2024-11-26 17:44

Revenue from trading Israeli currency, bonds set for 5 year high Top banks set to make $475 mln from Israel-linked trading - data JP Morgan expected to be top gainer LONDON, Nov 26 (Reuters) - The world's top investment banks are on track to post the highest revenue in five years from trading Israel's bonds and currency thanks to the volatility caused by the 14-month long war in the Middle East, data seen by Reuters show. Banks are expected to post $475 million in fixed-income, currencies and commodities trading (FICC) revenue linked to Israel in 2024, a more than 10% increase from 2023, amid increased volatility primarily in the shekel, the Israeli currency, data from Vali Analytics Ltd show. The revenue rise illustrates how global banks are making money on price gyrations in Israeli assets as the country's wars in Gaza and Lebanon grind on. The conflicts have boosted Israeli inflation, limited economic growth and increased borrowing costs. JPMorgan Chase & Co., the largest U.S. bank, is expected to be the top gainer among 10 global lenders surveyed by the data firm, raking in about $70 million so far this year from such trades, according to a person with knowledge of the matter. Though that is a tiny fraction of global trading income, the double-digit increase highlights how trading Israeli assets has been a bright spot in otherwise muted trading activity this year. Vali Analytics expects the 10 global banks to post no growth in FICC income overall this year. Goldman and Citigroup have the biggest share of the Israeli FICC market after JPMorgan, the person added, while European banks have a smaller portion. Goldman, Citi and JPMorgan declined to comment. Under pressure from activists and governments, some of Europe's biggest financial firms have cut back their links to Israeli companies or those with ties to the country, Reuters reported earlier this month. Reuters could not establish how European banks fared in the trading rankings. JPMorgan has been investing in Israel, where it opened its office in Tel Aviv in 2000. It currently has about 200 employees there. BIGGER SWINGS JPMorgan's global income from fixed-income markets trading declined by 2% to $14.7 billion in the nine months to September compared to the same period last year, according to a bank filing , opens new tab. Volatility favours traders who bet on the future direction of an asset. Early this month, the shekel's one-month implied volatility closed at its highest level since October 2023. It began to trade consistently above euro volatility in early 2023 - with the bigger peaks and troughs creating money-making opportunities for traders. "Israeli currency volatility has increased as a result first of more divided politics and concerns over institutional stability with the controversial judicial reform and then, obviously, the war on multiple fronts," said Hasnain Malik, head of emerging and frontier markets equity strategy at Tellimer. The Israeli government passed , opens new tab a series of laws in 2023 aimed at neutering the powers of Israel's Supreme Court in favour of Prime Minister Benjamin Netanyahu's executive branch, alarming investors. The conflict in the region that followed further increased swings in markets. The shekel has strengthened by nearly 3% against the dollar this month due in part to hopes for a ceasefire deal between Israel and Iran-backed Hezbollah in Lebanon. "That volatility suits banks whose spreads widen but hurts operating businesses exposed to imported inputs or exported finished products," Tellimer's Malik said. Sign up here. https://www.reuters.com/markets/wall-street-banks-get-lift-trading-israeli-currency-bonds-2024-11-26/

2024-11-26 17:03

Canadian dollar falls 0.5% against the greenback Touches its weakest since April 2020 at 1.4177 Trump vows 25% tariff on imports from Canada Canada-U.S. 10-year spread widens 7.5 basis points TORONTO, Nov 26 (Reuters) - The Canadian dollar clawed back some of its decline against its U.S. counterpart on Tuesday as investors weighed the likelihood of hefty trade tariffs pledged by U.S. President-elect Donald Trump on Canadian products being implemented. The loonie was trading 0.5% lower at 1.4060 per U.S. dollar, or 71.12 U.S. cents, after tumbling to its weakest intraday level since April 2020 at 1.4177. Trump on Monday said he would impose a 25% tariff on imports from Canada and Mexico until they clamped down on drugs, particularly fentanyl, and migrants crossing the border. "Markets are digesting the news of a 25% tariff with skepticism," Royce Mendes, managing director and head of macro strategy at Desjardins, said in a note. The Canadian dollar's depreciation is notable but "doesn't seem to reflect a high conviction in these harsher-than-anticipated tariffs being implemented," Mendes said, adding that the threat could nonetheless weigh on business investment in Canada. Bank of Canada Deputy Governor Rhys Mendes said that if Trump follows through on his threat it would have an impact on both economies and the central bank would incorporate those into its economic forecasts. Investors expect the BoC to ease its benchmark interest rate by quarter a percentage point at its next policy decision on Dec. 11, with the market pricing in a roughly 20% chance of a larger move. The policy rate is at 3.75%. The price of oil , one of Canada's major exports, rose 0.7% to $69.41 a barrel as investors eyed OPEC+ discussions on output. Canadian government bond yields moved lower across the curve. The 10-year was down 2.9 basis points at 3.282%, while the gap between it and the U.S. equivalent widened by 7.5 basis points to roughly 103 basis points in favor of the U.S. note. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-pares-decline-after-trump-tariff-pledge-shock-2024-11-26/

2024-11-26 14:49

SAO PAULO, Nov 26 (Reuters) - Brazil's consumer prices rose more than expected in the month to mid-November, data from statistics agency IBGE showed on Tuesday, fueling bets that the central bank may accelerate the pace of its ongoing monetary tightening cycle. Prices as measured by the benchmark IPCA-15 index were up 0.62% in the period, IBGE said, while annual inflation reached 4.77%, speeding up from 4.47% a month earlier and above the upper end of the central bank's 1.5% to 4.5% target range. Economists polled by Reuters had forecast the monthly rate to come in at 0.48%, while the 12-month figure was expected at 4.62%. The latest figures come as markets eagerly await the announcement of a government fiscal package with spending cut measures, and ahead of the central bank's final interest rate decision of 2024. The monetary authority earlier this month accelerated its tightening with a 50-basis-point interest rate hike to 11.25%, leaving the door open for further increases while underscoring the need for fiscal discipline to counter inflation. The bank's board is scheduled to announce its next policy decision on Dec. 11. Citi economists said they expect policymakers to speed up hikes again with a 75-basis-point increase next month and keep raising the benchmark Selic rate until 13.25% in March 2025, kicking off cuts only in 2026. "The combination of the persistent currency depreciation, the steady de-anchoring process of inflation expectations, the robust/above potential economic growth and the limited slackness in the labor market mean a quite challenging inflation outlook," they wrote. The mid-November inflation figure was fueled by higher food and beverage prices, IBGE said, noting they have now risen for three consecutive months, as meat prices jumped. Transportation costs were also up, driven by a 22.5% rise in air ticket prices. Capital Economics economist Jason Tuvey said the data meant the central bank is likely to raise interest rates further than previously expected. He now forecasts the benchmark rate to peak at 13% in the first half of 2025, up from 12% before. "But a lot rests on the details of the government's proposed spending cuts. Failure to soothe investors' fears about the state of the public finances could prompt even more aggressive hikes," Tuvey added. Finance Minister Fernando Haddad said on Monday that incoming central bank chief Gabriel Galipolo attended a meeting with President Luiz Inacio Lula da Silva at Lula's request to share "how he perceived what was going to be announced." Sign up here. https://www.reuters.com/world/americas/brazil-inflation-speeds-up-mid-november-more-rate-hikes-loom-2024-11-26/

2024-11-26 12:47

Nov 26 (Reuters) - Jif peanut butter maker JM Smucker (SJM.N) , opens new tab raised annual profit forecast and beat second-quarter estimates on Tuesday, benefiting from resilient demand for packaged and frozen foods and coffee price hikes. Shares of the Ohio-based company were up about 5% in premarket trading, with it keeping its annual sales target intact. With living costs continuing to remain high, consumers are increasingly opting to cook at home instead of dining out, which has led to a steady demand for the company's essential home goods, including coffee, jams, and spreads, even in the face of price increases. The price hikes helped JM Smucker to counter soaring coffee prices, which have been pushed up by supply chain disruptions. Smucker's U.S. retail coffee business saw sales in the quarter rise 3% to $704 million. Overall quarterly margins to rise 39% from 37.4% a year earlier. The Dunkin' coffee maker's results came in contrast with packaged food peers Kraft Heinz (KHC.O) , opens new tab and Conagra Brands (CAG.N) , opens new tab, which reported disappointing sales as customers traded down for cheaper alternatives. Smucker now expects annual adjusted earnings per share in the range of $9.70 to $10.10, compared with the prior forecast of $9.60 - $10.00. In the quarter ended Oct. 31, on an adjusted basis, the company posted quarterly profit of $2.76 per share, above estimates of $2.51, according to data compiled by LSEG. The company posted net sales of $2.27 billion for the quarter, compared with analysts' average estimate of $2.26 billion, according to LSEG data. Sign up here. https://www.reuters.com/business/retail-consumer/jm-smucker-raises-annual-profit-forecast-resilient-demand-higher-prices-2024-11-26/

2024-11-26 12:44

LONDON, Nov 26 (Reuters) - The expansion of green jet fuels could suffer a significant set-back under president-elect Donald Trump, according to aviation officials, who fear the reversal of tax credits needed to kick-start the sector. The comments by members of airlines trade body IATA and American Airlines (AAL.O) , opens new tab at an airlines industry conference in London are among the first assessments of what a Trump presidency could mean for nascent clean jet fuels. "There are these big potential risks on what the Trump policy is actually going to be and how this really affects everybody's motivation to pursue climate change," Marie Owens Thomsen, chief economist for airlines trade body IATA, told Reuters. The 2022 U.S. Inflation Reduction Act contains hundreds of billions of dollars in subsidies for clean energy and is billed as outgoing President Joe Biden's signature law to combat climate change. Europe's airlines sector, which will have to meet a new mandate for use of sustainable aviation fuels starting in 2026, has repeatedly pointed to the IRA as a useful model to encourage investment into the construction of new SAF production plants. President-elect Donald Trump, a climate skeptic, has vowed to rescind it, something that would require the support of Congress. While existing SAF production facilities are likely to continue producing the fuel, government affairs experts at airlines have said, any rollback of the IRA could put the future of new projects at risk. As it stands, sustainable aviation fuel makes up only around 1% of the world's jet fuel usage, with experts saying the production rate of the green fuel needs to grow quickly for the sector to achieve a goal of net zero carbon emissions by 2050. Trump's incoming administration could have the opposite effect. "The market needs certainty in terms of building up their reservoir," said Ronce Almond, American Airlines' head of intergovernmental affairs, during the airlines industry conference in London on Monday. Sign up here. https://www.reuters.com/sustainability/aviation-sector-officials-warn-trump-effect-green-jet-fuels-2024-11-26/

2024-11-26 12:40

MOSCOW, Nov 26 (Reuters) - Russia's oil pipeline monopoly Transneft (TRNF_p.MM) , opens new tab said on Tuesday that it risked running out of cash by 2026 and may suspend large investment projects after parliament approved a tax hike. Earlier on Tuesday, Russia's parliament approved an increase in the tax on Transneft's profits to 40% from 20% during 2025-2030. "Only a quarter of the profit will remain in the company's budget," the company said, commenting on the tax hike. "And this ensures that by 2026, Transneft should expect a shortage of cash, suspension of implementation and abandonment of large investment projects, including major repairs and reconstruction," it added. Russia is seeking to raise taxes as it needs to fund its military campaign in Ukraine. A major tax reform is expected to generate additional revenue worth 1.7% of GDP in 2025. Separately, Transneft, which operates Russia's 67,000 km-long (42,000 miles) oil pipeline network, said it was raising transportation fees for oil products by 13.8% from Dec. 6. The Russian Federal Anti-Monopoly Service has proposed raising tariffs for transporting crude via Transneft's pipelines by 5.8% in 2025 after a 7.2% hike in 2024. Sign up here. https://www.reuters.com/markets/commodities/russias-transneft-says-it-may-suspend-large-projects-due-tax-hike-2024-11-26/