2025-09-15 19:32

SOFR rises above IORB, suggests high demand for secured funding Liquidity pressure seen as temporary, analysts say Repo rates rise amid Treasury auction settlements Money market funds shift from repo to T-bills in August NEW YORK, Sept 15 (Reuters) - U.S. banks borrowed $1.5 billion from the Federal Reserve's Standing Repo Facility on Monday, the deadline for quarterly corporate tax payments and Treasury debt settlements, Fed data showed, suggesting some tightness in meeting funding obligations. The SRF serves as a backstop for any potential funding shortage. Launched in July 2021 in the aftermath of the Covid-19 pandemic, the Fed's SRF offers daily overnight cash twice a day in exchange for eligible collateral like Treasuries. Sign up here. The corporate tax date coincides with a large Treasury security settlement for recently issued debt, analysts said. Data from money market research firm Wrightson ICAP showed roughly $78 billion in payments to the Treasury due on Monday as well. Those settlements along with corporate taxes should push the U.S. Treasury's cash balance to more than $870 billion. U.S. financial institutions borrowed $1.5 billion in cash in the morning. There were no borrowings in the afternoon. On June 30, financial institutions borrowed about $11.1 billion from the SRF, backed mostly by Treasuries as collateral, the largest such borrowing since its launch four years ago. "Small utilization of the SRF today is in line with our expectations and speaks to elevated repo levels potentially giving some banks or dealers an opening to make a return by sourcing funds from the Fed and lending them out," said Steven Zeng, U.S. rates strategist at Deutsche Bank. "Cash is tight today because money market funds have had less excess to lend, as they've been allocating more to T-bills and also losing or holding back cash for redemptions ahead of today's corporate tax date." Ahead of these payments, rates in the repurchase (repo) such as the Secured Overnight Financing Rate have risen above the interest paid on bank reserves. SOFR, the cost of borrowing cash overnight collateralized by Treasuries, rose to 4.42% last Friday, matching the level hit on September 5, which was the highest in two months. The Interest on Reserve Balances, on the other hand, is currently 4.40%. SOFR should trade at or below IORB because banks can always park money risk-free at the Fed and earn IORB. But if SOFR rises above IORB, it suggests there is exceptional demand for secured funding against Treasuries, which typically happens around Treasury auction settlements. Teresa Ho, managing director and head of short duration strategy at JPMorgan in New York, said in a recent research note that while firmer SOFR levels are to be expected, "the magnitude somewhat caught us off guard." She noted that while markets have largely absorbed the additional Treasury bill supply with ease, the reallocation from repo to T-bills accelerated in August as money market funds aggressively extended their weighted average maturities, pricing in potential Fed rate cuts. Analysts said Monday's liquidity pressure should be temporary. "Funding conditions will only show the kind of incremental pressure that would typically be associated with a major Treasury coupon settlement date and a quarterly tax deadline rather than a disruptive funding squeeze," wrote Lou Crandall, chief economist at Wrightson. https://www.reuters.com/business/finance/us-banks-borrow-15-bln-feds-repo-facility-sign-mild-funding-pressure-2025-09-15/

2025-09-15 17:57

US Fed two-day policy meeting begins on Tuesday Fed seen cutting rates for first time since December US dollar at a one-week low Sept 15 (Reuters) - Gold rose to an all-time high on Monday, underpinned by a softer dollar and lower Treasury yields, as investors positioned ahead of a pivotal Federal Reserve meeting this week that could set the tone for the rest of the year. Spot gold was up 1.1% at $3,680.80 per ounce as of 01:44 p.m. EDT (1744 GMT), after hitting a record high of $3,685.39 earlier in the session. Bullion climbed about 1.6% last week. Sign up here. U.S. gold futures for December delivery settled 0.8% higher at $3,719.00. The dollar index (.DXY) , opens new tab fell 0.3% to a one-week low, making gold more attractive for other currency holders, while the benchmark U.S. 10-year Treasury yield edged lower. Markets are all but certain the Fed will deliver a 25-basis-point rate cut on Wednesday, the first since December, with some still holding out for a larger 50 bps move, according to CME's FedWatch tool , opens new tab. "Expectations of a 25-basis-point rate cut are largely baked into the cake at this point," said Peter Grant, vice president and senior metals strategist at Zaner Metals, adding that there could be one or two more rate cuts before the year-end. Gold's next upside targets are $3,700, followed by $3,730 and $3,743 in the short term, Grant said. Non-yielding bullion, often considered a safe-haven asset during broader uncertainty, tends to perform well in a low interest rate environment. The Fed meets under unusual pressure, with a leadership dispute and President Donald Trump pushing for greater sway over policy. The Senate has also left the door open for Trump's economic adviser Stephen Miran to join the rate-setting committee in time to vote on Wednesday. Weekend reports that China may ease gold import and export rules spurred strong buying, with both official and private demand seen as key drivers of bullion's rally, said Tai Wong, an independent metals trader. Data last week showed U.S. consumer prices rose at their fastest pace in seven months in August, while recent jobs figures have pointed to a weakening labor market, keeping the Fed on track to cut rates. USDIRPR/ Elsewhere, spot silver was up 1.1% at $42.62 per ounce, platinum gained 0.7% to $1,400.77 and palladium lost 0.3% to $1,193.21. https://www.reuters.com/world/india/gold-hits-record-high-dollar-yields-ease-spotlight-fed-meeting-2025-09-15/

2025-09-15 15:48

MOSCOW, Sept 15 (Reuters) - Russian President Vladimir Putin told a government meeting on Monday that measures to reduce inflation were working, but questioned whether more needed to be done to boost growth. Recent data showed that inflation fell to 8.1% in August from 8.8% in July. On September 12, the central bank cut its key rate by one percentage point instead of an expected two percentage points, saying that inflation remained high. Sign up here. "Efforts to reduce inflation are yielding results. It is very important that the moderate price environment has a positive effect on business investment activity and enables more dynamic, sustainable growth," Putin said. Putin questioned whether more needed to be done to boost economic growth, which slowed to 1.1% in the first half of this year from 4.3% in the whole of 2024. "The question is, is that enough? Is this what we wanted? Are we managing to solve the task we set for ourselves?" Putin asked. "Or do we need other measures and higher growth rates, naturally while ensuring macroeconomic and inflationary stability given the central bank’s prudent policy?" https://www.reuters.com/business/finance/russias-putin-says-measures-reduce-inflation-are-working-growth-needs-work-2025-09-15/

2025-09-15 13:32

US trade official Brendan Lynch to make a one-day visit Trump imposed tariffs on India for buying Russian oil Exports to US fell to $6.86 billion in August NEW DELHI, Sept 15 (Reuters) - India and the United States will hold trade talks on Tuesday, New Delhi said, raising hopes for a breakthrough weeks after President Donald Trump imposed punitive tariffs on the South Asian nation for buying Russian oil. The move comes after Trump struck a more conciliatory tone in statements last week and expressed optimism that they could finalise a trade deal. Sign up here. The U.S. trade representative for South Asia, Brendan Lynch, will be in New Delhi for one day of talks, Indian chief negotiator Rajesh Agarwal said. The talks will be held as part of bilateral trade negotiations, Agarwal added without going into more detail. Trump last month slapped a punitive 25% levy on India from August 27, doubling overall tariffs to 50%, as part of Washington's efforts to step up pressure on Moscow over its invasion of Ukraine. India's exports to the United States fell to $6.86 billion in August from $8.01 billion in July, trade ministry data released on Monday showed. Total goods exports fell to a nine-month low of $35.10 billion in August from $37.24 billion in July, while the trade deficit narrowed to $26.49 billion. The full impact of higher tariffs from the United States on Indian goods imports will be felt next month as the punitive tariffs kicked in from August 27, exporters said. New Delhi's discord with Washington has coincided with increased contacts with Beijing. Prime Minister Narendra Modi visited China for the first time in seven years last month to attend a summit hosted by President Xi Jinping. Modi was also seen holding hands with Russia’s President Vladimir Putin. An earlier U.S. visit to New Delhi, planned from August 25-29, was cancelled after talks hit major roadblocks, as New Delhi resisted opening its vast agricultural and dairy sectors. But Sergio Gor, Trump's nominee to be ambassador to India, said last week that the two sides were "not that far apart" on tariffs, and differences would be resolved in the next few weeks. https://www.reuters.com/world/india/india-us-hold-trade-talks-raising-hopes-reset-2025-09-15/

2025-09-15 12:56

BRASILIA, Sept 15 (Reuters) - Brazil's economic activity declined more than expected in July, marking a third consecutive monthly decline, a central bank index showed on Monday, highlighting a slowdown in Latin America's largest economy as borrowing costs remain high. The IBC-Br index, a proxy for gross domestic product, fell 0.5% in July from the previous month on a seasonally adjusted basis, compared with the 0.2% drop expected in a Reuters poll. Sign up here. The index incorporates central bank estimates for farming, industry and services, along with production-related taxes, all of which posted negative readings in the month. The index rose 3.5% in the 12 months through July, according to non-seasonally adjusted data. Brazil's benchmark Selic rate stands at 15%, near a two-decade high, as policymakers try to rein in annual inflation that has consistently exceeded the 3% target. The central bank will announce its next policy decision on Wednesday, with markets widely expecting rates to remain unchanged, in line with earlier guidance. On Friday, the finance ministry cut its 2025 GDP growth forecast to 2.3% from 2.5%, citing weaker-than-expected second-quarter performance and pressure from high interest rates. https://www.reuters.com/world/americas/brazil-economic-activity-falls-more-than-expected-july-2025-09-15/

2025-09-15 12:56

Sept 15 (Reuters) - HSBC expects a big oil surplus of 1.7 million barrels per day (mbd) from the fourth quarter of 2025, and a surplus of 2.4 mbd in 2026, exacerbated by the return of OPEC+ barrels over the next 12 months, it said in a note on Monday. At its meeting this month, OPEC+ opted to further increase oil production by 137,000 bpd in October, starting to unwind the 1.65 million bpd in cuts ahead of schedule. Sign up here. HSBC's latest oil market supply and demand model envisions OPEC+ gradually unwinding 1.65 million barrels per day in the "first-phase" voluntary production cuts over a 12-month period, HSBC said a week ago. The bank also saw a downside risk to its 2026 $65 per barrel Brent price assumption if stockbuilds materialise in the West. U.S. President Donald Trump urged EU officials last week to hit China with tariffs of up to 100% as part of a strategy to pressure Russian President Vladimir Putin. The bank's note on Monday stated that "outright losses in Russian supply are not in (HSBC's) base case (but) Russia will struggle to increase its output in line with OPEC+ quotas." The bank now expects only a modest production increase, lowering its end-2026 Russian production forecast by 300,000 bpd. https://www.reuters.com/business/energy/hsbc-sees-downside-risk-2026-brent-crude-oil-price-forecast-2025-09-15/