2024-11-25 06:06

Treasuries rally as investors see Bessent as fiscal hawk Dollar eases from two-year high, due some consolidation Market sees more policy easing from ECB, less from Fed NEW YORK, Nov 25 (Reuters) - The dollar backpedaled from two-year highs on Monday, while U.S. Treasury markets cheered Donald Trump's pick of hedge fund manager Scott Bessent for the U.S. Treasury secretary, trusting he will be more fiscally disciplined than investors had been fearing. The Treasuries' rally in response to President-elect Trump's Bessent announcement late on Friday pushed yields on 10-year Treasuries down about 14 basis points, the most since early August. Two-year yields also tumbled, reducing the dollar's interest rate advantage. The euro rose 0.83% to $1.0503, recovering from a fall on Friday to its lowest price against the dollar since Nov. 30, 2022. Against the Japanese yen , the dollar weakened 0.37% to 154.16 yen. Traders see Bessent as old Wall Street hand and fiscal conservative. However, he has also openly favoured a strong dollar and supported tariffs, suggesting any pullback in the currency might be fleeting. "I think it's an exaggerated response. We still don't know how much power is going to be in the White House and how much power is gonna be given to the cabinet," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. "I don't think we really know that much that we didn't know on Friday. I think it says more about market positioning than it does about the policies of the new administration," Chandler added. The dollar index measuring the greenback against a basket of six other currencies, including the yen and the euro, fell 0.61% to 106.83, which was more than 1% below a two-year high set on Friday. Trading was thin ahead of Thursday's U.S. Thanksgiving holiday, and Friday, which many market professionals also take off. The only major data on tap this week is on Wednesday, with the second reading of third quarter U.S. GDP and the October Personal Consumption Expenditures price index. The greenback has risen for eight consecutive weeks with many technical indicators flashing overbought on bets Trump's policies would stoke inflation and further support the dollar. "Pricing in various U.S. assets was pushed quite aggressively in one direction for three weeks," said Geoff Yu, senior macro strategist at BNY. "Markets probably need to take a breather when it comes to their dollar positions." RATE OUTLOOKS DIVERGE The euro zone's single currency had taken a hit on Friday as European manufacturing surveys (PMI) showed broad weakness, while U.S. surveys surprised on the high side. The contrast saw European bond yields fall sharply, widening the gap with Treasury yields to the benefit of the dollar. Markets also priced in more aggressive easing from the European Central Bank, with the probability of a half-point rate cut in December rising to about 40%. At the same time, futures scaled back the chance of a quarter-point rate cut from the Federal Reserve in December to 54%, from 75% a month ago, according to CME Group's Fed Watch Tool. Markets now imply about 150 basis points of ECB easing by the end of next year, compared with around 75 basis points from the Fed. Minutes of the Fed's last meeting are due on Tuesday and will offer more clues on the U.S. central bank's thinking behind policy moves so far. Also due this week are figures on U.S. and EU inflation, which will further refine the outlook for rates. Sterling strengthened 0.33% to $1.2572 after hitting a six-week low on Friday at $1.2484. In other North American currencies, the Mexican peso < MXN=> strengthened 0.87% versus the dollar to 20.272, while the Canadian dollar weakened 0.01% to 1.4 per U.S. dollar. The Chinese yuan strengthened 0.22% against the greenback to 7.245 per dollar. Turning to the crypto world, bitcoin was trading at $94,749.00, almost 5% below late Friday's level in consolidation of last week's run up to a record high of $99,830. Bitcoin met profit taking ahead of the symbolic $100,000 barrier on Friday, having climbed more than 40% since the U.S. election earlier this month on expectations Trump will loosen the regulatory environment for cryptocurrencies. (This story has been refiled to rectify an erroneous percent change in paragraph 7) Sign up here. https://www.reuters.com/markets/currencies/dollar-slips-with-bond-yields-treasury-nomination-2024-11-25/

2024-11-25 05:59

Northvolt co-founder urges EU not to give up EV battery dream Firm has filed for bankruptcy protection, needs $1.0-$1.2 bln EU hopes hit by weak EV sales, production issues, China strength STOCKHOLM/GDANSK, Nov 25 (Reuters) - Northvolt's financial collapse deals a blow to Europe's plan to set up its own battery industry to power electric cars, stirring a debate about whether it needs to do more to attract investment as startups struggle to catch up with Chinese rivals. Europe's biggest hope for an electric vehicle battery champion filed for U.S. Chapter 11 bankruptcy protection on Thursday after talks with investors and creditors including Volkswagen and Goldman Sachs for funding failed. The Swedish company, whose motto is "make oil history", has received more than $10 billion in equity, debt and public financing since its 2016 start-up. Volkswagen and Goldman Sachs each own about one fifth of its shares. Northvolt said on Friday it needed $1.0-$1.2 billion in new funds under the restructuring process, which it hopes will end by the end of March. In recent months, it has shrunk the business and cut jobs in a bid to shore up its finances. But it has struggled to produce sufficient volumes of high-quality batteries, and lost a 2 billion euro ($2.1 billion) contract from BMW (BMWG.DE) , opens new tab in June. That has left Europe's ambitions to build its own battery industry looking a distant dream. In recent years, Northvolt led a wave of European startups investing tens of billions of dollars to serve the continent's automakers as they switch from internal combustion engines to electric vehicles. But growth in EV demand is moving at a slower pace than many in the industry projected, and China has taken a huge lead in powering EVs, controlling 85% of global battery cell production, International Energy Agency data shows. Making batteries and cells, the units that store and convert chemical energy into electricity, is a delicate process and doing so at scale is a challenge for any battery maker. Northvolt has missed some in-house targets and curtailed production at its battery cells plant in northern Sweden, underscoring the difficulties, Reuters reported last Monday. "The biggest issue is that batteries are not easy to make and Northvolt haven’t satisfied the supply demands of their customers - that is a management issue," said Andy Palmer, founder of consultancy Palmer Automotive said. “The Chinese are technologically 10 years ahead of the West in batteries. That’s a fact," he said. At least eight companies have postponed or abandoned EV battery projects in Europe this year, including China's Svolt and joint venture ACC, led by Stellantis (STLAM.MI) , opens new tab and Mercedes-Benz (MBGn.DE) , opens new tab. In 2024, Europe's battery pipeline capacity out to 2030 has fallen by 176 gigawatt-hours, according to data firm Benchmark Minerals. That's equivalent to almost all the current installed capacity in Europe, according to Reuters calculations. RETHINK Some executives say Europe should do more to attract and support home-grown projects so they can compete with Chinese rivals such as CATL (300750.SZ) , opens new tab and BYD (002594.SZ) , opens new tab. "Europe needs to rethink how it supports a nascent sector before China eats up the entire value chain, which is due to smart planning," said James Frith, European head of Volta Energy Technologies, which specialises in battery and energy storage technology. Among its $5.8 billion in debts, Northvolt owes the European Investment Bank (EIB) some $313 million. EIB vice president Thomas Östros said it had been a constructive partner to Northvolt, but it needed to safeguard the EIB and EU's interests. "It remains the case that Europe has a strategic interest in a European battery industry for electric cars and we will follow developments very closely. But it is much to early to say what the outcome will be," he said. The Swedish government has repeatedly said it does not plan to take a stake in Northvolt. On Friday, Northvolt's outgoing CEO and co-founder Peter Carlsson said he was a "little worried" Europe is giving up on its dream of competing with China. He said Europe would regret it in 20 years time if it retreated. "It's not a straight journey and right now, we're all in a bit of a down in that journey where there's more hesitations, there's more questions on the speed of the transition from the carmakers, from policymakers, from the investor community," he told reporters in a call. Sign up here. https://www.reuters.com/technology/northvolt-crisis-may-be-make-or-break-europes-ev-battery-ambitions-2024-11-22/

2024-11-25 05:59

SEOUL, Nov 25 (Reuters) - South Korea and Malaysia signed an agreement on Monday to cooperate in supplying critical minerals from Malaysia's reserves and to boost cooperation in the defence industry as the Southeast Asian country looks to upgrade its air force jets. South Korean President Yoon Suk Yeol and Malaysian Prime Minister Anwar Ibrahim also shared their commitment at a summit to conclude a free trade agreement by next year, which would include additional areas such as services, investment, and green energy, Yoon's office said. South Korea invited continued interest from Malaysia as it embarks on a project to replace light fighter jets, after a 2023 contract to supply 18 jets valued at $920 million, Yoon's office said in a statement. The countries also agreed to establish an institutional foundation to cooperate on climate change, including for a previously signed memorandum of understanding on a carbon capture and storage project, which is scheduled to launch in 2029. Yoon and Anwar also shared concern over the growing military cooperation between North Korea and Russia, and the humanitarian crisis in Gaza and violence in Lebanon due to the Middle East conflict. Sign up here. https://www.reuters.com/world/asia-pacific/south-koreas-yoon-malaysias-anwar-agree-cooperate-defence-minerals-2024-11-25/

2024-11-25 05:51

MUMBAI, Nov 25 (Reuters) - The Indian rupee rose its strongest level on in over two weeks on Monday, boosted by gains in regional peers and likely dollar inflows on account of the rebalancing of MSCI's equity indexes. The rupee was at 84.30 as of 11:00 a.m. IST, its highest since Nov. 7, up 0.1% from its close at 84.4450 in the previous session. While the local unit had declined to its all-time low of 84.5075 on Friday, prompting intervention by the Reserve Bank of India (RBI), a pullback in the dollar index and U.S. bond yields offered some respite on Monday alongside dollar inflows, traders said. The dollar index was at 106.9 on the day, down 0.5% from its closing level on Friday, while the 10-year U.S. Treasury yield declined 6 bps to 4.35%. The pullback was spurred by markets taking comfort in U.S. President-elect Donald Trump's decision to nominate veteran investor Scott Bessent as the Treasury Secretary. Asian currencies were mostly higher on the day, with the Korean won up 0.4% and leading gains. Meanwhile, the rupee also benefited from dollar sales by at least two large foreign banks, likely on behalf of custodial clients, a trader at a state-run bank said. Indian equities are expected to see passive inflows of about $2.5 billon on account of an MSCI equity index rejig, according to estimates by Nuvama Alternative & Quantitative Research. The rebalancing will be effective after market close on Monday. The rupee has remained under pressure for the better part of the last two months and has relied on frequent interventions by the RBI to avoid sharp losses. The central bank's routine interventions though, alongside valuation losses, have pulled India's foreign exchange reserves to a four-month low of $657.89 billion, as of the week ended Nov. 15. Sign up here. https://www.reuters.com/markets/currencies/rupee-touches-over-two-week-high-dollar-inflows-gains-asia-fx-2024-11-25/

2024-11-25 05:44

LAUNCESTON, Australia, Nov 25 (Reuters) - Concerns that Europe is facing a natural gas supply crunch this winter are overblown, with the liquefied natural gas (LNG) market already stepping up to avoid any shortfall, albeit at higher prices. European natural gas prices climbed to the highest level in two years last week, with the benchmark front-month contract at the Dutch TTF hub reaching 49.03 euros per megawatt hour on Nov. 22, equivalent to $14.97 per million British thermal units (mmBtu). Prices have rallied about 40% since mid-September amid fears that the remaining Russian pipeline supplies to Europe will be halted, or face further curtailment. New U.S. sanctions on Russia's Gazprombank, the financial institution some remaining European importers of Russian gas use to process payments, have also raised concerns about the future of supply. Throw in some early cold weather and the expiry at the end of the year of the transit agreement for Russian gas through Ukraine and it's hardly surprising that prices have been rallying. But there is little sign that Europe is about to run short of natural gas, and the global LNG market is already adjusting to reflect the current dynamics. Europe's November imports of the super-chilled fuel are on track to rise to the highest since February, with commodity analysts Kpler tracking arrivals of 9.16 million metric tons. This is up from 7.56 million tons in October and 6.37 million in September, which was the lowest monthly total in three years. The increase in imports is largely being met by increased shipments from the United States, the world's largest LNG exporter and the swing supplier between the Atlantic and Pacific basins. Europe is on track to import 4.32 million tons of U.S. LNG in November, the most since February and up from October's 3.13 million, according to Kpler data. In contrast, Asia's imports of U.S. LNG are estimated to drop to 2.19 million tons in November, the lowest since march and down from 3.21 million in October. Asia's overall imports of LNG are expected to decline in November to 23.13 million tons, the lowest since June and down from 24.39 million in October. PRICE SENSITIVITY The drop is largely because of weaker imports in the South Asian nations of India, Pakistan and Bangladesh, with India, the fourth-biggest buyer in Asia, expected to land 2.21 million tons in November, down from 2.36 million in October. India is among a group of Asian buyers that tend to be price sensitive, and the recent rise in spot LNG prices will act as a brake on the country's demand. Spot LNG for delivery to North Asia rose to $14.60 per mmBtu in the week to Nov. 22, an 11-month high and up from $13.60 the prior week. The price has been rising steadily in recent months and is now up 76% from its 2024 low of $8.30 per mmBtu. However, it's still short of peak in 2023 of $17.90 per mmBtu, reached in late October as utilities in Asia stocked up ahead of winter. The current forecasts for winter in North Asia are for a colder season than last year, which may serve to bolster demand for LNG, especially in top importers China, Japan and South Korea. Coupled with the likelihood of higher European demand for LNG, it's likely that spot prices will continue to rise. The higher prices will increasingly crowd out the more price-sensitive buyers, such as India. But this isn't a sign that the market is under stress, rather it shows that it's working as it should. The views expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/business/energy/lng-is-stepping-up-solve-europe-gas-woes-price-russell-2024-11-25/

2024-11-25 05:42

MUMBAI, Nov 25 (Reuters) - The Indian rupee may log mild gains on Monday helped by a pullback in the U.S. dollar and portfolio inflows on account of the rebalancing of MSCI's global equity indexes. The 1-month non-deliverable forward indicated that the rupee will open at 84.38-84.39 against the U.S. dollar compared with 84.4450 in the previous session. The rupee had hit an all-time low of 84.5075 on Friday pressured by likely dollar outflows and ongoing strength in the greenback but averted deeper losses due to the intervention by the Reserve Bank of India. The dollar index rose to its highest level in two years on Friday but dipped 0.5% at Monday's market open to 106.9 after U.S. President-elect Donald Trump said he would nominate Scott Bessent as the U.S. Treasury secretary. Some analysts reckon that Bessent's appointment may reduce the chance of severe tariffs, potentially limiting the inflationary impact of Trump's policies. "The market view that Bessent is a 'safe hands' candidate, may see some relief rally in Treasuries from the open on Monday, as the risk of a more unorthodox candidate is priced out," Societe Generale analysts said in a note. Meanwhile, the rebalancing of MSCI's global equity indexes is effective after markets close on Monday and is expected to draw $2.5 billion of passive inflows, according to estimates by Nuvama Alternative & Quantitative Research. Expectations of some inflows, a broadly weaker dollar and the RBI's stiff defence are supportive of the rupee, but merchant dollar demand could keep gains shallow, a trader at a state-run bank said. On Friday, as the rupee weakened below the psychologically important 84.50 mark, the RBI instructed some banks to reduce speculative positions against the rupee and asked lenders to avoid buying spot dollars to execute arbitrage trades. KEY INDICATORS: ** One-month non-deliverable rupee forward at 84.50; onshore one-month forward premium at 12 paisa ** Dollar index at 106.8 ** Brent crude futures down 0.2% at $75 per barrel ** Ten-year U.S. note yield at 4.35% ** As per NSDL data, foreign investors bought a net $157mln worth of Indian shares on Nov. 21 ** NSDL data shows foreign investors sold a net $1.7mln worth of Indian bonds on Nov. 21 Sign up here. https://www.reuters.com/markets/currencies/rupee-poised-some-relief-softer-dollar-portfolio-flows-2024-11-25/