2024-12-19 18:38

SAN SALVADOR, Dec 19 (Reuters) - El Salvador said on Thursday it would keep buying bitcoin, possibly at an accelerated pace, a day after the government reached a financing agreement with the International Monetary Fund that had said it should limit its exposure to the cryptocurrency. Stacy Herbert, El Salvador's national bitcoin office director, wrote on X that bitcoin would remain legal tender in the Central American country, and that the government would keep adding to its strategic reserves. On Wednesday, El Salvador struck a $1.4 billion loan deal with the IMF, as part of which the government of President Nayib Bukele agreed that it would scale back its bitcoin policies. The deal specified that tax payments will only be made in the other official tender, the U.S. dollar. IMF spokesperson Julie Kozack said on Thursday that planned legal reforms in El Salvador would make acceptance of bitcoin by the private sector voluntary. The government's announcement that it would make more bitcoin purchases "might be just a way to counter any negative blowback" from a perceived diminished status of the cryptocurrency in El Salvador, said Eugene Epstein, head of trading and structured products for North America at Moneycorp in New Jersey. "Given the size and likely the terms of the IMF deal, it was probably worth for (Bukele) to do that." El Salvador owns 5,968 coins, valued at $594 million. Bitcoin has rallied in recent days after U.S. President-elect Donald Trump reiterated plans for a strategic reserve for the cryptocurrency, similar to a strategic oil reserve. In September 2021, El Salvador became the first country to make the cryptocurrency a legal tender, alongside the dollar. That caused friction with the IMF, which warned of financial and legal risks that it recently said "have not materialized." Bukele has been hyping the country's status as a hub for the promotion of digital currency trading, hosting an "Adopting Bitcoin" conference last month. The country is also home to "Bitcoin Beach," a surfing spot aimed at tourists, where businesses have started to adopt bitcoin as a form of payment. Sign up here. https://www.reuters.com/markets/currencies/el-salvadors-bitcoin-wallet-be-sold-or-discontinued-after-deal-with-imf-official-2024-12-19/

2024-12-19 18:13

WASHINGTON, Dec 19 (Reuters) - U.S. mortgage rates increased this week following three straight weekly declines and could rise further after the Federal Reserve projected fewer interest rate cuts in 2025, boosting the yield on the 10-year Treasury note. The average rate on the popular 30-year fixed-rate mortgage rose to 6.72% after falling to 6.60% last week, which was the lowest level since the week ending Oct. 24, mortgage finance agency Freddie Mac said on Thursday. The rate averaged 6.67% during the same period a year ago. "This week, mortgage rates crept up to a similar average as this time in 2023," said Sam Khater, Freddie Mac chief economist. "For the most part, mortgage rates have moved between 6 and 7 percent over the last 12 months." The U.S. central bank on Wednesday cut its benchmark overnight interest rate by 25 basis points to the 4.25%-4.50% range, but projected only two rate reductions in 2025, citing the economy's continued resilience and still-elevated inflation. In September, the Fed had penciled in four quarter-point rate cuts in 2025. The shallower rate cut path next year in the latest projections also reflected uncertainty over policies from President-elect Donald Trump's incoming administration, including tariffs on imported goods, tax cuts and mass deportations of undocumented immigrants, which economists have warned would be inflationary. The yield on the U.S. 10-year Treasury note touched a fresh 6-1/2-month high on Thursday. Mortgage rates track the 10-year Treasury note. Earlier on Thursday, the National Association of Realtors reported a surge in sales of existing homes in November. The sales, however, likely reflected contracts that were signed in September, when mortgage rates were falling before and shortly after the Fed embarked on its policy easing cycle. Sign up here. https://www.reuters.com/markets/us/us-mortgage-rates-rise-after-three-straight-weekly-declines-2024-12-19/

2024-12-19 18:10

Canadian dollar gains 0.6% against the greenback Touches its weakest intraday level since March 2020 Price of oil falls 0.8% 10-year yield climbs to 3-week high at 3.340% TORONTO, Dec 19 (Reuters) - The Canadian dollar rallied against its high-flying U.S. counterpart on Thursday as investors took stock of technical conditions for the currency pair and ahead of domestic data that could show retail sales increasing in October. The loonie was trading 0.6% higher at 1.4365 to the U.S. dollar, or 69.61 U.S. cents, after earlier touching its weakest level since March 2020 at 1.4467. The U.S. dollar became more technically overbought overnight against the Canadian currency than it has been in over two years, said Michael Goshko, senior market analyst at Convera Canada. The relative strength index for the currency pair touched 80.8 on Wednesday, its highest level since September 2022. A reading above 70 signals an overbought condition. "I wouldn't be surprised to see traders take profit around year-end as they square up and close their books on the year," Goshko said. Wall Street's main indexes also regained some ground a day after the Federal Reserve's projections of fewer-than-expected interest rate cuts and higher inflation next year wrong-footed some investors and pummeled U.S. stocks. Still, the price of oil fell 0.8% to $70.02 a barrel as investors worried that a slower pace of Fed easing could dampen economic growth. Oil is one of Canada's major exports. Economists forecast that Canadian retail sales rose 0.7% in October. The data, due on Friday, could add to recent evidence of some parts of the domestic economy picking up after the Bank of Canada lowered interest rates. Canadian Prime Minister Justin Trudeau has the full support of his cabinet of ministers to continue in that role, new Finance Minister Dominic LeBlanc said. Canadian bond yields moved higher across a steeper curve. The 10-year was up 10.5 basis points at 3.330%%, after earlier touching its highest level since Nov. 25 at 3.340%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-rebounds-against-technically-overbought-greenback-2024-12-19/

2024-12-19 17:53

IMF sees US labor market cooling, inflation trending down High US uncertainty requires data-dependent approach, IMF says IMF's Kozack declines comment on Trump bitcoin reserve plan Bank of Japan taking appropriate cautious approach to rates-IMF WASHINGTON, Dec 19 (Reuters) - The International Monetary Fund views Wednesday's Federal Reserve interest rate cut and adoption of a more cautious outlook as appropriate given high U.S. economic uncertainty, IMF spokesperson Julie Kozack said on Thursday. "Data from the last few months shows that the labor market continues to cool at the same time that inflation has been somewhat higher than expected, but still trending down toward the target," Kozack told a news briefing. "So with this background, we see the Fed's action as appropriate." Kozack said the U.S. disinflation process has proven less costly than many had feared in terms of jobs, the IMF expects core PCE inflation, the Fed's preferred measure, to end 2024 at just under 3% as it declines towards the Fed's 2% target. Earlier on Thursday, the Bank of Japan kept interest rates unchanged but offered few clues on how soon it could push up borrowing costs as it waits for U.S. President-elect Trump's economic and tariff plans. Kozack said that the IMF also views the BOJ's actions as appropriate. "We also recommend that they continue a data-dependent monetary policy as they seek to both policy normalization and ensuring that inflation directly returns to target," Kozack said of the BOJ. Asked about Trump's plans for a U.S. strategic bitcoin reserve, Kozack declined to comment, saying the IMF would fully assess Trump's policies as they are implemented after he takes office in January. The IMF's $2.4 billion loan deal this week with El Salvador requires the country to scale back its official bitcoin activities. Kozack said the Fund sees both opportunities and risks to crypto assets, including risks to financial stability and integrity and consumer protection and countries should have policy frameworks to address such risks. But she said the IMF recognizes that financial institutions are adopting underlying crypto asset technology for payment systems, security and back office operations. "And it's also important to recognize that investor appetite for crypto assets has been very strong, reflecting the assessment by some that crypto assets can generate diversification benefits in asset allocation," she said. Sign up here. https://www.reuters.com/markets/rates-bonds/imf-says-fed-taking-appropriate-action-rates-given-high-us-uncertainty-2024-12-19/

2024-12-19 16:14

LONDON, Dec 19 (Reuters) - An Australian computer scientist who falsely claimed he invented bitcoin was sentenced for contempt of court on Thursday for bringing a 911 billion-pound ($1.2 trillion) lawsuit against Twitter founder Jack Dorsey's payments company Block (SQ.N) , opens new tab in Britain. Craig Wright had long claimed to have been the author of a 2008 white paper, the foundational text of bitcoin, published under the pseudonym "Satoshi Nakamoto." But a judge at London's High Court found in May that Wright had repeatedly lied and forged documents to support his false claim, after the trial of a case brought by the Crypto Open Patent Alliance (COPA) to stop Wright suing bitcoin developers. COPA argued that Wright's recent lawsuit against Block and others breached an injunction preventing Wright from bringing litigation on the basis of his claim to be Satoshi or that he owned intellectual property rights over bitcoin. The group's lawyer Jonathan Hough told the court that Wright's latest lawsuit was "a desperate publicity stunt to keep his cultish supporters engaged." Judge James Mellor ruled on Thursday that Wright was in contempt of court, following a hearing on Wednesday which Wright did not attend. Wright attended his sentencing hearing remotely but refused to say which country he was currently in when asked by Mellor. The judge imposed a sentence of one year in prison, suspended for two years, for what he said was a "flagrant breach" of the court's order. Mellor also threw out Wright's lawsuit against Block and others. Wright, who said he would appeal against the finding that he was in contempt of court, was refused permission last month to appeal against Mellor's ruling that he did not invent bitcoin. Sign up here. https://www.reuters.com/markets/currencies/self-proclaimed-bitcoin-inventor-contempt-court-over-12-trillion-uk-lawsuit-2024-12-19/

2024-12-19 16:07

Global M&A volumes YTD jumps 15% to $3.45 trillion Private equity-led buyouts up 35% M&A outlook buoyed by hopes of deregulation, lower taxes Dealmakers see activity levels above 10-year average in 2025 Technology M&A volumes jump 20% to touch $534 billion LONDON/NEW YORK/HONG KONG, Dec 19 (Reuters) - Bankers expect global deal volumes to surpass $4 trillion next year, the highest in four years, buoyed by U.S. President-elect Donald Trump's promise of less regulation, lower corporate taxes and a broadly pro-business stance. The total value of mergers and acquisitions (M&A) rose 15% from last year to total $3.45 trillion as of Dec. 19 this year, according to Dealogic data, recovering from a decade-low of about $3 trillion during the same period last year. Top dealmakers expect a more deal-friendly antitrust enforcement in the U.S. next year to unshackle tie-ups that were put on hold under the Biden administration. Trump recently named Andrew Ferguson to replace Lina Khan as the chair of the Federal Trade Commission, appointing a current Republican member of the agency who is expected to ease up on policing of large corporate mergers. "Setting aside 2021, next year could be one of the best of the last 10 years because there wasn't a lot of volatility in volume over the last decade. If global M&A volumes are up 15% or 20% next year, it wouldn't be a surprise to us at all," said Jay Hofmann, co-head of M&A for North America at JPMorgan Chase. M&A volumes in the United States climbed 10% to $1.55 trillion so far this year, while Europe and Asia Pacific saw a 22% and 11% jump respectively, with volumes hovering around the $800 billion mark. Recent interest rate cuts, an improved financing environment and a pickup in initial public offerings are expected to lift the fortunes of private equity firms, who were unable to sell or list portfolio companies worth several billions of dollars during the last two years when buyers and sellers were unable to agree on the price of assets and equity capital markets were largely shut for big IPOs. "The IPO market is improving and that really helps some of the larger assets that are in sponsor portfolios for which that may be the only monetization outlet," said John Collins, global co-head of M&A at Morgan Stanley. Leveraged buyout volumes jumped 35% to $600.8 billion this year, as private equity firms braved challenging market conditions to take several companies private, while also clinching takeovers of large targets. Blackstone's (BX.N) , opens new tab $16 billion acquisition of Australian data center operator AirTrunk, and Silver Lake's $13 billion take-private of entertainment conglomerate Endeavor Group (EDR.N) , opens new tab ranked as the top LBOs of the year. Some investment bankers warned planned tariffs under the Trump presidency could prove to be a headwind for the U.S. economy as that could drive up inflation. On Wednesday, the U.S. central bank said more reductions in borrowing costs hinge on further progress in lowering stubbornly high inflation. "There are a lot of views that the Trump administration is going to open the flood-gates for deals. We see less of that and we're a little bit more cautious on how much will change," said Stephen Pick, head of M&A for EMEA at Barclays. Mars' $36 billion takeover of Cheez-It maker Kellanova (K.N) , opens new tab; Capital One's (DFS.N) , opens new tab $35 billion deal for Discover Financial (COF.N) , opens new tab; and Synopsys' (SNPS.O) , opens new tab $35 billion takeover of design software maker Ansys (ANSS.O) , opens new tab were the largest M&A transactions of the year. "Discussions around bigger deals is happening and will continue to happen because the environment is going to be more predictable (in 2025) than it has been in the recent administration," said Krishna Veeraraghavan, global co-head of the M&A group at Paul, Weiss, Rifkind, Wharton & Garrison. LARGE DEALS BUOY VOLUMES While the number of transactions worth over $10 billion grew at a robust pace in 2024, the overall deal count fell from last year as a tough regulatory environment and election-year uncertainty forced companies to postpone their pursuit of transformational tie-ups. Despite those headwinds, 37 deals valued at more than $10 billion were announced, compared to 32 last year. A booming U.S. economy, pent-up demand, and trillions of dollars of unspent capital sitting on corporate balance sheets should result in more deal activity in the near term, bankers said. Top investment banks are starting to ramp up hiring to ensure deal teams are fully staffed to handle the expected surge in transaction volumes. "With Trump lowering taxes and promoting deregulation, companies may be more willing to invest their cash in M&A, instead of distributing it to shareholders," said Nestor Paz-Galindo, global co-head of M&A at UBS. With the outlook for U.S. corporate earnings looking brighter, cross-border M&A activity is also expected to improve as cash-flush foreign buyers increasingly eye attractive U.S. targets. Fast-growing economies in Asia are also increasingly being viewed as attractive for opportunistic private equity firms. "Given their unique dynamics and tailwinds, Japan and India both saw a growing focus from sponsors translating into strong momentum in deal volume and we expect that to continue for both markets in 2025 as sponsor M&A returns globally and in the region,” said Raghav Maliah, global vice chairman of investment banking at Goldman Sachs. Deal advisers noted that the rate of dealmaking heading into 2025 is starting to return to levels seen in the pre-pandemic years of 2018 and 2019, when deal volumes averaged about $4 trillion a year. A flurry of large deals have been announced in recent weeks, including Omnicom's (OMC.N) , opens new tab $13 billion merger with rival advertising giant Interpublic Group (IPG.N) , opens new tab, and Arthur J Gallagher's (AJG.N) , opens new tab $13.4 billion takeover of insurance broker AssuredPartners. "People who are predicting that everything's going to be rolling from January are probably a bit overly optimistic. It's all trending in the right direction. I'm not convinced we'll see another (record) year like 2021 but I'm hopeful that it will be a bit more like 2019 or 2020, right before COVID," said Daniel Wolf, an M&A partner at Kirkland & Ellis. The technology sector accounted for the largest share of M&A activity this year, jumping more than 20% year-on-year to $534 billion globally. "The types of deals that we're seeing in the works are of the type that we saw fewer of over the last couple years and it feels like there's a lot of excitement to do big, transformational deals," said Mark Bekheit, global vice chair of the M&A practice at Latham & Watkins. Sign up here. https://www.reuters.com/markets/deals/dealmakers-eye-4-trillion-plus-ma-haul-2025-trump-boost-2024-12-19/