2025-10-06 05:19

ISTANBUL, Oct 6 (Reuters) - Turkish prosecutors issued detention warrants for 23 suspects linked to the Istanbul Gold Refinery and related companies on a charge of obtaining state support through fraudulent means, state-owned Anadolu news agency said on Monday. The statement from the Istanbul chief prosecutor's office said the 23 suspects were accused of violating the central bank law, a public finance law and a law related to the protection of the Turkish lira's value. Sign up here. https://www.reuters.com/world/middle-east/turkey-orders-23-arrests-istanbul-gold-refinery-probe-state-media-says-2025-10-06/

2025-10-06 05:15

BoE's QT adds significant costs to UK government finances - investors UK has highest 30-year borrowing costs in G7 Taxpayer still winning from cost and profit sharing bond pact - BoE LONDON, Oct 6 (Reuters) - Asset managers whose companies oversee more than $1.5 trillion are urging the Bank of England to scrap bond sales they believe place unnecessary strain on Britain's government debt, while they also rack up tens of billions of pounds of taxpayer costs. Reuters spoke to 10 investors who had wanted the central bank to halt the sales before it pledged on September 18 to slow its overall runoff, which includes bonds that mature. They don't think the BoE has gone far enough and recommend changing the policy, including a complete halt to sales. Sign up here. As finance minister Rachel Reeves' annual budget looms in November, Britain's long-term borrowing costs are the highest among G7 advanced economies. Sticky inflation and fiscal worries are depressing the value of bonds, known as gilts, while the BoE is also actively selling its holdings into weak UK debt markets, recording losses. GILT MARKET INSTABILITY The Treasury compensates the central bank for bond-market losses. While taxpayers previously benefited from gains on the bonds, the arrangement now costs the government 22 billion pounds ($29.6 billion) annually, research , opens new tab by former BoE economist Carsten Jung shows. "Many investors including ourselves have been saying to the Bank of England you’re making the problem worse, not better. Stop doing this," said RBC BlueBay Asset Management fixed income CIO Mark Dowding, who directly oversees assets of about $154 billion. He said he doesn't own gilts and is betting on the pound weakening against the euro. Dowding had shared his view with BoE officials before the central bank announced it would reduce the pace of the gilt runoff to 70 billion pounds ($94 billion) from 100 billion pounds annually. He's still expecting gilt market instability and has since suggested to the UK debt office to stop issuing long-dated bonds to raise funds. The BoE declined to comment while a Treasury spokesperson declined to comment on whether the government would consider changes to reduce the strain on public finances. The BoE hoovered up 875 billion pounds worth of government bonds between 2009 and 2021 to support the UK economy and then moved to offload them faster than other major central banks. This so-called quantitative tightening followed years of easing by central banks in the aftermath of the global financial crisis and the pandemic. 'FISCAL FEEDBACK LOOP' A 2024 Treasury Committee report called , opens new tab the QT plan a "leap in the dark" with more public money at stake than was ever envisaged. One 40-year gilt issued in 2020 is now trading at 24% of its original issue price, in a sign of the potential losses the BoE faces. The BoE has said that the net cash flow benefit to taxpayers since 2012 is still 34 billion pounds, funds used for government spending amid pressure to boost growth for increasingly disillusioned voters. And while losses push up one measure of Britain's debt, gilt sales improve the current budget deficit measure that Reeves targets. That's because they reduce bank reserves on the BoE's balance sheet on which it pays interest. Data crunched by Columbia Threadneedle's Christopher Mahon, head of dynamic real return for multi-asset and with a neutral position on gilts, shows the extra debt interest costs from active quantitative tightening were between 1 billion and 3 billion pounds annually. He will "continue to push the topic" at future meetings with the BoE because the announced reduction is too small to make an impact on wobbly gilt markets, he said. Central banks moving in lockstep to end quantitative easing since 2021 has lifted debt yields globally but the effect has been amplified in the UK, a 2024 study , opens new tab published by the National Bureau of Economic Research estimated, with the BoE's active sales raising yields by up to 70 basis points (bps). One basis point is one-hundredth of a percentage point, or 0.01%. The U.S. Federal Reserve and the European Central Bank have instead allowed debt to roll off their books as bonds mature, with the effect of raising yields by about 20 bps, the NBER paper said. The BoE said in August that its debt sales added 15 to 25 bps to gilt yields. For Paul Flood, head of mixed assets at BNY Investments Newton, active UK QT affected UK debt sustainability via a "fiscal feedback loop" of higher public sector costs and higher gilt yields. "I think it's madness," Artemis' head of fixed income Stephen Snowden said. "Active quantitative tightening should be stopped altogether. It’s ruinous for the taxpayer." ($1 = 0.7429 pounds) https://www.reuters.com/world/uk/top-fund-managers-urge-bank-england-stop-selling-gilts-into-rocky-debt-markets-2025-10-06/

2025-10-06 05:09

SINGAPORE, Oct 6 (Reuters) - Japanese shares surged to record highs on Monday, while the yen sank after fiscal dove Sanae Takaichi was elected to lead the ruling party and become the next prime minister. Takaichi's victory has raised chances that the Bank of Japan will avoid lifting interest rates this month, though the pause may not last if it batters the yen. Sign up here. The Nikkei (.N225) , opens new tab surged past the 47,000 level for the first time, while the yen weakened over 1.5% to hover near the psychologically important 150 per U.S. dollar. Here are some comments from investors and analysts: SHOKI OMORI, CHIEF DESK STRATEGIST, MIZUHO SECURITIES, TOKYO "Market participants will be cautious about JP/US MOF to comment on the quick cheapening of yen. But there’s people still favouring short USD/JPY and I see those positions being closed. That will support USD/JPY level above, say 148. With the BOJ rates expectations fading and expected short term real yield being low and concerns about fiscal boost from Takaichi would also be support for higher USD/JPY." DAVID CHAO, GLOBAL MARKET STRATEGIST FOR ASIA-PACIFIC, INVESCO, SINGAPORE: "Takaichi has previously voiced dovish views on monetary policy, criticising the BOJ for tightening while more recently reaffirming respect for the central bank’s independence. We do not expect her to oppose a potential BOJ rate hike at the end of October, which we continue to expect, though her leadership could limit the scope for further tightening in the future. This could lead to the JPY paring recent gains in the lead-up to the LDP election." ANINDA MITRA, HEAD OF ASIA MACRO STRATEGY, BNY INVESTMENT INSTITUTE, SINGAPORE: "The uncertainty around fiscal objectives and an uptick in the odds of dominance over monetary policy are likely to result in more pain for the yen. To be sure, amid a weak U.S. dollar environment, we do not expect a sharply weaker bilateral exchange rate. But the JPY is likely to underperform other major FX-crosses until there is greater policy clarity. "The near-term impact on Japanese government bonds is likely to be slightly (fleetingly) adverse. This is because much depends on Takaichi’s cabinet appointments and the actual course of her policies. For instance, the appointment of a conservative finance minister, from one of the traditional factions of the LDP, could allay some doubts about fiscal slippage. "But efforts to provide immediate relief, in the year-end supplementary budget, against cost-of-living difficulties, could involve subsidies and tax credits to low-to-middle-income households which will be closely scrutinised by the markets." SHRIKANT KALE, SENIOR QUANTITATIVE STRATEGIST, JEFFERIES, HONG KONG: "In the immediate term, the landscape is one of buoyant equities, a potentially weaker yen, and cautious bond markets, as investors adjust to the prospect of 'Abenomics 2.0' under Japan’s first female prime minister." MIKI DEN, SENIOR JAPAN RATE STRATEGIST, SMBC NIKKO SECURITIES, TOKYO: "The outcome of the LDP election was the exact opposite of market expectations. The market had bet that Koizumi would win, and they were positioned for curve flattening. But because the bet on Koizumi was so strong, it will take time to unwind the flattening positions." CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE: "With policy unlikely to shift soon, the yen stays under pressure — not collapsing, but also not finding safe-haven demand unless there’s a shock. It remains the go-to funding currency in global markets. "That keeps the yen as the preferred funding currency for carry trades, at least until we get closer to the 150–152 intervention zone. "The policy continuity and weaker yen narrative should keep supporting Japanese equities, especially exporters and companies benefiting from inbound tourism and defence spending." HITOSHI ASAOKA, CHIEF STRATEGIST, ASSET MANAGEMENT ONE, TOKYO: "The Nikkei was on course to reach as high as 48,000 by year-end, but because Takaichi was chosen as the LDP leader, it shot up toward that level already. The market welcomes her spending policy, but whether she can achieve that goal is not certain, as the LDP is still a minority party. The Nikkei may retreat once before year-end." TAKAMASA IKEDA, SENIOR PORTFOLIO MANAGER, GCI ASSET MANAGEMENT IN TOKYO: "The market was lifted by a Takaichi surprise and when investors realise the reality, the momentum will fade. The hurdle for Takaichi to achieve her goal is high and she may be able to achieve perhaps only 10% or 20% of what she wants to do." ALEX LOO, MACRO STRATEGIST, TD SECURITIES, SINGAPORE: "Knee-jerk reaction higher in USDJPY and Japan equities as her past views read to investors that she will ramp up fiscal spending and drive Japan back towards Abenomics. Investors are also discounting a BOJ move in October but we caution against this. "The Tankan survey reflected favourable business sentiment and if branch regional managers feedback today also indicate that Japan is weathering through tariffs, the BOJ should continue with rates normalisation or risk falling further behind the curve. We don't expect USDJPY to stay above 150 for long given US shutdown fears and the eventual compression in US-Japan rates differential." CHRIS WESTON, HEAD OF RESEARCH, PEPPERSTONE GROUP LTD, MELBOURNE: "We know she's a strong advocate of the Bank of Japan keeping policy on hold. We also look to the Trump administration [when considering central bank independence but] it's the BOJ who has the loss of independence. The repricing we've been seeing does suggest that people bet she'll have some influence on the BOJ thought process going forward. "People are getting concerned about BOJ policy being behind the curve and they've left it quite late. Inflation is in a different spot in Japan. You could argue terminal pricing has been too low. If markets get a whiff that she's going to do Abenomics-lite, it could keep bond buyers out of the market. She does need to tread a careful path if she goes down that road. She'll be very cognisant of the UK's example." https://www.reuters.com/world/asia-pacific/market-analysts-reaction-takaichi-becoming-next-japan-pm-2025-10-06/

2025-10-06 05:04

Oct 6 (Reuters) - The U.S. government shut down much of its operations on October 1 after Republicans and Democrats failed to reach an agreement to extend funding past the end of the federal fiscal year on September 30. The closure has shut off the flow of key economic data at a moment of uncertainty among policymakers and investors about the health of the U.S. job market, the trajectory of inflation and the strength of consumer spending and business investment. Sign up here. The federal agencies responsible for indicators of U.S. economic activity, including the Bureau of Labor Statistics, Bureau of Economic Analysis and Census Bureau, have said they will suspend the collection and distribution of data in the event of a government shutdown. Those operations will resume once funding is restored. Much of the data from private-sector sources, however, will continue to be issued, although some of those series rely in part on earlier government reports and will also cease publication during the shutdown. Following is calendar of economic reports that had been scheduled to be issued in the coming days, noting which releases will be suspended should the shutdown still be in effect and which will continue to be issued. * TBD = To be determined https://www.reuters.com/world/us/us-government-shutdown-how-it-affects-key-economic-data-publishing-2025-10-06/

2025-10-06 04:34

A look at the day ahead in European and global markets from Kevin Buckland Politics was firmly back in the driver's seat of global markets on Monday, not least after a surprise weekend win for right-wing fiscal dove Sanae Takaichi that sets her up to be Japan's first female prime minister. Sign up here. The Nikkei (.N225) , opens new tab sliced through several big psychological levels in the first minutes of trading in setting a fresh all-time high not far from 48,000. Long-dated bond yields , meanwhile, jumped to be just shy of record peaks on worries about the country's finances. Short-dated yields pulled back sharply and the yen plunged to an unprecedented low versus the euro on speculation Takaichi could pressure the Bank of Japan to delay further rate hikes. At the same time, gold extended its record rally to just $75 short of $4,000 per ounce, while bitcoin vaulted above $125,000 for the first time on Sunday. The ostensible driver is the U.S. government shutdown, which is shaping up to be a protracted affair, as another vote failed in the Senate on Friday and Republican President Donald Trump threatened more funding cuts to Democratic states and more firings of federal workers. The reasons for the record rallies in alternative assets might run deeper though, as faith in the value of fiat currencies - already battered by the White House's open and active pursuit of a weaker dollar - takes another blow from Takaichi's ascension. JPMorgan calls it the "debasement trade". What's in store today for European stocks - already perched at record highs - is less clear, with futures currently more or less flat. While Japanese stocks are soaring, most other major Asian markets are closed today, or thinner than usual. Mainland China, Taiwan and South Korea are shut, while Hong Kong trading is sandwiched between the weekend and a holiday on Tuesday. Australian markets are open, but half of the country's states and territories have holidays today, including the most populous, New South Wales. There's little in the way of data on Europe's docket, with regional construction PMIs providing the highlight. There are plenty of central bank speakers though, including ECB President Christine Lagarde and Bank of England boss Andrew Bailey taking the podium at separate venues. Kansas City Fed chief Jeffrey Schmid is also scheduled for speaking duty. Key developments that could influence markets on Monday: -European construction PMIs (Sep) -Euro-area retail sales (Aug) -ECB President Lagarde speaks in Strasbourg, ECB Vice-President de Guindos and Bank of Spain Governor Escriva speak in Madrid, ECB chief economist Lane speaks in Frankfurt -BoE Governor Bailey speaks in Edinburgh -Kansas City Fed President Schmid speaks in Kansas City -U.S. government shutdown https://www.reuters.com/markets/europe/global-markets-view-europe-2025-10-06/

2025-10-06 04:00

TOKYO, Oct 6 (Reuters) - Sanae Takaichi, who is set to become Japan's new prime minister, will likely tolerate another 25-basis-point interest rate hike by January next year if the economy is in firm shape, said Takuji Aida, who is widely considered as among her closest advisers on economic policy. But such a move would be on condition the Bank of Japan (BOJ) maintains relatively loose monetary policy with no further rate hikes likely until 2027, Aida, who is currently chief Japan economist at Credit Agricole, wrote in a research note on Saturday. Sign up here. "The new administration will likely move steadfastly towards aggressive fiscal policy to protect people's livelihood," Aida said. To align with the government's focus on reflating growth, the BOJ will be required to maintain accommodative monetary policy, he added. "Takaichi will tolerate another 25-basis-point rate hike by January next year on condition the BOJ keeps monetary policy loose, and solid economic health and sufficient wage growth can be foreseen" despite the hit from U.S. tariffs, he said. Aida is considered as one of Takaichi's reflationist-minded advisers who have proposed bigger spending, backed by low BOJ interest rates, to revitalise the economy. Japan's ruling party picked Takaichi, seen as an advocate of expansionary fiscal and monetary policy, as its head on Saturday, putting her on course to become the country's first female prime minister. The Nikkei share gauge surged past the 47,000 level for the first time and the yen slid on Monday, as markets priced in the chance of big spending and reduced bets of a rate hike at the BOJ's next policy meeting on October 29-30. The BOJ ended a decade-long, massive stimulus last year and raised short-term interest rates to 0.5% in January on the view Japan was on the cusp of durably achieving its 2% inflation target. Governor Kazuo Ueda has signaled the BOJ's readiness to keep raising interest rates if economic and price developments move in line with its forecasts. The yen swaps market on Monday indicated a 41% likelihood of a rate hike by December, down from 68% on Friday. https://www.reuters.com/world/asia-pacific/takaichi-could-tolerate-another-boj-rate-hike-by-january-economic-adviser-says-2025-10-06/