2025-12-09 17:48

Investors expect Fed rate cut this week, but with dissents Unanimous Fed policy decisions will be rare in 2026, analysts say Politicization of US central bank is a risk but not yet priced in LONDON, Dec 9 (Reuters) - What is expected to be one of the most ructious Federal Reserve policy meetings in years this week could well prove to be the road test for financial markets on how U.S. monetary policy debates will shape up in 2026. Heading into the two-day meeting that began on Tuesday, markets are pricing in an almost certain chance of an interest rate cut by the U.S. central bank's policy-setting Federal Open Market Committee, even though the group is the most divided it has been in years. Sign up here. The weeks leading up to the meeting have been stressful for investors, with little data to parse during a record 43-day U.S. government shutdown, conflicting messages from Fed officials and the unrelenting push from President Donald Trump's administration for lower rates. Expectations that the Fed will reduce its benchmark overnight interest rate by a quarter of a percentage point to the 3.50-3.75% range have climbed to 87% from 30% in the past three weeks, spurred largely by New York Fed President John Williams' recent support for an insurance rate cut. Investment banks Morgan Stanley, J.P. Morgan and BofA reacted by changing their calls to a cut at the December 9-10 meeting. Yet, analysts expect as many as five of the 12 voting members of the FOMC will have divergent views, reinforcing the refrain in markets that the Fed is turning more political. The policy committee has not had three or more dissents at a meeting since 2019, and that has happened just nine times since 1990. Analysts now expect such dissent will persist. "The more dissent that you see, and the more open it is, the more it does call into question about how willing the Fed is to become more politicized," said Sally Greig, head of global bonds at Scottish long-only investment manager Baillie Gifford. "It raises questions about how willing they are to keep life a little bit easier for them by erring on the side of being a bit too dovish rather than a bit too hawkish, how concerned they are for their own jobs." Trump's appointees to the Fed's seven-member Board of Governors have been dovish. His economic adviser Kevin Hassett, a top candidate to succeed Fed Chair Jerome Powell next year, has called for lower rates. Fed Governor Stephen Miran, another Trump economic adviser who was appointed in September to fill an unexpected board vacancy, has been pushing for oversized rate cuts. Other FOMC members such as Kansas City Fed President Jeffrey Schmid, St. Louis Fed President Alberto Musalem and Fed Vice Chair Philip Jefferson, however, have been equally vocal about their preference to keep rates steady. When Williams, normally a more neutral voice, was explicitly dovish about a December rate cut within weeks of Powell saying in October that a December cut was far from certain, more investors got twitchy about political pressure. FOCUS ON POWELL'S SUCCESSOR Even if the Fed cuts rates this week and signals it will hold them steady in January, "the market may not give that signal credence, given the 180-degree turnaround from the hawkish signals at the October meeting and minutes," Standard Chartered Bank analysts Steve Englander and John Davies wrote this week. Traders pointed to rising volatility priced into short-term interest rate options and steepening long-term yields as a sign of such concern. "There's more sensitivity now and people are having to decide whose comments you place weight on," a bond trader in London said. Yet, barely 75 basis points of Fed easing is expected by the end of next year, according to rates futures markets. Fabio Bassi, head of cross-asset strategy at J.P. Morgan, says investors should not focus only on the December meeting. "Powell's Fed, which is in charge now, is not leaning towards very aggressive action, they are delivering insurance cuts." Trump, however, seems bent on lower borrowing costs ahead of the U.S. midterm elections late next year. The Republican president, who has voiced repeated displeasure with Powell's stewardship of the Fed, said support for immediately cutting rates would be a requirement for anyone he chose to lead the central bank, according to a Politico interview published on Tuesday. The Fed cut rates at its September and October meetings. Trump's attempt to fire Fed Governor Lisa Cook, who was appointed by former President Joe Biden, and recent comments by Treasury Secretary Scott Bessent about possible changes to how the Fed's regional bank presidents are hired are also fueling more concerns about politicization of the central bank. But how far that political pressure will influence the Fed isn't clear. "I understand why people are talking about it, but I don't think it would be justified for it to be in the price at the moment, given what we know," said James Athey, fixed income fund manager at London-based investment group Marlborough. "I think it's a risk. It's not a reality." Tim Winstone, head of investment grade credit at Janus Henderson Investors, said some clients are rethinking options when allocating the marginal dollar and investing less in the U.S. "It's people just acknowledging that the risks to what the United States historically stood for are higher. And the evolving political landscape and the impact that has on the Fed is certainly a factor." https://www.reuters.com/business/investors-warm-up-long-spell-discordant-fed-2025-12-09/

2025-12-09 16:35

ROME, Dec 9 (Reuters) - The independence of central banks is essential for monetary stability, Bank of Italy Governor Fabio Panetta said on Tuesday, amid a spat between the Italian government and the European Central Bank over the country's gold reserves. The ECB urged Rome on Monday to reconsider a proposed amendment to its 2026 budget law that would state that the Bank of Italy's gold reserves belong to "the Italian people," warning the move could jeopardise the central bank's independence. Sign up here. Without mentioning specifically the issue of the gold reserves, Panetta said in a speech that monetary stability rests on "the authority of the State and the credibility of an independent central bank." Italian Economy Minister Giancarlo Giorgetti intends to send a letter to ECB head Christine Lagarde to clarify that Rome has no plans to undermine the independence of the Bank of Italy, sources familiar with the matter told Reuters on Tuesday. RISKS AHEAD In his speech in Dublin at an event organised by Ireland's central bank, Panetta said the transformation of the international monetary system, with accelerating digitalisation and growing multipolarity, carried a number of risks. "When structural forces move inch by inch, while technology advances in leaps and bounds, the outcome is not just linear change or fresh opportunities; it may also turn turbulent," he said. Panetta expressed concern about the increasing use of stablecoins in cross-border payments, saying their circulation was opaque and they suffered from operational vulnerabilities. "During the transition to a digital monetary order, their growing use could add a layer of volatility – or even instability – to an already uncertain international environment," he said. Managing these risks will require clear rules, credible public anchors and sustained international cooperation, Panetta added. The Bank of Italy chief also noted "the weakening of some of the dollar's traditional pillars," while China's yuan and the euro both have the potential to become more global currencies but are not currently in a position to match the greenback. "Multipolarity could increase diversification, spreading the burden of global liquidity provision and reducing global dependence on the US policy cycle. But it could also amplify volatility and contagion risks," he warned. https://www.reuters.com/world/china/central-bank-independence-essential-monetary-stability-ecbs-panetta-says-2025-12-09/

2025-12-09 15:40

MEXICO CITY, Dec 9 (Reuters) - Mexico's annual inflation rate accelerated in November, landing slightly above market expectations, official data showed on Tuesday, and the central bank's deputy governor flagged possible new inflation risks for the coming year. Consumer prices rose 3.80% in the year through November, according to national statistics agency INEGI, up from 3.57% the previous month. Economists in a Reuters poll expected a 3.7% increase. Sign up here. "The increase in inflation for goods resumed with greater force than expected," economists at Banamex said in a note. They also warned of an expected inflation rebound early next year associated with possible tax increases. The inflation rate remained within the central bank's target range of 3% plus or minus a percentage point. In November, the bank cut borrowing costs to 7.25%, the lowest since 2022, but took a more cautious tone. Inflation risks remain tilted to the upside, central bank deputy governor Galia Borja said in a podcast released on Tuesday. She added that potential tax increases, tariff uncertainty and renegotiation of the U.S.-Mexico-Canada (USMCA) trade pact in the new year will call for greater caution from the monetary institution. "Next year ... will present certain additional risks," Borja said. Policymakers pointed to the country's weak economy as a reason behind their latest decision, but raised concerns about sticky core inflation. In November alone, the closely watched core index - which strips out some volatile food and energy prices - rose 0.19%, while the annual rate came in at 4.43%, both above market forecasts. https://www.reuters.com/world/americas/mexicos-inflation-accelerates-more-than-expected-central-bank-notes-further-2025-12-09/

2025-12-09 12:52

Congo's export restrictions cause cobalt hydroxide price surge Cobalt hydroxide payables in China reach 100% of metal price Demand for cobalt hydroxide slows due to high payables SHANGHAI/LONDON, Dec 9 (Reuters) - Prices of cobalt hydroxide used to make chemicals for electric vehicle batteries have risen sharply this year due to cobalt export restrictions from top producer Democratic Republic of Congo, industry sources said. Congo suspended all cobalt exports in February, but then introduced a quota system in October, aiming to boost state revenues and tighten oversight in a country that produces more than 70% of the metal globally, estimated at more than 280,000 metric tons this year. Sign up here. It has set new conditions for exporters, potentially complicating the recently introduced quota system, which sources say is likely to exacerbate shortages and support cobalt hydroxide prices. "Cobalt is currently registering as 2025's top price performer, but this has purely been driven by the introduction of export quotas by Congo which have caused an artificial market tightness, removing 160,000 to 170,000 tons from the market this year," analysts at Macquarie said in a recent note. Cobalt hydroxide is produced in Congo and as a by-product of copper and nickel mining in Indonesia, the two primary global producers. The products are priced as a percentage of the underlying cobalt metal price and known as payables. Sellers of cobalt hydroxide have been raising their prices since Congo first suspended exports in February. Payables for Congo's hydroxide in top consumer China have jumped to 100% of the cobalt metal price currently trading around $24 a lb or $52,900 a ton, up from nine-year lows of around $10 a lb in February. One source said there is some progress on getting exports moving, but that the significant amounts needed by China's electric vehicle battery makers would not arrive until February or March next year. Two industry sources said some firms with cobalt hydroxide to sell were asking for a premium above the cobalt metal price. For hydroxide produced in Indonesia, payables have jumped to 90% from 50% at the start of the year. Three industry sources, who asked not to be named as they are not authorised to speak to media, said demand for cobalt hydroxide slowed this month and that high payables are sidelining buyers. https://www.reuters.com/world/africa/costs-ev-battery-material-cobalt-hydroxide-jump-congo-export-restrictions-2025-12-09/

2025-12-09 12:41

Stock hovering near SPAC's lowest price level since April Current holdings make it third-largest corporate BTC holder Dec 9 (Reuters) - Shares of crypto treasury firm Twenty One Capital plunged on their first day of trading on Tuesday following the completion of the company's merger with a blank-check firm as crypto-related stocks face mounting pressure. The new company, trading under the ticker "XXI" on the NYSE, was last down 19.41% at $11.49. Sign up here. Twenty One is majority-owned by stablecoin giant Tether and crypto exchange Bitfinex, with a minority stake held by Japanese technology investor SoftBank Group (9984.T) , opens new tab. It was formed by merging into blank-check vehicle Cantor Equity Partners in a deal first announced in April. CEO Jack Mallers said that like other bitcoin treasury companies, Twenty One will hold and buy bitcoin, but it also plans to launch products and "utility services" connected to the world's largest cryptocurrency. "Yes, we own a lot of bitcoin. Yes, we're going to acquire as much as we possibly can, but we're also about to launch a ton of business lines and produce profit that's related to bitcoin, and that's a lot of why we created the company in the first place," Mallers said in an interview. The new company holds over 43,500 bitcoins , making it the world's third-largest corporate holder of the cryptocurrency, according to crypto publication The Block. Twenty One's holdings are worth more than $3.97 billion based on bitcoin's last closing price of $91,350.84, according to Reuters' calculations. Cantor Equity is a special purpose acquisition company (SPAC) backed by Cantor Fitzgerald, an investment banking and brokerage firm chaired by Brandon Lutnick, the son of U.S. Secretary of Commerce Howard Lutnick. SPACs merge with privately held startups, offering them an alternative route to go public. Cantor Equity shares had surged as much as 380% for the year in April before paring much of those gains, and are now up just 3.9% year-to-date. Twenty One joins public markets as cryptocurrencies are facing selling pressure, with bitcoin having fallen more than 28% from its record high of $126,223.18 on October 6. "Digital asset treasury" or DAT companies have lost ground amid the broader crypto drawdown, stoking concerns over stress in the niche but fast-growing sector, with focus also on the "mNAV" metric, a company's enterprise value relative to its crypto holdings. "It's becoming harder for DATs to raise capital and we are in an environment now where DATs need to show material differentiation to warrant the mNAV multiples they were trading at earlier in 2025," said John Todaro, senior research analyst at Needham. Buoyed by U.S. President Donald Trump's crypto-friendly stance and inspired by Michael Saylor's Strategy (MSTR.O) , opens new tab, a number of publicly traded companies have started investing in cryptocurrencies in hopes of higher returns. https://www.reuters.com/business/tether-backed-twenty-one-capital-set-slide-trading-debut-2025-12-09/

2025-12-09 12:30

Dec 9 (Reuters) - HF Sinclair (DINO.N) , opens new tab on Tuesday forecast capital expenditure for 2026 at $775 million, a drop of 11% from its estimated spending for this year, as it expects reduced maintenance costs. U.S. refiners have been focusing on maintenance activities after operating at breakneck capacity in 2022 following supply shortages stemming from Russia's invasion of Ukraine. Sign up here. Lower turnarounds and catalysts costs, pegged at $325 million, below the $410 million it forecast for 2025, would lead the company's spending trim. In October, the Dallas, Texas-based independent refiner said it was considering expanding its pipeline systems across the Rocky Mountain and West Coast to bolster fuel supplies in markets including California and Nevada. Increasing West Coast fuel supply would help ease strain on the region as two refineries accounting for about 20% of California's refining capacity close down. Phillips 66 (PSX.N) , opens new tab is winding down its Los Angeles refinery by the end of this year and Valero Energy (VLO.N) , opens new tab plans to shut the Benicia refinery next year. HF Sinclair expects spending at its refining segment for 2026 to be at $225 million, compared to $240 million estimated for this year. The company has seven refineries in the United States with a total oil processing capacity of 678,000 barrels per day. It has invested increasingly on expanding its renewable diesel capacity and has an annual production capacity of 380 million gallons for the biofuel. The company had estimated expected capex spending of $875 million in the current year. https://www.reuters.com/business/energy/hf-sinclair-forecasts-lower-capex-2026-reduced-maintenance-costs-2025-12-09/