2024-04-09 16:37

GENEVA, April 9 (Reuters) - The Swiss National Bank's foreign exchange interventions are a vital tool in the central bank's campaign against both inflationary and deflationary pressures, Vice Chairman Martin Schlegel said on Tuesday. The SNB sold foreign currencies worth 133 billion Swiss francs ($147.04 billion) in 2023, equivalent to 17% of Swiss GDP, Schlegel told an event in Geneva. The purchases boosted the value of the franc and helped reduce price rises by making imports cheaper. Swiss inflation dipped in March to 1.0%, data showed last week, well within the SNB's target range of 0-2% which it defines as price stability. "Have foreign exchange interventions contributed to achieving price stability? Yes, they have," Schlegel told the event at the International Center for Monetary and Banking Studies (ICMB). "Without the use of foreign currency sales, the SNB would have had to raise the policy rate to a higher level," he said. Weak inflation allowed SNB to cut its policy rate to 1.5% last month, becoming the first major central bank to start rate cuts in the current economic cycle. In the past the SNB has also bought huge amounts of foreign currencies to prevent too rapid a rise in the franc - which could have lead to deflation in Switzerland. "Inflation has averaged 0.3% over the past fifteen years. Without foreign exchange purchases, inflation would have been much lower," Schlegel said. "Estimates suggest that it would have been significantly below zero without the purchases; we would thus not have fulfilled our mandate." The SNB said last month it had paused its foreign currency interventions at present, although Chairman Thomas Jordan said the bank could still buy or sell francs again in future according to the situation. Schlegel, who could replace Jordan when he steps down in September, said the SNB only used forex operations "when necessary." "Stable prices are crucial for a prospering economy. Foreign exchange interventions....complemented interest rates well when it was needed," Schlegel said. ($1 = 0.9045 Swiss francs) Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/business/finance/swiss-national-banks-schlegel-says-forex-ops-help-price-stability-goal-2024-04-09/

2024-04-09 14:23

BENGALURU, April 9 (Reuters) - Bond strategists upgraded their U.S. Treasury yield forecasts for coming months as sticky inflation and resilient economic activity have pushed financial markets to temper expectations for Federal Reserve rate cuts this year, a Reuters poll showed. The benchmark U.S. 10-year yield , which moves inversely to bond prices, has surged nearly 60 basis points since the start of the year to 4.46% on Monday, its highest since November, even as U.S. stocks have hit all-time highs and the dollar has gained against most major currencies. That was driven by traders dialing back Fed rate cut bets for 2024 to around 60 basis points, the lowest since October, down from 150 bps expected in January. Interest rate futures are now on a knife's-edge on the timing of the first Fed rate cut between June and July, compared to a 57% chance for June a week ago, after strong jobs market data published last week. The April 4-9 Reuters poll of 81 bond strategists showed the 10-year yield is expected to fall about 24 bps from 4.39% on Tuesday to 4.15% by end-June and then to 4.00% in six months, wiping out most of its year-to-date rise. But forecasts were the highest so far this year. A strong 86% majority of those who answered an additional question, 25 of 29, also said the greater risk to their three-month forecast was for the benchmark bond yield to be higher than they predicted. "Markets are too confident in (a)...stream of rate cuts that will take the funds rate below 4% despite the Fed continuing to push back their time frame," said Robert Tipp, chief investment strategist at PGIM Fixed Income. "But I think what investors have been experiencing since we moved into this higher interest rate environment - topping 4% on the 10-year - is one where we're likely to stay for some time. Investors are piling into the market to capture the higher yield and they're likely to continue to do that." A combination of strong economic data and limited progress on inflation in the last couple of months has amplified calls among Fed officials for patience as they approach a decision on when to cut rates. However, most market watchers remain confident a series of cuts is coming. The 10-year yield was forecast to fall to 3.85% in a year, slightly lower than the 3.90% median of the primary dealer banks who deal directly with the Fed participating in the poll. "We see economic growth as healthy but rebalancing, and that will take off some of the inflation pressure, particularly in housing and rents. We see the Fed probably cutting rates twice this year, so there's still some room for yields to fall," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research. The interest-rate sensitive 2-year Treasury note yield , currently around 4.76%, was forecast to decline 36 bps to 4.40% by end-June, and then to 4.10% and 3.69% in six and 12 months respectively, higher than in a March poll. Schwab's Jones said there was a roughly 300 bps gap between the top end of the fed funds rate range, 5.50%, and where inflation is currently headed, leaving room for the Fed to cut. "I'm not saying they need to stimulate the economy, but there's no reason to keep policy where it is," Jones said. Much will depend on inflation readings over coming months. The consumer price index report for March, due on Wednesday, is forecast to show inflation on an annual basis picking up to 3.4% from February's 3.2%, a separate Reuters poll found. However, some say the recent stickiness in inflation is more down to statistical nuance. "We've had two months' worth of warm inflation readings for noisy reasons, and if we get two months' worth of cool inflation readings for noisy reasons, yields will come down pretty quickly," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/us-treasury-yield-forecasts-rise-rate-cut-calls-recede-2024-04-09/

2024-04-09 13:28

KAMPALA, April 9 (Reuters) - Uganda's foreign exchange reserves fell by about 12% between June 2023 and January this year because of external debt payments and the central bank's inability to buy foreign currency due to a slide in the Ugandan shilling . Reserves dropped from $4.07 billion in June to about $3.58 billion at the end of January, reaching 3.4 months of import cover excluding oil project-related imports, the central bank said on Tuesday in its State of the Economy report. The Bank of Uganda targets foreign exchange cover of 4 months of imports, excluding oil projects, an International Monetary Fund staff report published in March said. Uganda's rising public debt, more than half of which is external, has been eating up a growing share of revenues and hitting other spending priorities like education and health. Total public debt stood at $24.7 billion, 60% of which was external, at the end of 2023, finance ministry figures show. The Bank of Uganda said foreign reserves could rise due to expected inflows from budget support loans, but that the outlook for the country's balance of payments was fragile. "Delayed disbursement of expected budget support loans, higher-than-projected government expenditure on imports, and ... tight global and domestic financial market conditions may disrupt the reserve build-up programme," it said. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/ugandan-foreign-exchange-reserves-drop-12-due-debt-payments-2024-04-09/

2024-04-09 13:21

April 9 (Reuters) - Brazil's consumer price increases are likely to have remained subdued in March but some services continued to show worrying increases, leading economists to expect quicker disinflation to come from food and other goods, a Reuters poll showed. Last month the annual variation of the headline IPCA index probably dropped closer to the midpoint of the wider official target for 2024 of 3% plus/minus 1.5 percentage points as a previous seasonal jump in education costs faded. It is forecast to register a 4.01% yearly rate and a monthly rate of 0.25% in March, against 4.5% and 0.83% respectively in February, according to median estimates of 23 economists polled over April 3-9. The monthly inflation report is due on Wednesday. "We are noting an expected increase in underlying services (0.50%) that continues to be a source of risk ... and should only start to slow down from April onwards," said Banco Santander economist Adriano Valladao P. Ribeiro. "Despite this, most core inflation measures are expected to improve in March, and in particular, we are projecting an increase of just 0.23% month on month for the average of the five main core readings." Central bank governor Roberto Campos Neto warned last week of "some contamination" in the trajectory of service prices derived from wage gains that, combined with high inflation expectations, warranted a cautious policy stance. Stronger salaries are linked to resilient domestic labor markets. The unemployment rate remains close to its lowest since 2015 while Latin America's largest economy continues to create jobs despite some signs of deceleration. This has been one of the main factors keeping inflation expectations for 2024 persistently above the central target of 3% in the bank's weekly poll of private sector economists, frustrating policymakers' hopes for lower projections. Nevertheless, some analysts forecast a convergence towards this narrower official goal, starting this quarter, with help from the other main components of the IPCA index outside services. A report by UBS economists said they expect food inflation to "surprise consensus to the downside" in the second quarter while industrial goods have "downside bias" throughout the year. "We forecast 3% for IPCA in 2024," they wrote. Much will also depend on the Brazilian real's resistance to the threat of higher currency volatility and the potential hit on consumer prices after the real fell to its lowest since October last week on growing doubts over future monetary policy. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/brazil-consumer-prices-expected-have-remained-subdued-march-2024-04-09/

2024-04-09 13:07

MOSCOW, April 9 (Reuters) - Russia's energy ministry said on Tuesday it has not asked Kazakhstan to set up a reserve of gasoline for possible supplies to Russia, denying a Reuters report. Three industry sources told Reuters that Russia had asked Kazakhstan to stand ready to supply it with 100,000 tons of gasoline in case of shortages exacerbated by Ukrainian drone attacks and outages. "The Russian energy ministry has not approached Kazakhstan with a request to set up a reserve or supply motor gasoline to the Russian domestic market," the ministry said. "At the same time, it remains possible to supply up to 285,000 tons per year of gasoline from Russia to Kazakhstan even during the period of the export ban on the export for this type of motor fuel from Russia, and these supplies are being carried out." It also said that Russia's domestic market is fully supplied with gasoline and available inventories are enough to meet rising domestic demand. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/russian-energy-ministry-rejects-report-it-asked-kazakhstan-about-gasoline-2024-04-09/

2024-04-09 13:02

WASHINGTON, April 9 (Reuters) - The U.S. Environmental Protection Agency on Tuesday finalized a rule that will reduce cancer-causing toxic air pollutants from chemical plants and require regular air quality monitoring to protect communities surrounding those facilities. WHY IT'S IMPORTANT The agency's rule targeting ethylene oxide and chloroprene will address two of President Joe Biden's key policy priorities, safeguarding vulnerable communities overburdened by pollution and advancing his goal to end cancer. It applies to 200 plants largely located in an area along the Gulf Coast where petrochemical plants are clustered that make synthetic organic chemicals and several polymers and resins, including neoprene and where residents suffer high rates of cancer. The EPA estimates that emissions from the facilities will be reduced by nearly 80%. CONTEXT The announcement comes after the EPA filed a complaint against neoprene maker Denka in 2022 under Section 303 of the Clean Air Act to force it to cut emissions of chloroprene at its facility in LaPlace, Louisiana. The Japanese company said this year that EPA overstepped its authority when it sought rapid reductions of carcinogenic chloroprene emissions. KEY QUOTE “We promised to listen to folks that are suffering from pollution and act to protect them. Today we deliver on that promise with strong final standards to slash pollution, reduce cancer risk, and ensure cleaner air for nearby communities,” said EPA Administrator Michael Regan. THE DETAILS The rule also reduces additional air toxics, including benzene, 1,3-butadiene, ethylene dichloride and vinyl chloride. The EPA projects that cutting emissions of these chemicals will reduce the risks of developing cancer from breathing in toxic air pollutants and cut back smog-forming volatile organic compounds by 23,700 tons a year. Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. https://www.reuters.com/business/environment/us-epa-sets-final-rule-cutting-chemical-plant-pollution-2024-04-09/