2025-01-22 17:08

LONDON, Jan 22 (Reuters) - Libya's sovereign wealth fund said there were no remaining asset "seizures" on it in Belgium after a Brussels Court of Appeal ruled to lift a long-imposed freeze of its funds in Euroclear Bank. "With this decision there are no longer any seizures on the LIA's assets in the Kingdom of Belgium," the Libyan Investment Authority said in a statement posted on social media platform X. The statement said the seizures had been in place since 2017. Neither Belgium court nor Euroclear immediately responded to requests for comment. Muammar Gaddafi established the LIA in 2006 to manage the North African nation's oil wealth, and it has been subject to a United Nations asset freeze since the 2011 revolution that toppled Gaddafi. The Belgium assets remain under that freeze. Earlier this month, the UN Security Council adopted a resolution , opens new tab that would allow the LIA to invest its frozen assets in fixed income instruments, under the condition that those instruments and the income from them would remain frozen. LIA last year petitioned for a thaw in the asset freeze. In its statement, it said the UN decision would enable it to "preserve them from erosion risks, optimise their market value and ensure their sustainable grow(th)." Sign up here. https://www.reuters.com/business/finance/libyas-wealth-fund-says-belgian-court-lifts-euroclear-asset-seizures-2025-01-22/

2025-01-22 16:19

Scope warns UK's AA rating may be at risk if gilt sell-offs continue Worry is over risk that gilts, sterling could be losing safe-haven status UK debt nearly 100% of GDP, borrowing surged in December LONDON, Jan 22 (Reuters) - Recent moves in UK debt markets, where gilt yields have risen even though interest rates are being cut and the pound is falling, suggest that cracks may be appearing in Britain's reserve currency status, a credit rating agency has warned. A sharp sell-off in UK gilts earlier this month brought reminders of the 2022 "mini-budget" crisis, when the Conservative government of then-prime minister Liz Truss tried to ram through unfunded tax cuts. The trouble this time was largely pinned on shifts in global interest rate expectations. But bond market watchers have pointed to a notable change in UK market dynamics that seems to have taken root. Rather than attracting risk-adverse investors looking for a safe place to park their money when markets become volatile, gilts now tend to get sold off along with everything else when trouble hits. Dennis Shen, a top analyst at Scope Ratings, the only major agency headquartered in Europe, said evidence that the UK was becoming more vulnerable to these kinds of emerging market-style sell-offs would be a sign its AA rating may not be as robust as it once was. "If bond sell-offs sparking references to the mini-budget crisis of 2022 become a more regular feature of UK capital markets, this may suggest the safe-haven status is becoming less assured," Shen said. "This may be consequential for the AA rating," he added, saying the degree to which the coveted status was being eroded could be evaluated by shifts in "global holdings of reserves in gilts or sterling". Data from the International Monetary Fund shows that the pound's share in "official" sector foreign exchange reserves has nudged higher over the last decade. It accounted for 4.97% in the third quarter of 2024 compared to 4.65% in 2016, before the UK voted to leave the European Union. The amount of debt the UK is saddled with has surged though. It is now at nearly 100% of GDP versus less than 45% before the 2007-2008 global financial crisis. New government figures published on Thursday showed borrowing unexpectedly jumped to 17.8 billion pounds last month, hoisting pressure on UK finance minister Rachel Reeves to draw up budget cuts before a spending review in the summer. The figure was more than 25% higher than economists had forecast and more than 10 billion pounds up on the same month last year, making it the highest December borrowing for four years. "The debt outlook is certainly also important," Shen said. Although occasional bond market sell-offs are not going to change the UK's debt outlook overnight, he said that if higher interest rates were sustained, it would gradually increase the level of UK debt and alter its structure. "Any meaningful weakening of our current outlook on the fiscal trajectory could affect the rating," Shen said. Sign up here. https://www.reuters.com/markets/europe/cracks-could-be-showing-uks-reserve-currency-status-rating-agency-warns-2025-01-22/

2025-01-22 16:03

BUENOS AIRES, Jan 22 (Reuters) - Staff from an International Monetary Fund (IMF) mission are in Argentina discussing a possible new debt deal, an economy ministry source told Reuters on Wednesday, confirming recent comments from the IMF chief about promising conditions for the talks. Argentina's government is seeking a new loan this year, on top of the $44 billion the previous administration renegotiated in 2022, with hopes that extra funds could further restore market confidence, according to the source. Argentina is the IMF's largest debtor country. The ministry source, who is not authorized to speak to the media, spoke on the condition of anonymity. Libertarian President Javier Milei's push to slash public spending, rebuild depleted foreign reserves and lower triple-digit annual inflation has boosted Argentina's prospects for a fresh injection of funding, according to investors. On Sunday, IMF head Kristalina Georgieva signaled that with the "deficit wiped out, inflation down, and growth rebounding," there were strong prospects for further talks. The international lender's managing director made the comments following a meeting with Milei's economic team in Washington. A new debt deal could unblock new funds to bolster the central bank's hard currency reserves. Economy Minister Luis Caputo interrupted a trip to the World Economic Forum in Davos, Switzerland, to return to the South American country to meet with IMF officials, he said on social media. "There will be three days of hard work dealing with the (IMF) mission, the membership bid announced yesterday, and measures that we're finishing designing from the secretariat of commerce," Caputo wrote in a post on X. Sign up here. https://www.reuters.com/world/americas/imf-staff-argentina-debt-deal-talks-that-could-boost-reserves-2025-01-22/

2025-01-22 15:03

ORLANDO, Florida, Jan 22 (Reuters) - After two years of significant underperformance by bonds, investors may have a hard time swallowing claims that 2025 will be the "year of the bond". But there are compelling reasons to believe this will be a case of third time lucky. Fixed income assets, particularly U.S. Treasuries and other government bonds, have struggled to recover from the historic pounding they took in 2022, when central banks hiked interest rates to quell the burst of inflation that followed the pandemic and Russia's invasion of Ukraine. The last time Treasuries posted double-digit annual gains was 2008, when the ICE BofA U.S. Government Bond Index returned 14%. Treasuries eked out modest gains in 2023 and 2024, and corporate bonds performed notably better, but both trailed the S&P 500's sizzling 24% and 23% gains by a wide margin. Wall Street has survived – and indeed thrived – despite elevated borrowing costs, thanks to resilient U.S. growth and the AI boom. But bonds have badly lagged, creating a narrative that they are a poor investment when interest rates are high. This narrative has gained acolytes as U.S. debt and deficit dynamics have deteriorated. Washington's interest payments, borrowing and spending are all elevated, and many investors are skeptical the Trump administration will get public finances in order. Little wonder then that the 'term premium' is the highest in a decade. That's the compensation investors build into the 10-year Treasury yield for taking the risk of lending to Uncle Sam over the long term rather than rolling over short-term loans. This is why Treasuries are no longer a natural hedge against a potential equity selloff. Or so the narrative goes. HIGH YIELDS? NO PROBLEM Chris Iggo, chair of the AXA IM Investment Institute, disagrees. A look back at the past 40 years suggests bond yields at current levels are associated with positive total returns over the following 12 months. Iggo notes that the Bloomberg Aggregate U.S. Government Bond Index has delivered positive monthly total returns 90% of the time since 1985 when the yield on the index has been 4.6% or higher. Some recent history supports this view. The cost of credit in the decade before the Global Financial Crisis was notably higher - the 10-year yield mostly fluctuated in a 4-7% range, and real yields and the term premium were consistently more elevated than they are today. Yet the ICE BofA U.S. Government Bond Index doubled in value and delivered positive returns in all but one of these years. The S&P 500 index also doubled but had to ride out three straight years of double-digit annual losses, during which time it halved in value. The post-GFC, bond-friendly era of zero interest rates may be over, but that does not mean bond investors should be fearful. Liquidity is ample, default risk is low, investors can earn attractive income, and demand is high - look at the record demand at French and Spanish debt sales this week. COMPELLING Capital flows show investors still believe in bonds. U.S. bond funds drew record inflows of $435 billion last year, according to TD Securities. That trend could certainly continue this year, given the strength of global demand for U.S. fixed income, juicy yields and the strong probability that the U.S. economy will continue to enjoy a soft landing. What's more, bonds appear cheap by many measures. Analysts at Citi calculate that the selloff in U.S. Treasuries over the last month is in the 85th percentile going all the way back to 2000. This is especially true in relation to equities. The 'equity risk premium' - the earnings yield on the S&P 500 minus the 10-year Treasury yield - is the lowest in a quarter of a century and negative in certain cases. Even in the investment grade corporate bond market, where spreads are historically tight, it's a similar picture. Angel Oak Capital Advisors estimate that the S&P 500 earnings yield is almost two percentage points below the average return for the Bloomberg U.S. Corporate Investment Grade Index, the biggest gap in decades. Investors burned over the last two years may be suspicious of yet another bond bull call – for valid reasons, namely inflation, the public finances and uncertainty surrounding many of the Trump administration's proposed policies. But the third time truly could be the charm. (The opinions expressed here are those of the author, a columnist for Reuters.) Sign up here. https://www.reuters.com/markets/rates-bonds/third-time-lucky-year-bond-call-mcgeever-2025-01-22/

2025-01-22 13:13

Jan 22 (Reuters) - Citi on Wednesday raised its oil price outlook for 2025 due to geopolitical risks centred on Russia and Iran, but noted prices were likely to ease through the second half of the year. "The oil outlook could see heightened, sustained geopolitical risks in Iran/Russia-Ukraine potentially wipe out the 2025 oil balance surplus, but the Trump administration appears intent on dealmaking," the bank said in a note. Citi expects Brent crude to average $67 a barrel in 2025, up from a previous forecast of $62. It also said it was lifting its average WTI crude forecast to $63/bbl, without giving its former view. It added that it was revising up its quarterly Brent forecasts to $75/bbl in the first quarter, $68/bbl in the second, $63/bbl in the third, and $60/bbl in the fourth, also without specifying its previous expectations. The Biden administration on Jan. 10 sanctioned more than 100 tankers and two Russian oil producers, leading to a scramble by top buyers China and India for prompt oil cargoes and a global rush for ship supply as dealers of Russian and Iranian oil sought unsanctioned tankers. U.S. President Donald Trump has since laid out a sweeping plan to maximise oil and gas production, including declaring a national energy emergency to speed up permitting, rolling back environmental protections, and withdrawing the U.S. from the Paris climate pact. Citi said the timing and nature of President Trump’s actions regarding Iran and Russia could be defining features of the oil market and pricing during 2025. It forecast a surplus of 0.8 million barrels per day for the year. Sign up here. https://www.reuters.com/business/energy/citi-raises-average-2025-oil-price-forecasts-citing-geopolitical-risks-2025-01-22/

2025-01-22 12:34

Jan 22 (Reuters) - Halliburton (HAL.N) , opens new tab on Wednesday warned of softer activity in North America this year even as the oilfield giant beat analysts' estimates for fourth-quarter profit helped by higher demand for drilling and pressure pumping services in the North Sea and Asia. The tepid outlook echoed that of rival Schlumberger, who flagged a flat 2025 revenue as customers limited activity and spending due to an oversupply of oil. Revenue from North America, which account for 39% of the company's total revenue, fell 9% to $2.2 billion, while revenue from international markets gained 2.4%. Completion and production services revenue eased 4.2%, while that from drilling and evaluation rose just 0.4%. Overall revenue of $5.61 billion was below analysts' average expectation of $5.63 billion, according to data compiled by LSEG. Operating margins in the quarter shrank 1 basis point to 17%. On an adjusted basis, the Houston-based company earned 70 cents per share in the quarter, compared with the average analyst estimate of 69 cents, according to data compiled by LSEG. Shares of the company were down 0.5% at $29.38 in pre-market trading. Sign up here. https://www.reuters.com/business/energy/halliburtons-fourth-quarter-profit-beats-estimates-2025-01-22/