump said last month he was considering tariffs on semiconductor chips, starting at "25% or higher", but did not specify when these could come into effect. Sign up here. Jutta Meier, who was confirmed as CEO on Tuesday, said that IQE, which supplies the compound semiconductor wafer products used in the iPhone's facial recognition sensor, was constantly talking to customers to find ways to mitigate tariff risks. "The other thing is we need to look at alternative sourcing activities, moving some of our production inside of the U.S. and ensuring that there's production there, but obviously that will take investment, that really takes time to do that," she added in an interview. For instance, the Cardiff-based company is looking at gallium supplies from outside of China as part of its strategy to ensure it is not reliant on any single supplier, Meier said. Trump has announced a swathe of tariffs on global trading partners as well as sectors such as autos, and steel and aluminium. Some broader tariffs have been delayed while countries try to negotiate a deal with the U.S. administration. There is "currently no direct impact" from the implementation of U.S. tariffs, said IQE, which has manufacturing sites in the U.S., Britain and Taiwan. DIVERSIFICATION STRATEGY IQE has said it could sell its Taiwan business as part of a strategic review to cut debt and boost growth, having previously considered an IPO of the operation. "(A) full sale ... makes sense from a timing perspective and also from the valuation that we will get for the remaining company, and we can definitely use the proceeds much quicker for our growth and diversification strategy," said Meier. IQE expects 2025 revenue to be within market expectations of between 115.1 million and 123 million pounds ($151.9 million-162.5 million), according to a company-provided consensus. It reported 118 million pounds in revenue for 2024. Shares in the company were up 4.6% in afternoon trading. ($1 = 0.7578 pounds) https://www.reuters.com/technology/uk-chip-supplier-iqe-sees-fy25-revenue-within-market-view-2025-05-13/

2025-05-13 11:33

Raising tops original target of $1.5 billion Funds to be invested in oil and gas assets with steady output Largest energy income fund ever raised by Kayne Anderson May 13 (Reuters) - Kayne Anderson has closed its third energy income fund with $2.25 billion of total capital committed, the investment firm said, far exceeding an initial target as investors show renewed appetite for oil and gas assets. The fund, Kayne Private Energy Income Fund III, will invest in high-quality private companies focused on producing oil and natural gas from wells that generate stable cash flows, according to a statement seen by Reuters. Sign up here. This type of production suits income-focused strategies, where investors are regularly paid out a portion of an investment's earnings, on top of the traditional private equity return generated by assets appreciating in value. Mark Teshoian, co-head of Kayne Energy Private Equity, said the success of the third fundraise, which initially targeted $1.5 billion, validates the income strategy the firm has pursued over the last decade. Investor interest in oil and gas-focused private equity has been returning, after a period earlier this decade where it fell out of favor. Strong returns from the industry have helped drive the attraction, while regulatory pushback on environmental issues that previously dampened interest have ebbed away under the Trump administration. A recent clutch of private equity funds have been raised by firms, such as Kayne Anderson, that have strong track records in oil and gas. The net internal rate of return (IRR) of Kayne's first two income funds, and associated co-investments, was around 24.4%, according to a person familiar with the matter. IRR is a key metric which helps judge profitability within private equity. Danny Weingeist, who also leads Kayne Energy Private Equity, said both new and existing investors contributed to the third fund. Including co-investments and associated funds, the recent fundraising efforts secured more than $2.8 billion. The third fund has already begun deploying capital: South Wind Exploration & Production received $400 million of equity capital, according to an April 29 statement. The management team of South Wind previously ran Flywheel Energy, a Kayne Anderson-backed energy producer until it was sold last year. Teshoian said Kayne's income strategy was well-suited to periods of market volatility, and today's environment provided a compelling entry point for new investments. U.S. crude prices touched a four-year low last week amid concerns over increased supply from the OPEC+ cartel, and sluggish global growth stemming from U.S. President Donald Trump's trade war. While such conditions have led executives of large publicly-listed shale producers to cut spending and output targets, the types of oil and gas wells favored by income strategies are less impacted as they are focused on milking existing production. https://www.reuters.com/business/energy/kayne-anderson-raises-225-billion-third-energy-income-fund-2025-05-13/

2025-05-13 11:31

LONDON, May 13 (Reuters) - Tesco (TSCO.L) , opens new tab, Britain's biggest supermarket group, has no plans to source American beef despite last week's U.S.-UK trade deal giving the product access to the UK market. The deal gave U.S. farmers a quota of 13,000 metric tonnes for beef which meets UK standards, with UK farmers having the same quota for sales into the United States. Sign up here. "We source 100% Irish and British beef in Tesco and for the foreseeable future that policy will be the same, we're not planning to change it," Tesco CEO Ken Murphy told Reuters on the sidelines of the World Retail Congress. As market leader, Tesco has a 28% share of Britain's grocery market. No. 2 player Sainsbury's (SBRY.L) , opens new tab, which has 15% of the market, similarly sources all of its beef from Britain and Ireland. Last week, U.S. Secretary of Agriculture Brooke Rollins hailed American beef as "the safest, the best quality and the crown jewel of American agriculture" and predicted the trade deal would "exponentially increase" U.S. beef exports to Britain. However, with little difference between prices of British-produced beef and U.S. beef that does meet UK standards, the U.S. product could struggle to find a UK market. https://www.reuters.com/world/uk/britains-tesco-has-no-plans-source-american-beef-2025-05-13/

2025-05-13 11:14

May 13 (Reuters) - Indian gas transporter GAIL (India) will operate its 5 million-tonnes-per-year liquefied natural gas (LNG) import terminal in western India during the monsoon season for the first time, after completing a breakwater facility, Chairman Sandeep Kumar Gupta said. The company typically shuts the Ratnagiri terminal — popularly known as the Dabhol LNG plant — for four months from May 25 each year to avoid high tides. The new breakwater will now enable ship arrivals during the monsoon. Sign up here. "Our breakwater has been completed. We have applied for an all weather terminal status with the authorities and hope to get authorisation in a week's time. So we will schedule LNG cargoes accordingly," Gupta said at a press conference. Separately, GAIL's head of business development Rajeev Kumar Singhal said the company plans to expand Dabhol's capacity to 6.3 million tonnes per year by mid-2027, and to 12.5 million tonnes by 2031–32. He added that GAIL has received five bids in a tender to acquire a stake in a U.S. LNG project, alongside a long-term LNG supply agreement. Indian companies are increasingly seeking U.S. LNG linked to Henry Hub prices to reduce exposure to oil-indexed contracts, which dominate their current portfolios. Gupta said Henry Hub-linked LNG prices are expected to average $3.5–$4 per million British thermal units, making purchases affordable on a free-on-board basis for Indian customers. https://www.reuters.com/business/energy/indias-gail-run-dabhol-lng-terminal-during-monsoons-plans-expansion-2025-05-13/

2025-05-13 11:11

Venture Global entire Plaquemines plant to produce LNG by end of 2025 Company plans to sell 550 LNG cargoes from CP2 project before moving to commercial operations Venture Global stock price soars almost 10% trading May 13 (Reuters) - Venture Global LNG (VG.N) , opens new tab shares jumped nearly 11% on Tuesday after the company announced it expects its entire Plaquemines LNG export facility in Louisiana to be operating by year end, news that eclipsed its disappointing quarterly results. Venture Global CEO Mike Sabel told analysts on a conference call that he expects Phase 1 of the Plaquemines plant to be operating by the end of May, with the rest up by the end of the year, even as formal commissioning continues for years. Sign up here. That means the company will be able to sell hundreds of cargoes from the facility on the highly profitable spot market into 2027, rather than sell LNG to long-term customers at relatively low contracted prices. Liquefaction fees for Plaquemines commissioning cargoes are expected to average over $7 per million British thermal unit (mmBtu) compared with $2.25 for the long-term contracted cargoes at its Calcasieu Pass export facility, Sabel said. "In Plaquemines we are going to be triple the production by the end of this year", he said on the call. Venture Global shares rose 8% to close at $10.72. The company is the second-largest U.S. LNG exporter behind Cheniere Energy (LNG.N) , opens new tab, and has been responsible for almost all additional U.S. export capacity since 2023, helping make the country the world's largest exporter of the superchilled gas. Earlier in the session Venture Global shares fell after the company lowered its current-year forecast and said it missed first-quarter estimates for core profit due to higher operating costs at LNG projects. The company has been grappling with high project costs, prompting it to raise the Plaquemines project's budget forecast in March. U.S. President Donald Trump's import tariffs on steel and aluminum are likely to impact only 1% of Venture Global's construction costs but the company continues to manage rising labor costs, Sabel said. Venture Global lowered its current-year adjusted core profit, or EBITDA, forecast to between $6.4 billion and $6.8 billion from between $6.8 billion and $7.4 billion. The midpoint was still above Wall Street expectations of $6.54 billion, according to data compiled by LSEG. Its adjusted core profit for the first quarter was $1.35 billion, missing estimates of $1.38 billion, as per LSEG data, weighed down by higher operating costs related to ramping up LNG production at the Plaquemines project and commercialization of the Calcasieu project. The company's quarterly operating and maintenance expenses more than doubled from a year earlier to $252 million. "We view the release as mixed ... somewhat overshadowed by a larger downward revision to FY25 EBITDA guidance than what might have been expected, though tariff impacts to CP2 are minimal," Scotiabank analyst Brandon Bingham said. Sabel said in the earnings call that all customers of Venture Global's other facility at Calcasieu Pass have received contracted cargoes since the facility started commercial operations in April, after more than three years of commissioning. The company said it was also well on its way to giving the financial go-ahead to its CP2 project, also in Louisiana, and estimates it will sell over 550 commissioning cargoes from that project before it has to move to commercial operations. CP2 is expected to produce 28 million tonnes per year, making it the single largest LNG export plant in the U.S. With larger volumes from CP2 and Plaquemines than originally expected, Sabel said the company will make announcements in the coming months of more long-term contracts and that it was speaking mainly to European and Asian buyers. "We have built and are building more production capacity than we expected and so our appetite for signing more longer term contracts is greater than it was," said Sabel. https://www.reuters.com/business/energy/lng-firm-venture-global-forecasts-full-year-core-profit-above-expectations-2025-05-13/