2025-02-03 20:56

SAO PAULO, Feb 3 (Reuters) - Inflation in Brazil is expected to ease further this year and near the mid-point of the central bank's 3% target by mid-2026, President Luiz Inacio Lula da Silva said in a written message to Congress on Monday. "In 2025, the reduction in inflation should continue, supported by the more positive performance expected for the grain harvest, electricity tariffs and fuels," his message read. The slowdown in prices will benefit from the increase in the interest rate differential between Brazil and other economies, which should help with exchange-rate dynamics, according to the document. Last week, Brazil's central bank hiked interest rates by 100 basis points and signaled another increase in March. On Monday, the Brazilian real set its longest streak of gains versus the U.S. dollar in 20 years. The Brazilian government's spending review would continue in 2025 and not deviate from the commitment to the "structural construction of fiscal robustness," Lula's message read. Sign up here. https://www.reuters.com/world/americas/brazil-inflation-ease-further-this-year-lula-tells-congress-2025-02-03/

2025-02-03 20:53

Feb 3 (Reuters) - New Jersey officials on Monday said the state would not grant awards for new offshore wind contracts, a sign that U.S. President Donald Trump's order to review the federal offshore wind program is putting a chill on the industry. The announcement by the New Jersey Board of Public Utilities comes days after Shell (SHEL.L) , opens new tab backed out as a partner in the only project that had finalized a bid under the state's latest offshore wind procurement scheme. In a statement, the New Jersey Board of Public Utilities cited both Shell's withdrawal from the Atlantic Shores project and uncertainty regarding federal support for the industry. "The Board concluded that an award in New Jersey's fourth offshore wind solicitation, despite the manifold benefits the industry offers to the state, would not be a responsible decision at this time," Christine Guhl-Sadovy, president of the BPU, said in the statement. The announcement is the latest in a string of recent blows to the nascent U.S. offshore wind industry, which has struggled with soaring costs, canceled projects and a high-profile construction accident. Trump has cast doubt on the industry's future after he suspended new federal offshore wind leasing pending an environmental and economic review, saying wind turbines are ugly, expensive and harm wildlife. New Jersey is among the nation's top offshore wind states. Governor Phil Murphy has a goal of installing 11,000 megawatts by 2040 as part of his agenda to boost clean energy and combat climate change. In its fourth solicitation, the state had sought up to 4,000 megawatts of offshore wind capacity. The BPU said two of three bidders had withdrawn from the process, leaving only Atlantic Shores, a joint venture between Shell and France's EDF. Atlantic Shores received federal approval from the administration of former President Joe Biden last year. If built, the project is expected to be able to generate enough electricity to power 1 million homes. EDF Renewables said Trump's order was harming industry progress. "It is disappointing that the recent solicitation concluded without a selection of a project," EDF Renewables spokesperson Sandi Briner said in an email. "The anti-wind executive order has created extraordinary uncertainty that is directly and immediately detrimental to US jobs, energy production and investment." A spokesperson for Atlantic Shores, which intends to continue with its offshore wind project, said the company was discouraged by the BPU announcement but would look for other contract opportunities. Sign up here. https://www.reuters.com/business/energy/new-jersey-says-it-wont-award-new-offshore-wind-contracts-2025-02-03/

2025-02-03 20:20

Feb 3 (Reuters) - U.S. President Donald Trump slapped Canada and Mexico with duties of 25% and China with a 10% levy on Saturday, calling the measures necessary to combat illegal immigration and the drug trade. Canada and Mexico immediately vowed retaliatory measures, and China said it would challenge Trump's levies at the World Trade Organization and take other countermeasures. Trump's move has sparked volatility in the commodities market. Here are some reactions to the news: GOLDMAN SACHS "We still expect Canadian oil producers to eventually bear most of the burden of the tariff with a $3 to $4 a barrel wider-than-normal discount on Canadian crude given limited alternative export markets, with U.S. consumers of refined products bearing the remaining $2 to $3 a barrel burden. "We estimate Canadian natural gas exports to the U.S. might drop by a modest 0.16 billion cubic feet per day (bcfd) as a result of 10% import tariffs, with little if any impact on U.S. gas prices." BARCLAYS "It would be fair to assume that all the three parties in the supply chain (Canadian producers, refiners - primarily in the Midwest - and end-consumers) will bear the incremental cost equally. "Tariffs in general are not good for oil because they weigh on demand and boost the U.S. dollar, so we would feel more comfortable positioning for a narrower Brent-WTI spread." CITI "We see further tariff escalation as bullish for gold to $3,000 per ounce and silver to $36 per ounce on a 6-12 months basis and bearish copper to $8,500 per ton over the next three months, on an ex-U.S. price basis." JP MORGAN "We maintain our tactically bearish stance on base metals in the near term and see LME 3M copper prices at risk of falling towards $8,500/mt while LME 3M aluminum could move lower towards $2,400/mt amid a near-term pricing in of risk premium given the ramped up economic and inflationary risks of tariffs. "For silver, platinum and palladium, the hit to industrial sentiment and threat to the automotive sector could drive a sharper divergence with gold in the near term, keeping our bullish preference primarily in gold for the time being." RBC CAPITAL MARKETS "Tariffs are highly unlikely to lower U.S. gas prices, and we believe these tariffs could lead to mildly higher U.S. gas prices than would otherwise be the case over the near and medium term as long as they are in effect. "If tariffs broaden further, it simply means that gold will cost more in the U.S. than it otherwise would." Sign up here. https://www.reuters.com/markets/how-trumps-tariffs-might-affect-commodity-energy-sectors-2025-02-03/

2025-02-03 20:17

WASHINGTON, Feb 3 (Reuters) - U.S. President Donald Trump said on Monday he wants Ukraine to supply the United States with rare earth minerals as a form of payment for financially supporting the country's war efforts against Russia. Trump, speaking to reporters at the White House, said Ukraine was willing, adding that he wants "equalization" from Ukraine for Washington's "close to $300 billion" in support. "We're telling Ukraine they have very valuable rare earths," Trump said. "We're looking to do a deal with Ukraine where they're going to secure what we're giving them with their rare earths and other things." It was not immediately clear if Trump was using the term "rare earths" to refer to all types of critical minerals or just to rare earths. Rare earths are a group of 17 metals used to make magnets that turn power into motion for electric vehicles, cellphones and other electronics. There are no known substitutes. The U.S. Geological Survey considers 50 minerals to be critical , opens new tab for the country's economy and national defense, including several types of rare earths, nickel and lithium. Ukraine contains large deposits of uranium, lithium and titanium, although none are considered to be among the world's five biggest by volume and the U.S. has its own untapped reserves of those and other critical minerals. The U.S. has only one operating rare earths mine and very little processing capacity, although several companies are working to develop projects in the country. China is the world's largest producer of rare earths and many other critical minerals. Sign up here. https://www.reuters.com/markets/commodities/trump-says-he-wants-ukraine-supply-us-with-rare-earths-2025-02-03/

2025-02-03 20:08

Fed's Goolsbee sees risk that inflation could resurge Fed's response to tariffs depends on how prices react - Collins Bostic, Collins, Goolsbee see no need to cut rates soon Feb 3 (Reuters) - The Trump administration's plans for trade tariffs come with inflation risks, three Federal Reserve officials warned on Monday, with one arguing that uncertainty over the outlook for prices calls for slower interest-rate cuts than otherwise. Trump on Saturday slapped across-the-board tariffs on the three largest U.S. trade partners, though by late Monday the leaders of Mexico and Canada had won a 30-day reprieve after they agreed to stepped-up efforts to stem drug trafficking. Tariffs on China are set to begin on Tuesday, and Trump has signaled he will impose duties on other trading partners as well. "The kind of broad-based tariffs that were announced over the weekend, one would expect to have an impact on prices," Boston Fed President Susan Collins said in an interview with CNBC, adding that "with broad-based tariffs, you actually would not only see increases in prices of final goods, but also a number of intermediate goods." Little modern experience on how mega-tariffs impact the economy makes it hard for the Fed to know exactly how big or long-lasting the effects will be, she said, noting that it is possible the Fed could even shrug off a one-time increase in inflation tied to the tariffs. Speaking later in the day on Marketplace Radio, Chicago Fed President Austan Goolsbee said that very lack of clarity requires a go-slower approach on interest-rate cuts. "Now we've got to be a little more careful and more prudent of how fast rates could come down because there are risks that inflation is about to start kicking back up again," Goolsbee said. He did not repeat his recent mantra, voiced as recently as last week, that rates will need to come down a fair bit over the next year, given progress on bringing down inflation and the goal of keeping the economy at full employment. Earlier in the day, Atlanta Fed President Raphael Bostic warned his business contacts were planning to pass through any rising costs from the tariffs. "The ultimate question about whether that is significantly inflationary depends on exactly how it plays out," as there are scenarios where the Fed may be able to shrug off these increases and ones where it might not be able to. "To the extent that were to impact things like inflation expectations then you'd have to," Bostic told reporters after a speech. Analysts at the Peterson Institute for International Economics said on Monday that the full suite of tariffs on the three nations, if implemented, will cost the typical American household an additional $1,200 a year. "The burden will fall disproportionately on low-income households who spend more of their income on physical goods relative to higher income households," ING chief international economist James Knightley said, noting that tariffs are effectively tax increases on American citizens, as they are paid by the citizens of importing nations. 'NO URGENCY' The Federal Reserve, which cut interest rates by a full percentage point last year, held its policy rate steady last week, flagging uncertainty in the economic outlook. Fed Chair Jerome Powell said after the meeting that when it comes to tariffs, "we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be." Collins, who is a voting member of the Fed's rate-setting committee this year, told CNBC that Fed policy is well-positioned. She noted that "it's really appropriate for policy to be patient, careful, and there's no urgency for making additional adjustments, especially given all of the uncertainty, even though, of course, we're still somewhat restrictive" with the current stance of interest rates. Bostic also signaled he was ready to stay on the sidelines for the time being. There is "a ton of uncertainty in a ton of space," Bostic told a Rotary Club of Atlanta meeting, adding "there are a lot of things I am going to wait and see about ... I'd be very satisfied to wait for a while" with rates at their current levels. Collins left the door open to further rate cuts, saying "I certainly would see additional ... normalization, in terms of what the policy stance is," without providing a time frame. Financial markets are currently betting the Fed will wait until at least June before it cuts rates again. Sign up here. https://www.reuters.com/markets/us/feds-collins-says-fed-can-be-patient-rates-amid-tariff-uncertainty-2025-02-03/

2025-02-03 19:58

US tariffs on China take effect, Beijing quickly imposes own Mexico, Canada tariffs paused after border promises Markets on edge although Monday's big moves unwound SINGAPORE/LONDON, Feb 4 (Reuters) - U.S. stock futures and the dollar fell on Tuesday, while Hong Kong shares slipped from two-month highs, as the U.S. and China went tit-for-tat on tariffs and raised the spectre of a broader, damaging trade conflict. "(The) trade war story remains alive and well and this has a lot further to play out," said Shane Oliver, chief economist at AMP in Sydney, as prices skidded around on news headlines. S&P 500 futures , which had bounced in relief that Mexico and Canada cut last-minute deals to delay a U.S. tariff hit, swung to a 0.2% loss, while the dollar index erased earlier gains to trade 0.1% lower at 108.86 . European stocks (.STOXX) , opens new tab slipped 0.1% in morning trading after falling 0.87% on Monday. Germany's DAX index (.GDAXI) , opens new tab was flat and Britain's FTSE 100 (.FTSE) , opens new tab 0.3% lower. Hong Kong's Hang Seng (.HIS) , opens new tab scaled 2025 highs on hopes that China would also negotiate its way out of tariffs with U.S. President Donald Trump, but later pared its gains slightly to trade about 2.8% higher, buoyed by hopes that Beijing will ramp up stimulus spending to counter U.S. moves. An additional 10% U.S. tariff on Chinese exports took effect at 0501 GMT, and minutes later Beijing announced it was investigating Google and imposing tariffs on imports of U.S. oil, coal, gas, cars and farm equipment from Feb. 10. "I'd say there's disappointment that the U.S. tariffs will be implemented following the last-minute reprieve of both Mexico and Canada," said Ben Bennett, Asia-Pacific investment strategist at Legal & General Investment Management in Hong Kong. "At first look, the Chinese action doesn’t appear overly aggressive, and investors will remain hopeful that both sides will reach an agreement before long and remove the barriers." The dollar surged against the offshore yuan on Monday but was last down 0.16% on Tuesday. The more liquid Australian dollar , often seen as a proxy for the yuan, was last down 0.3% to $0.6209. Mainland Chinese markets remained shut for the Lunar New Year break, with investors focusing on where China fixes the currency trading band on Wednesday morning for clues as to whether it will seek to weaken the yuan to limit the impact of tariffs. Trump's press secretary said he will speak with Chinese President Xi Jinping in the next few days, but unlike the North Americans, it is less clear where they will find common ground. "It's a totally different story because it (China) is an economic rival as well as political," said Naka Matsuzawa, chief macro strategist at Nomura in Tokyo. "Unless China makes huge concession economically, I really don't think Trump will stop this tariff." UNCERTAINTY UNLEASHED Trump's shifting trade policies have made for a wild start to a week that is also dotted with major company earnings. The Canadian dollar swung in its biggest one-day range since the onset of the pandemic on Monday, while the S&P 500 (.SPX) , opens new tab fell 1.9% before finishing the session 0.76% lower. Investor discomfort had safe-haven gold trading just below Monday's record highs at $2,817 an ounce. Bonds fell slightly after ticking higher on Monday, with benchmark 10-year Treasury yields up 3 bps to 4.579% . The euro was steady at $1.0341 while the dollar rose 0.3% to 155.28 yen . "For the Federal Reserve, the weekend's developments will likely reinforce their inclination to sit on the sidelines and to remain below the radar as much as possible," noted J.P. Morgan's chief U.S. economist, Michael Feroli. UBS Group (UBSG.S) , opens new tab trounced forecasts with fourth-quarter profits and announced a buyback. BNP Paribas also beat earnings forecasts but lowered this year's profit target. Google (GOOGL.O) , opens new tab reports after U.S. markets close on Tuesday and scrutiny will be on its massive AI spending after the apparently much cheaper Chinese model DeepSeek shocked markets last week. Brent crude oil prices, which initially rose on Monday, were down around 1% after touching their lowest in a month at $74.81 a barrel. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2025-02-03/