2024-11-15 17:57

MEXICO CITY, Nov 15 (Reuters) - The Mexican government expects to transfer 136 billion pesos ($6.69 billion) to state oil producer Pemex next year to help the heavily indebted firm meet its debt and loan repayments, a budget proposal showed on Friday. Pemex has debt payments of nearly $9 billion coming due on bonds next year, part of its $97.3 billion in financial liabilities. Ratings agencies have long criticized the firm for its reliance on government support to shore up its finances. President Claudia Sheinbaum, who took office in October, has said that her government will continue to support Pemex and state-owned electric utility CFE because of the key role they play. The transfer to Pemex is dependent on the company improving its balance sheet by the same amount, according to the budget proposal. Congress must now debate and vote on the bill. Pemex has received around 150 billion pesos this year to meet its debt obligations. Under the administration of Sheinbaum's predecessor, President Andres Manuel Lopez Obrador, Pemex received billions of dollars to pay down its debt, boost oil output and build a refinery that is just starting to produce fuel. ($1 = 20.3310 Mexican pesos) Sign up here. https://www.reuters.com/business/energy/mexico-extend-67-billion-cover-oil-producer-pemexs-debt-2025-2024-11-15/

2024-11-15 17:19

PORT LOUIS, Nov 15 (Reuters) - Mauritius President Prithvirajsing Roopun appointed Rama Krishna Sithanen as governor of the central bank on Friday, following a general election last weekend that was won by an opposition political alliance lead by Navin Ramgoolam. The Alliance du Changement (ADC) coalition won a landslide 60 of the 62 national assembly seats with 62.6% of votes in Sunday's ballot, securing Ramgoolam a fourth stint as prime minister. Sithanen was widely credited with ushering in sweeping financial reforms to diversify the island state's economy when he served as finance minister from 2005 to 2010, during Ramgoolam's second term. Sithanen's priorities would be to stop the depreciation of the rupee currency and tackle the foreign currency shortage on the foreign exchange market, he told Reuters by telephone. Sign up here. https://www.reuters.com/world/asia-pacific/mauritius-president-appoints-rama-krishna-sithanen-central-bank-governor-2024-11-15/

2024-11-15 17:08

Canadian dollar falls 0.1% against the greenback Touches its weakest since May 2020 at 1.4105 Factory sales decrease 0.5% in September Bond yields ease across the curve TORONTO, Nov 15 (Reuters) - The Canadian dollar weakened to a 4-1/2 year low against its U.S. counterpart on Friday as oil prices fell and a wider gap between U.S. and Canadian yields reduced the incentive for investors to hold the currency. The loonie was trading 0.1% lower at 1.4075 to the U.S. dollar, or 71.05 U.S. cents, after touching its weakest intraday level since May 2020 at 1.4105. For the week, the currency was down 1.2%, its sixth weekly decline in the last seven weeks. "The CAD's principal headwind comes from spreads ... with short-term cash and swaps spreads having widened significantly in the USD's favour in the wake of U.S. election," Shaun Osborne, chief currency strategist at Scotiabank, said in a note. The gap between the Canadian 2-year yield and its U.S. equivalent widened by 5.5 basis points to roughly 115 basis points in favor of the U.S. note, near its widest since 1997. Investors tend to favor higher yielding currencies. Upbeat U.S. retail sales data contributed to traders paring back expectations that the Federal Reserve would cut interest rates in December, while the potential for higher inflation under the incoming Trump administration has tempered expectations for Fed easing in 2025. Domestic data for September was mixed. It showed factory sales falling 0.5% from the previous month and wholesale trade up 0.8%. Data for October showed home sales jumping 7.7%, adding to the rise in activity since the Bank of Canada began cutting interest rates in June. The price of oil , one of Canada's major exports, fell 1.4% to $67.73 a barrel and was bound for a weekly loss as investors digested waning Chinese demand. Canadian bond yields edged lower across the curve, with the 10-year down 1.2 basis points at 3.272%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-extends-weekly-decline-wider-yield-spreads-2024-11-15/

2024-11-15 16:25

BOSTON, Nov 15 (Reuters) - Federal Reserve Bank of Boston President Susan Collins said Friday she wants to see more data before deciding whether the central bank should cut rates again at its policy meeting next month. Speaking on Bloomberg's television channel, Collins said when it comes to a rate cut following three quarters of a percentage points' worth of cuts at the last two meetings, "I certainly wouldn’t take December off the table. But again, we're not on a preset path and so we'll have a look carefully at the data and see what make sense when we get" to the next Federal Open Market Committee meeting, she said. Markets are questioning whether the Fed will press forward with rate cuts at its next meeting in the wake of some new data pointing to firmer inflation pressures. This comes also at a time when Donald Trump has been elected president again on an economic platform of trade tariffs and mass deportations, which broad swathes of economists expect will reignite inflation. On Thursday Fed leader Jerome Powell said "the economy is not sending any signals that we need to be in a hurry to lower rates," with economic strength allowing officials the space to deliberate on monetary policy "carefully." Powell declined to say how Trump's preferred policy path will affect the economy and Collins did likewise in her interview. The Boston Fed leader noted monetary policy is still restricting the economy and said "normalizing that will be important." She described monetary policy as "well positioned" given where the economy is right now, with a healthy labor sector and a general moderation in price pressures. Sign up here. https://www.reuters.com/markets/rates-bonds/feds-collins-wont-rule-out-december-rate-cut-bloomberg-tv-2024-11-15/

2024-11-15 16:16

FRANKFURT, Nov 15 (Reuters) - The European Central Bank should cut interest rates further to support a nascent economic recovery in the euro zone, also in the face of potential new trade tariffs in the United States, ECB board member Piero Cipollone said on Friday. The ECB has cut interest rates three times since June after seeing inflation, which had hit double digits in the wake of Russia's invasion of Ukraine in 2022, drop to its 2% target. Cipollone, an Italian and the most dovish voice on the six-member board that runs the ECB, argued that lowering borrowing costs would stimulate investment and boost productivity. "The current balance of risks suggests that we can and should reduce further the current level of monetary policy restriction," Cipollone told an event in Britain. "The pace and extent of this reduction will depend on the incoming data." Conversely, keeping rates too high and economic growth below potential could be "self-defeating" because it "could lower potential growth, thereby weakening the economy’s resilience to both demand and supply shocks", Cipollone added. He did not explicitly mention Donald Trump's victory in the U.S. presidential election last week but noted that "the prospect of higher trade tariffs... by the United States could significantly weigh on activity (and) consumer confidence". "These developments could in turn put downward pressure on euro area inflation," the former Bank of Italy official added. "However, these disinflationary effects could be countervailed by the depreciation of the euro exchange rate and tariff retaliation, which would increase the prices of imported goods." While Trump's trade plans remain unclear, some ECB policymakers have said protectionist U.S. policies would hamper global growth and blanket trade barriers in retaliation would do more harm than good. Investors fully expect the ECB to reduce its interest rates by a quarter of a percentage point at its next meeting on Dec. 12, followed by more cuts through the spring. This would leave the rate the ECB pays on bank deposits at 1.75% to 2.0% from 3.25% now. Sign up here. https://www.reuters.com/markets/rates-bonds/ecb-should-cut-rates-further-support-recovery-cipollone-says-2024-11-15/

2024-11-15 13:21

Options traders shift from defensive to bullish post-election S&P 500 gains 3% since Nov. 5 vote Volatility index drops as market fears subside NEW YORK, Nov 15 (Reuters) - Options players are piling in to riskier bets across the U.S. stock market, supporting a rally that has come on the back of fading election worries and expectations of a Republican lock on power in Washington next year. The bullish plays span a wide array of assets, from electric car maker Tesla (TSLA.O) , opens new tab to small-cap stocks and regional banks. Together, they have helped drive the S&P 500's gain of 3% since the Nov. 5 vote. "We've got this relief from this big risk," said Garrett DeSimone, head of quantitative research at OptionMetrics. "It's just across the board ... you've got everything, with the exception of bonds, going up." Options traders adopted a defensive posture ahead of the election to hedge their portfolios from possible election-related volatility, including worries over a result that might be too close to call immediately or contested. Many are now shifting to a bullish stance, wary of underperforming a market that has rallied following a victory by Donald Trump and Republican control of both houses of Congress, which had been anticipated following the election and was projected by Edison Research on Wednesday. The result is expected to give Republicans a freer hand in pursuing their economic agenda, which includes tax cuts and looser regulations. Investors are "panicking to chase stocks at all time highs," said Charlie McElligott, managing director of cross-asset strategy at Nomura, in a note earlier this week. The volume on daily call options - which profit when stocks rise - has outnumbered puts by a ratio of 1.5-to-1, compared with 1.3-to-1 during the rest of the year, data from Trade Alert showed. Net call volume across single-stock options jumped sharply across most sector groups after the election, according to Deutsche Bank. More broadly, the volatility landscape has changed dramatically, with the Cboe Volatility Index (.VIX) , opens new tab - a measure of demand for portfolio protection - sinking to a near four-month low of 13.67. "What the volatility market was worried about didn't come to fruition, so all that excess worry came out of the market," said Michael Thompson, co-portfolio manager at boutique investment firm Little Harbor Advisors. McElligott cited heightened demand for call options in a range of names including in options on iShares Russell 2000 ETF (IWM.P) , opens new tab ARK Innovation ETF (ARKK.P) , opens new tab, SPDR S&P Regional Banking ETF (KRE.P) , opens new tab and the VanEck Semiconductor ETF (SMH.O) , opens new tab. The swing from worry to upside speculation was visible in the options on Tesla, with investors pouring in to call options as the stock soared after the election on bets that CEO Elon Musk’s close ties with Trump may benefit the EV maker. Tesla options accounted for about 30% of the total U.S. stock options traded in notional terms on Monday, data from Nomura showed. Investors' overall rush into bullish options may be helping fuel the rally in stock prices, analysts said. "When you get these investors that pile in to calls ... this information moves into the stock and then you see the increase in the stock itself," according to OptionMetrics' DeSimone. TEMPERED OPTIMISM Of course, the so-called Trump trade could be in for twists and turns ahead, as details of the timing and implementation of the Republican policy agenda become clearer. Investors are also wary that parts of Trump’s economic platform, such as tax cuts and tariffs, could stoke inflation. Some of those concerns have been reflected in a recent rise in Treasury yields, which could present an obstacle for stocks if it continues. Stocks fell on Thursday after Federal Reserve Chairman Jerome Powell said there was no need given the strong economy. The effect of Trump’s policies on economic growth will not become clear until new laws or administrative edicts are approved or issued, he added. That could be one reason why some measures of investor enthusiasm remain far from the euphoric levels reached in past market rallies. For instance, one gauge of S&P 500 skew - which measures the relative demand for bullish calls versus bearish puts - has fallen to 4%, from a level of 7% just before the election, indicating investors have grown less defensive. But it has been even lower at various times this year, including in May, when it stood at 3%. "This suggests markets are maintaining some degree of caution rather than displaying complete complacency," DeSimone said. Sign up here. https://www.reuters.com/markets/us/traders-chase-post-election-stock-gains-us-options-market-2024-11-15/