2025-11-13 22:09
ORLANDO, Florida, Nov 13 (Reuters) - Wall Street tumbled and Treasury yields rose on Thursday as expectations of a Federal Reserve interest rate cut next month faded rapidly, while the dollar also fell in a bleak session for U.S. asset prices. More on that below. In my column today I look at the emerging parallels between the U.S. and Japan, and how both countries are deploying a rather unorthodox policy tool in the broader fight to mitigate sticky inflation - fiscal stimulus. Sign up here. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Today's Talking Points * December Fed cut now only 50-50 A Fed rate cut in December, which was a 90% certainty only a couple of weeks ago according to rates futures markets, is now a coin flip. The rapid shift in market expectations is such that the next fully priced rate cut isn't until March. Very broadly speaking, a split appears to be forming between Fed governors and regional bank presidents: governors, nominated by the president, are leaning dovish; regional bank presidents, less so. Since 1990, the most dissents at a Fed policy meeting has been four. Fed Chair Jerome Powell will earn his leadership spurs next month. * Short goodbye from the Big Short Michael Burry, the 'Big Short' investor who made his fame and fortune betting against the U.S. housing market in the mid-2000s, is closing his hedge fund. On Wednesday, he posted on X that he has bet $9.2 million shorting Palantir stock, although it's unclear if that position is still open. There's an interesting debate around long-term 'shorts.' Market dynamics, structure, and liquidity are very different from 20 years ago. The 'buy the dip' mentality, built on an expected Fed backstop, is such that investors need bags of nerves, patience and deep pockets like never before. * The limits of long bond demand Appetite for U.S. Treasuries this year has been remarkably strong. Just look at where yields are today compared with where they were on January 1 - even the yield on the much-maligned 30-year bond is lower year-to-date. But auctions of 10- and 30-year debt this week have been met with pretty weak demand. Perhaps yields have fallen too far, and investors are now requiring more compensation for holding longer-dated debt given how sticky inflation is looking. US, Japan share unorthodox anti-inflation tool – fiscal stimulus The United States and Japan are both employing a novel inflation-fighting tool: fiscal stimulus. U.S. President Donald Trump and Japan's Prime Minister Sanae Takaichi are looking to placate angry electorates squeezed by cost-of-living issues. But offering lavish fiscal giveaways to cool inflation is a bit like trying to bring a raging fire under control by dousing it with gasoline. Earlier this month, Trump's Republican Party suffered key gubernatorial and mayoral election defeats, where concerns about the high cost of living played a major role. The White House appears to have heard the electorate loud and clear. The president now seems set on sending a $2,000 check to most U.S. households, a 'tariff dividend' funded via money raised by the cranked-up duties on U.S. imports. "It's in discussion," Treasury Secretary Scott Bessent said on Wednesday. But wait, weren't the hundreds of billions of dollars of tariff revenues meant to help cut the budget deficit? Evidently, that's no longer the priority, something that became clear earlier this year when Trump pushed through his 'One Big Beautiful Bill Act'. The package is jammed full of tax cuts that are expected to add $2.4 trillion to the federal budget deficit over the next decade, according to the non-partisan Congressional Budget Office. The Trump administration's key priority is clearly growth, meaning it will run the economy hot, even if the price for that is above-target inflation. While White House officials have never said this publicly, they appear to accept that having inflation closer to 3% than the Fed's 2% target may be worth it to prop up nominal growth. FISCAL HOUSE DISORDER It looks like Japan's new prime minister is taking a similar approach. Rising living costs in Japan were a key factor behind the ruling Liberal Democratic Party's historic election defeat in the summer that led to Takaichi's surprise sweep to power last month. But instead of seeking to tighten policy to stamp out inflation, Takaichi, like Trump, is advocating loosening the fiscal taps. Her newly formed government is preparing an economic stimulus package that will likely exceed last year's $92 billion package. One of its three main aims is to mitigate the impact of rising prices. She is also filling key government economic panels with advocates of expansionary fiscal policy, and this week indicated that she is willing to water down long-term commitments to getting the country's fiscal house in order. Meanwhile, both Takaichi and Trump have made it clear to their respective central banks that they would like to keep monetary policy on the stimulative side too – something many rate-setters might disagree with. In other words, both leaders appear to be intent on countering the effects of inflation with actions that could very well make inflation worse. INFLATION DOOM LOOP Of course, fiscal stimulus can be a powerful and useful tool, especially when directed towards lower-income consumers who will almost always spend the cash they get. Both the 2007-09 Global Financial Crisis and the pandemic in 2020 showed that fiscal largesse is essential during times of crisis when the economy is in a liquidity trap, demand has collapsed, and deflation is the dragon to be slain. But neither the U.S. nor Japan is facing anything approaching economic catastrophe. At an aggregate level, growth in both countries is on the soft side but steady, unemployment is historically low, and inflation is a full percentage point or more above target. It is also unclear how much this fiscal splurge will boost growth. There is no universally agreed measure of the 'fiscal multiplier', how much economic growth is increased by additional government spending or tax cuts. But economists do agree that it is higher in recessions than in expansions, when debt-to-GDP ratios are on the small side, and when monetary policy is less "activist," as a San Francisco Fed paper from 2020 put it. In short, this describes an environment completely different from the ones present in both countries today. Populist fiscal splurges may be politically appealing to Washington and Tokyo right now, but in the context of bringing down inflation it is an unorthodox approach that could make that struggle harder. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/world/china/global-markets-trading-day-graphic-2025-11-13/
2025-11-13 21:54
BOGOTA, Nov 13 (Reuters) - Colombia's state oil producer Ecopetrol on Thursday (ECO.CN) , opens new tab reported a 30% drop in net profit in the third quarter from a year earlier, citing weaker sales volumes and lower crude prices. Net profit landed at 2.56 trillion pesos ($689 million) from 3.65 trillion pesos in the year-ago period, while total sales also fell around 14% to 29.84 trillion pesos. Sign up here. Production slipped 0.4% to 751,500 barrels of oil equivalent per day compared with the same period in 2024. Ecopetrol said it completed its plan to drill 10 exploratory wells in the first nine months of the year. "Ten exploratory wells have been drilled: Eight wells were drilled by Ecopetrol and its subsidiary Hocol in conjunction with its partners, and two were drilled on a risk-only basis by our partners," the company said in a statement. "The results achieved during this period place us in a strong position to meet our operational and financial goals set for 2025," CEO Ricardo Roa added. ($1= 3,719.71 Colombian pesos) https://www.reuters.com/business/energy/colombias-ecopetrol-posts-q3-profit-drop-30-2025-11-13/
2025-11-13 21:26
BERLIN, Nov 13 (Reuters) - Siemens Energy (ENR1n.DE) , opens new tab said on Thursday that it would pay its first dividend in four years and also raised its mid-term outlook following strong demand for gas turbines, services and power transmission technology. "This success was hard-earned and didn't come by chance," CEO Christian Bruch said, in a reference to years of restructuring and cost cuts in the wake of a major quality crisis at the group's wind turbine division. Sign up here. Siemens Energy recommended a dividend of 0.70 euros ($0.82) per share for the fiscal year that ended in September, the highest payout since the company was spun off from former parent Siemens AG (SIEGn.DE) , opens new tab in 2020. As a result of a more optimistic view of the global power equipment market, Siemens Energy now expects sales to grow by at least 10% a year in the 2025 to 2028 period, while the profit margin before special items will rise to 14% to 16% in 2028. The group, which makes everything from gas and wind turbines to electrolysers and power transmission equipment, had previously expected average annual sales growth in the high single-digit percentage range until 2028, with a margin of 10%-12% that year. ($1 = 0.8575 euros) https://www.reuters.com/sustainability/climate-energy/siemens-energy-pay-dividend-2025-raises-mid-term-outlook-2025-11-13/
2025-11-13 21:21
White House meets refiners and biofuel producers over waiver disputes Talks include year-round E15 and waiver reforms Biofuel groups push for waived gallons to be made up Nov 13 (Reuters) - The White House this week held separate meetings with oil refiners and biofuel producers as it seeks to resolve a long-running dispute over billions of gallons of U.S. biofuel-blending requirements that were waived for small refineries, according to four sources familiar with the discussions. The discussions signal the Trump administration is nearing a decision on whether larger refiners must make up for any of the waived gallons, a decision originally expected by the end of October but delayed by the government shutdown. Sign up here. The outreach underscores the administration’s effort to balance the competing demands of two politically powerful constituencies — the oil industry, which says federal blending mandates threaten refinery jobs, and the farm belt, which argues the waivers have eroded demand for corn-based ethanol and other biofuels. The outcome could influence fuel prices, farm incomes and broader energy politics heading into next year. The meetings, which included trade groups representing the largest U.S. refiners and biofuel companies, also touched on ways to make gasoline containing 15% ethanol, known as E15, available year-round. The administration could package that move with reforms to the small refinery waiver program to win support from both industries, the sources said. The White House did not immediately respond to a request for comment. Under the U.S. Renewable Fuel Standard, refiners must blend billions of gallons of biofuels into the nation’s fuel supply each year or buy compliance credits, known as RINs, from others that do. The law allows small refiners to apply for waivers, known as small refinery exemptions, if they can demonstrate economic hardship. The Environmental Protection Agency has cleared a backlog of more than 180 small refinery exemption requests dating back to 2016 — a sweeping move that required the agency to propose a method to account for waived obligations. The EPA proposal said the agency will have waived blending obligations worth 2.18 billion RINs from 2023 through 2025. Biofuel groups want non-exempt refiners to make up for the full 2.18 billion RINs to prevent reduced demand for renewable fuels, while refiners oppose reallocation, saying it would raise regulatory costs. “We appreciate the administration’s leadership in bringing stakeholders together to advance a practical solution on E15 and small refinery exemption reform,” a spokesperson for the American Petroleum Institute said. https://www.reuters.com/business/energy/white-house-hosts-oil-biofuel-talks-trump-administration-nears-decision-refinery-2025-11-13/
2025-11-13 21:00
Nov 13 (Reuters) - Minneapolis Federal Reserve President Neel Kashkari told Bloomberg News in an interview on Thursday that he did not support the Fed's interest-rate cut in October given the economy's resilience, and said he was undecided on what to do for the Fed's meeting next month. "I can make a case depending on how the data goes to cut, I can make a case to hold, and we’ll have to see," Kashkari told Bloomberg News. Sign up here. https://www.reuters.com/markets/us/feds-kashkari-wanted-rate-cut-pause-october-reports-bloomberg-news-2025-11-13/
2025-11-13 21:00
Cisco Systems gains after annual revenue forecast hike Disney warns of long distribution dispute with YouTube TV Traders see December rate cut chance as coin flip S&P 500 -1.66%, Nasdaq -2.29%, Dow -1.65% Nov 13 (Reuters) - Wall Street ended sharply lower on Thursday, with steep losses in Nvidia and other AI heavyweights, as investors scaled back expectations of interest rate cuts due to inflation worries and divisions among central bankers about the U.S. economy's health. All three major U.S. stock indexes posted their steepest daily percentage declines in over a month. Sign up here. The U.S. government reopened after a record 43-day shutdown that had worried investors and disrupted the flow of economic data. A growing number of Federal Reserve policymakers in recent days have signaled hesitation about further interest rate cuts, pushing financial market-based odds of a reduction in borrowing costs in December to near even. Fed officials who spoke recently cited worries about inflation and signs of relative stability in the labor market after two U.S. interest rate cuts this year. "The fundamental question is, is tariff inflation transitory and a one-time deal? And whether it is or isn't, that's why some of the Fed governors don't want to cut," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "It's a risky bet either way, whether they cut or don't cut." Shares fell for some of the U.S. stock market's strongest performers in recent years, as investors fretted about high valuations fueled by optimism about artificial intelligence. Nvidia (NVDA.O) , opens new tab, the world's most valuable company, dropped 3.6%, Tesla (TSLA.O) , opens new tab fell 6.6% and Broadcom (AVGO.O) , opens new tab declined 4.3%. "There's a lot of uncertainties about the state of the economy. ... What we're going through is a little bit of a correction in the market in the AI sector and we're seeing market rotation," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. The S&P 500 declined 1.66% to end the session at 6,737.49 points. The Nasdaq fell 2.29% to 22,870.36 points, while the Dow Jones Industrial Average declined 1.65% to 47,457.22 points. Nine of the 11 S&P 500 sector indexes declined, led lower by consumer discretionary (.SPLRCD) , opens new tab, down 2.73%, followed by a 2.37% loss in information technology (.SPLRCT) , opens new tab. Reflecting Wall Street's rotation away from tech stocks, the S&P 500 value index (.IVX) , opens new tab has gained about 1% so far this week, while the growth index (.IGX) , opens new tab has dipped 0.6%. Walt Disney (DIS.N) , opens new tab tumbled 7.8% after the media giant signaled it was preparing for a potentially prolonged fight with YouTube TV over distribution of its cable channels. Cisco Systems (CSCO.O) , opens new tab rallied 4.6% after raising full-year profit and revenue forecasts, betting on demand for its networking equipment. On Tuesday and Wednesday, the Dow (.DJI) , opens new tab notched record high closes, benefiting from investors selling technology stocks and moving money into the health care sector. Recently, data from payroll processor ADP showed private employers shed over 11,000 jobs a week through late October. Indeed Hiring Lab slides showed a 16% drop in retail-related job postings in October from a year ago, pointing to continued weakness in the labor market. Traders are pricing in about a 47% chance of a 25-basis-point rate cut in December, lower than last week's 70% probability, according to CME Group's FedWatch tool. APA Corp gained 3.3% after a report that Spain's Repsol (REP.MC) , opens new tab is considering a reverse merger of its upstream unit with potential partners, including the energy producer. Memory device maker Western Digital (WDC.O) , opens new tab fell 5.4%, Seagate (STX.O) , opens new tab lost over 7% and SanDisk (SNDK.O) , opens new tab dropped almost 14% after Japanese memory manufacturer Kioxia Holdings reported lower sales and profits. Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) , opens new tab by a 2.8-to-one ratio. The S&P 500 posted 17 new highs and seven new lows; the Nasdaq recorded 56 new highs and 230 new lows. Volume on U.S. exchanges was relatively heavy, with 20.8 billion shares traded, compared to an average of 20.3 billion shares over the previous 20 sessions. https://www.reuters.com/business/us-futures-muted-traders-await-data-after-federal-reopen-2025-11-13/
