2024-11-13 12:59

BENGALURU, Nov 13 (Reuters) - Donald Trump's presidential election win has forced bond strategists to make a material change in their outlook towards higher longer-dated Treasury yields, a Reuters poll found, as the risk of a U.S. inflation resurgence escalates. Since Trump's victory, the benchmark U.S. 10-year Treasury yield has risen nearly 15 basis points. That stems from expectations of his proposed policies of tax cuts and tariffs, which, according to estimates from the Committee for a Responsible Federal Budget, could push up U.S. fiscal debt by $7.75 trillion over the next decade. Coupled with continued resilience in U.S. economic data, that has thrown a wrench into the Federal Reserve's easing plans. Benchmark 10-year yields, which move inversely to prices, are up over 70 basis points cumulatively since the Fed's large September half-percentage point rate cut. Interest rate futures are now fully priced for just three more quarter-point interest rate cuts by end-2025, half of what was predicted even a few weeks ago. Nearly two-thirds of respondents, 19 of 30, said their overall view of longer-dated Treasury yields, which account for future growth and inflation expectations, had materially changed since the U.S. election in a Nov. 8-13 Reuters survey. "The situation is two-fold. Initially, we were skeptical about the U.S.'s need to cut rates as much as they were saying, or as much as the market was pricing. Central banks typically cut rates if there is a crisis or if inflation is too low, neither of which we're currently seeing," said Lars Mouland, chief rates strategist at Nordea. "Plus, its hard to argue against a lot of what Trump has proposed as being inflationary. Imported goods will become more expensive, and even if substituted with American goods, which are pricier from the onset, prices will rise ... Perhaps we need to revisit the highs in rates and go even higher in the long end of the curve." POLICY CLARITY SOUGHT Dan Ivascyn, group chief investment officer at bond giant PIMCO, told Reuters last week the Treasury market selloff on and around the election reflected "reflationary theme" as well as higher fiscal risks. But strategists have not yet fully factored in these concerns to their official point forecasts. The 10-year Treasury yield, currently 4.43%, was seen falling about 20 bps to 4.25% in three months and to 4.20% by end-April, according to the median forecasts from nearly 40 bond strategists. Those forecasts were sizeable upgrades from October's survey. "There are two opposing forces here for the market. One is the expectation of fiscal stimulus in 2025, which keeps an upward bias to yields. However, at the same time, there is also the fact the labor market has been weakening. The Fed is on an easing path, which acts in the opposite direction, pulling down yields," said Jabaz Mathai, head of G10 rates and FX strategy at Citi. "Between these two forces, we find ourselves somewhat neutral at current levels - 4.2% is a reasonable target in the near term." Several others in the survey also cited the need for greater clarity around whether Trump's proposed policies will be implemented in full before taking a definitive call on the future path of yields. While results are still coming in for the House of Representatives, most expect the Republican Party to be in control of both Houses of Congress. "From here, yields will clearly look for more information not only from economic data, but also from fiscal policy," said Vishal Khanduja, portfolio manager, Total Return Bond Fund at Morgan Stanley Investment Management. "We need to see more details not only about who will lead certain aspects in the administration and certain departments, but also about their focus and actual numbers, whether it's tax cuts or tariffs ... This will give us more direction for Treasury yields." Asked what was more likely for the U.S. yield curve over the coming month, 95% of survey respondents, 20 of 21, said it would steepen, 13 of whom said it would be led by longer-term yields rising faster than short-term ones, or "bear steepening". Seven said "bull steepening" was more likely, one said "bull flattening". Sign up here. https://www.reuters.com/markets/rates-bonds/inflation-worries-come-back-haunt-bond-strategists-after-trump-victory-2024-11-13/

2024-11-13 12:47

DAKAR, Nov 13 (Reuters) - Funders including the Dutch entrepreneurial development bank (FMO) have provided 84 million euros ($89.27 million) for the building of two photovoltaic plants with a 60 megawatts (MW) capacity in Senegal, Axian Energy said on Wednesday. ($1 = 0.9410 euros) Sign up here. https://www.reuters.com/business/energy/solar-plants-with-60-mw-capacity-be-built-senegal-2024-11-13/

2024-11-13 12:45

Nov 13 (Reuters) - Agricultural chemicals maker Bayer CropScience (BAYE.NS) , opens new tab, the Indian unit of German drug and pesticide maker Bayer AG (BAYGn.DE) , opens new tab posted a near 39% drop in second-quarter profit on Wednesday, hurt by pricing pressure. The company reported a consolidated profit of 1.36 billion rupees ($16.1 million) for the three months ended Sept. 30, compared to 2.23 billion rupees a year earlier. Revenue from operations rose 7.4% to 1.74 billion rupees, while total expenses rose by 18.4% to 15.71 billion rupees, mainly due to spike in its raw material costs. For further results highlights click KEY CONTEXT Bayer CropScience attributed the increase in revenue to higher volumes, but said this was partially offset by lower producer prices in China. While international agrochemical demand is recovering, with higher sales volume across geographies, ample supplies from China have curbed price increases and hurt domestic companies' margins, analysts have said. The company also said that its margins were hurt by higher production costs in corn seeds due to adverse weather conditions as well as a higher cost of goods sold in its chemical business. Peer UPL (UPLL.NS) , opens new tab posted a wider quarterly loss earlier this week hurt by pricing pressures. PEER COMPARISON * Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT JULY-SEPTEMBER STOCK PERFORMANCE -- All data from LSEG -- $1 = 84.3600 rupees Sign up here. https://www.reuters.com/markets/commodities/indias-bayer-cropscience-q2-profit-falls-pricing-pressure-2024-11-13/

2024-11-13 12:30

Tight copper concentrate supplies eroding smelter profits CNIA sees China's recycled copper volumes up 1 mln tons by 2030 Calls for industry consolidation to boost purchasing power SHANGHAI, Nov 13 (Reuters) - Using more aluminium and recycled copper would help China cope with scarce copper resources, an industry group said on Wednesday, at a time when tight copper concentrate supplies are eroding profits at Chinese smelters. "The copper industry faces many uncertainties and severe challenges ... profit of smelters, in many cases, is not from copper but from byproducts with some already suffering loss," Ge Honglin, chairman of the China Nonferrous Metals Industry Association (CNIA), told a conference. Global miners and smelters in the world's largest copper producer and consumer usually meet in Shanghai every November for the Asia Copper Week gathering to negotiate their copper concentrate contracts and settle treatment and refining charges (TC/RCs) for the following year. TC/RCs, which typically fall when ore supply declines, are a key source of revenue for smelters paid by miners. The fees are expected to be set at a 15-year-low in 2025, a survey of industry participants found. Using more recycled copper could reduce China's reliance on overseas resources, which is currently more than 70%, Ge said. China's recycled copper volume will rise from 2.5 million metric tons in 2024 to 2.7 million tons in 2025 and 3.5 million tons by 2030, Ge forecast, encouraging Chinese companies to go to politically stable areas abroad to secure more recycled copper resources. China has allowed imports of more recycled copper and established a new state-backed recycling company to help reduce reliance on primary raw materials. Ge called for mergers and the reorganisation of China's copper refining capacity to increase industrial consolidation so as to enhance negotiating power to buy concentrate. ALUMINIUM-COPPER SUBSTITUTION Using aluminium to replace copper already presents economic advantages, said Ge, with copper prices more than 3.5 times those of aluminium. China buys 60% of resources needed to produce aluminium from abroad, and Chinese-funded companies have acquired more than 8 billion tons of foreign bauxite, more than a quarter of the total overseas reserves, said Ge. Bauxite is refined into alumina, the main ingredient for making aluminium. Sign up here. https://www.reuters.com/markets/commodities/existing-mines-projects-can-only-meet-80-global-copper-demand-by-2030-minmetals-2024-11-13/

2024-11-13 12:29

SAO PAULO Nov 13 (Reuters) - Services activity in Brazil grew more than expected in September and hit a record high, a sign of economic strength that comes after the central bank kicked off a monetary tightening cycle to fight inflation. The service sector in Latin America's largest economy rose 1.0% in September from August, statistics agency IBGE said on Wednesday, above the 0.7% increase expected in a Reuters poll with economists. Compared with a year earlier the sector rose 4.0%, while economists had forecast a median rise of 3.5%. “In September we had several sectors that boosted the volume of services, such as engineering companies, musical festival production, pipeline transport and book publishing and printing," said IBGE survey manager Rodrigo Lobo. Brazil's central bank accelerated its monetary tightening pace at its meeting last week, going for a 50 basis-point hike that pushed rates to 11.25%. Strong economic activity throughout the year, a tight labor market, fiscal concerns and a weakening Brazilian real against the U.S. dollar have been pushing up inflation expectations in the country. Sign up here. https://www.reuters.com/markets/brazils-service-sector-hits-fresh-record-high-september-2024-11-13/

2024-11-13 12:16

Nov 13 (Reuters) - Germany's cabinet on Wednesday approved plans to require most operators of new wind and solar power plants to sell their electricity independently on the open market, aiming to better integrate renewables into the country's energy system. Under a new energy reform, facilities as small as 25 kilowatts will need to self-market their power rather than selling it to the grid at guaranteed prices. Germany aims to cover 80% of its electricity needs through renewables by 2030, up from 58% currently. The plans announced Wednesday aim to help the country manage electricity surpluses, which often occur midday during summer and have led to negative electricity prices. The proposed reform, however, faces uncertain prospects in the current legislative period, after the collapse of Germany’s governing coalition. Until now, small- and medium-sized plants under 100 kilowatts have been able to sell their electricity to grid operators at fixed, guaranteed rates for 20 years. The new rules would apply only to new plants, with some exceptions for very small solar installations, such as residential rooftop or balcony-mounted systems. Berlin aims to reduce the burden of surpluses on the power grid, where excess solar energy can lead to negative prices by requiring more renewable operators to self-market. Under the draft law, subsidies would no longer be paid out when market prices turn negative, creating incentives to invest in storage systems that hold excess power until prices are favourable. Sign up here. https://www.reuters.com/business/energy/germany-mandate-open-market-sales-new-wind-solar-plants-2024-11-13/