2024-02-22 22:03
NEW YORK, Feb 22 (Reuters) - Bond investors are expected to pocket higher debt payouts for holding long-term U.S. government debt due to its wide fiscal deficits, U.S. bond giant PIMCO warned on Thursday. With apparently no end in sight for increases in government spending, concerns over U.S. debt sustainability will likely pressure government bond prices, pushing yields higher, PIMCO’s Head of Public Policy Libby Cantrill and Rich Clarida, global economic advisor, said in a note. "With bond yields declining in recent months, it would appear that mounting U.S. federal debt isn't at the forefront of investors' minds," they said. "Yet many clients have asked about the sustainability of the path of U.S. debt, whether politicians plan to do anything about it, and whether the 'bond vigilantes' will ultimately emerge to push borrowing costs higher." Bond investors' concerns around U.S. government spending and budget deficit contributed to a sharp sell-off last year that pushed Treasuries prices to a 17-year low. So-called bond vigilantes - investors who punish profligate governments by selling their bonds, driving yields higher - were a feature of markets in the 1990s, when worries around U.S. federal spending pushed yields to 8%. Rating agency Fitch last year downgraded the U.S. government by one notch and Moody's lowered its credit rating outlook on the sovereign, with both agencies citing worries over widening U.S. fiscal deficits. "Absent changes to either mandatory spending or taxes, which we do not see as likely over the next several years, we believe that the market will eventually demand – and earn – a premium for holding longer-dated Treasuries," said PIMCO. "This will lead to a steeper U.S. yield curve over time." A steeper yield curve is one where longer-dated bonds yield significantly more than shorter-dated ones. Still, the global reserve currency status of the U.S. dollar is expected to limit how high yields will go, said Cantrill and Clarida. "Although the long-term debt trajectory is problematic, we don’t believe there will be a fiscal crisis in the U.S. anytime soon," they said. https://www.reuters.com/markets/us/us-government-debt-trajectory-push-long-term-yields-higher-says-pimco-2024-02-22/
2024-02-22 21:58
Feb 22 (Reuters) - Rare earths miner MP Materials (MP.N) , opens new tab on Thursday reported a fourth-quarter loss due to slipping prices for the strategic minerals and rising production costs, although the loss was not as much as analysts had expected. The company, which held unsuccessful merger talks , opens new tab earlier this year with rival Lynas Rare Earths (LYC.AX) , opens new tab, has struggled in recent months with falling prices and stiff competition from Chinese rivals. Jim Litinsky, the company's CEO and largest shareholder, declined to directly discuss the merger talks on conference call with investors, but said: "Objectively, when you look at any company in a generic sense, there are always things that companies can learn from each other and cut costs around." Shares of the Las Vegas-based company rose slightly in after-hours trading after falling 2.7% on Thursday. MP posted a quarterly net loss of $16.3 million, or 9 cents per share, compared with a profit of $67 million, or 36 cents per share, in the year-ago quarter. Excluding one-time items, MP lost 2 cents per share. Analysts expected a loss of 4 cents, according to LSEG data. For the past four years, MP has processed rock it extracts from its Mountain Pass mine in California into rare earths concentrate that is shipped to China for refining. The company sold 7,174 metric tons of that concentrate during the quarter, about 34% lower than the year-ago period. MP said the drop was due in part to lower production at the California mine, partly due to problems at the facility's power plant. MP has been working to refine its own rare earths for some time. The company said its refining equipment in California produced 150 metric tons of neodymium and praseodymium - the two most in demand rare earths - during the quarter, with 10 metric tons sold. MP also said it has finished construction on a rare earths magnet plant in Texas and has begun testing equipment there. The company on the conference call also announced an investment in a rare earths metal facility in Vietnam, where it said it has begun production. https://www.reuters.com/markets/commodities/mp-materials-swings-quarterly-loss-falling-rare-earths-prices-2024-02-22/
2024-02-22 21:55
NEW YORK, Feb 22 (Reuters) - The U.S. government said on Thursday it approved a request from Midwestern governors allowing expanded sales of gasoline with higher blends of ethanol in their states, starting in 2025. Reuters had exclusively reported the impending announcement earlier this week. The government currently restricts sales of E15 gasoline, or gasoline with 15% ethanol, in summer months due to environmental concerns over smog, though the biofuel industry says those concerns are unfounded. The corn-based ethanol industry has been fighting for years for year-round sales of E15 but was frustrated by the 2025 start date, one year later than proposed. In 2022, the governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin made the request for year-round E15 sales, saying the move could help lower pump prices by boosting fuel volumes. Some oil refiners have argued that allowing E15 in select states as opposed to nationwide could prompt localized fuel price spikes and supply issues. The delay enables President Joe Biden's administration to put off potential price spikes stemming from the decision until after the 2024 U.S. presidential election in November. Two states the decision affects, Wisconsin and Minnesota, are battleground states in this year's contest. Inflation and the economy are key vulnerabilities for Biden's re-election campaign. The Environmental Protection Agency had sent a final rule on the proposal to the White House in December with an effective date of April 28, 2024. The new timeline would push the effective date to April 28, 2025. "By extending the implementation date, this final action reduces the risk of gasoline supply issues this summer and the price impacts that could have come with 2024 implementation," an EPA official said on Thursday. The EPA did not comment on whether it would issue a temporary waiver enabling E15 sales this summer. "We cannot speculate about the 2024 summer driving season. We will continue to monitor the situation, consult closely with the Department of Energy, and be prepared to act should conditions warrant," the agency said. After the news, the Renewable Fuels Association, a biofuels trade group, called on the administration to take action to ensure consumers have access to E15 this summer, and said it was disappointed over the new rule's 2025 start date. The American Petroleum Institute, an oil industry group, meanwhile, said it supported a legislative solution that would allow year-round sales of E15 nationwide. https://www.reuters.com/business/energy/biden-administration-approves-e15-gasoline-sales-expansion-midwest-states-2024-02-22/
2024-02-22 21:52
Feb 22 (Reuters) - Arcadium Lithium (ALTM.N) , opens new tab, which was formed earlier this year by the merger of Livent and Allkem, posted a 54% drop in fourth-quarter profit on Thursday amid slumping prices of the key battery metal. The company post net income of $37.7 million, or 18 cents per share, compared to $82.7 million, or 39 cents per share, in the year-ago quarter. The results were consolidated between the two combined companies. https://www.reuters.com/markets/commodities/arcadium-lithiums-quarterly-profit-drops-54-slumping-prices-2024-02-22/
2024-02-22 21:48
Feb 23 (Reuters) - A look at the day ahead in Asian markets. Investors in Asia could not be going into Friday's trading in more bullish spirits as the U.S.-led surge in mega tech fuels a global stock market boom, although there will be temptation to book some profit ahead of the weekend. Japan's Nikkei smashed its way to a new all-time high on Thursday after Nvidia's post-market surge following its fourth-quarter results, a path followed later in the day by Europe's Stoxx 600, the S&P 500 and the Dow Jones Industrials. The relentless rise around the world on Thursday, propelled by Nvidia's 16.5% surge, should set the tone for Asia on Friday. Chinese stocks, of course, are nowhere near all-time highs, but they are on a roll too. Since plumbing five-year lows a few weeks ago, they have rebounded more than 10% and are on their longest winning streak in over three and half years. A close in the green for the CSI 300 index on Friday will seal its best run in more than six years. Improving sentiment towards China is in large part down to the various steps taken by authorities in Beijing to revive economic activity and prop up markets, especially the battered housing market. These measures include a cut in the benchmark 5-year lending rate, which influences the pricing of mortgages. It is too soon to determine the success or otherwise of this week's move, but Chinese house price figures on Friday will be closely watched. House prices have been outright declining year-on-year for the last two years. A return to growth will go a long way to reassuring investors that the worst of the property sector meltdown is over and that the economy is back on a firmer growth track. Will Japan's extraordinary rally continue or fizzle out on Friday? The scale of the rally equally points to both - the Nikkei's 17% surge this year shows that momentum is strong; but a 17% surge in less than two months will tempt some investors to take some chips off the table. While the mood across global markets is being set by equities, the rise in U.S. bond yields and dogged resistance of the dollar cannot be ignored in Asia and emerging markets. The 10-year Treasury yield rose to a three-month high of 4.35% on Thursday and rates markets continue to pare back U.S. rate cut expectations - the first Fed cut is now fully priced for July, and barely 80 basis points of easing is in this year's curve. Rising U.S. yields and a 'higher for longer' Fed at some point are likely to bump up against the tech-fueled euphoria sweeping global equities, and when they do, Asia could be hit hard. But that probably won't be Friday. Here are key developments that could provide more direction to markets on Friday: - China house prices (January) - Singapore, Malaysia inflation (January) - New Zealand retail sales (Q4) https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-pix-2024-02-22/
2024-02-22 21:48
Feb 22 (Reuters) - Shares in Jack Dorsey-led Block (SQ.N) , opens new tab surged nearly 12% on Thursday after the company forecast adjusted core earnings for the current quarter above Wall Street estimates as the payments firm bets on continued consumer resilience and its cost-cutting measures. The company expects adjusted core earnings between $570 million and $590 million for the three months ended March 31, compared with analysts' average expectation of $511.76 million, according to LSEG data. A strong holiday season has put consumer spending on a stronger path heading into 2024 as Americans put aside worries of an economic slowdown to keep shopping, dining out and traveling. Meanwhile, Block has been looking to lower costs and drive "profitable growth" in the business by cutting jobs and reducing its real estate footprint. The company has previously said it expects significant improvement in operating margins this year as these measures bear fruit. Total net revenue rose 24% to $5.77 billion in the fourth quarter. Excluding bitcoin, revenue came in at $3.25 billion, up 15% compared to a year earlier. https://www.reuters.com/technology/payments-fintech-block-sees-q1-adjusted-core-earnings-above-estimates-2024-02-22/
