2024-01-10 11:03

WASHINGTON/NEW YORK, Jan 10 (Reuters) - The U.S. securities regulator on Wednesday approved the first U.S.-listed exchange traded funds (ETFs) to track bitcoin, in a watershed for the world's largest cryptocurrency and the broader crypto industry. The Securities and Exchange Commission said it approved 11 applications, including from BlackRock (BLK.N), Ark Investments/21Shares (ABTC.S), Fidelity, Invesco (IVZ.N) and VanEck, despite warnings from some officials and investor advocates that the products carried risks. Most of the products are expected to begin trading Thursday, issuers said, kicking off a fierce competition for market share. A decade in the making, the ETFs are a game-changer for bitcoin, offering investors exposure to the world's largest cryptocurrency without directly holding it. They provide a major boost for a crypto industry beset by scandals. "It's a huge positive for the institutionalization of bitcoin as an asset class," said Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities. Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this year alone. Other analysts have said inflows will be closer to $55 billion over five years. The market capitalization of bitcoin stood at more than $913 billion as of Wednesday, according to CoinGecko. As of December 2022, total net assets of U.S. ETFs stood at $6.5 trillion, according to the Investment Company Institute. Bitcoin was last up 3% at $47,300. The cryptocurrency has soared more than 70% in recent months in anticipation of an ETF, and hit its highest level since March 2022 this week. Success in the battle for inflows will mostly depend on fees and liquidity, analysts say. Some issuers slashed their proposed fees in new filings this week, including BlackRock and Ark/21Shares. Those fees range from 0.2% to 1.5%, with many firms offering to waive fees entirely for a certain period of time. For short-term speculators looking to buy in and out of the products, liquidity could be more important. Companies expect a flurry of online advertising and other marketing. Some issuers, including Bitwise and VanEck, have already released ads touting bitcoin as an investment. "It is pretty unprecedented, so we'll see how it works. I've never been in a situation where 10 of the same ETF was launched on the same day,” said Steven McClurg, chief investment officer at Valkyrie, whose ETF was among those approved on Wednesday. The approvals come a day after an unauthorized person published a fake post on the SEC’s account on social media platform X, saying the agency had approved the products for trading. The agency quickly disavowed and deleted the post. On Wednesday it said it is coordinating with law enforcement and the SEC's own internal watchdog to investigate the incident. That incident, and a confused announcement on Wednesday afternoon in which the SEC appeared to publish the formal regulatory approval and then remove it from its website, did not dampen the crypto industry celebrations. "We believed that bitcoin could change the world, and we were and remain excited at the prospect of democratizing access to this asset," said Grayscale CEO Michael Sonnenshein. Douglas Yones, head of exchange traded products at the New York Stock Exchange, where some products will be listed, said the approval was also a "milestone" for the ETF industry. Cynthia Lo Bessette, head of digital asset management at Fidelity, said the new products should provide "increased choice for investors who want to engage with" crypto. Some regulatory experts believe the bitcoin ETFs could also pave the way for other innovative crypto products. Several issuers, for example, have filed for ETFs tracking either, the second-largest cryptocurrency. "Once the dam has been breached, it’s going to be really hard for the SEC to continue its ‘just say no to crypto’ approach,” said Jim Angel, associate professor at Georgetown's McDonough School of Business. 'SPECULATIVE, VOLATILE' Cryptocurrencies were created as an alternative to fiat currencies -- currencies established by and backed by a government such as the U.S. dollar and the euro -- but cryptocurrencies are largely used as speculative investments due to their volatility. The green light marks a U-turn for the SEC, which had rejected bitcoin ETFs due to worries they could be easily manipulated. SEC Chair Gary Gensler is a fierce crypto skeptic. In a highly unusual move, however, Gensler, a Democrat, joined the SEC's two Republican commissioners in voting to approve the products, while the agency's two Democratic commissioners voted against. One, Caroline Crenshaw, cited investor protection worries. Hopes the SEC would finally approve bitcoin ETFs surged last year after a federal appeals court ruled that the agency was wrong to reject an application from Grayscale Investments to convert its existing Grayscale Bitcoin Trust into an ETF. In a statement on Wednesday, Gensler said that in light of the court ruling, approving the products was "the most sustainable path forward," but added the agency did not endorse bitcoin, calling it a "speculative, volatile asset" also used to fund crime. Gensler also repeated his long-held position that bitcoin is a commodity not a security, and as such, Wednesday's approval was in "no way" a signal that the SEC would be easing up on its crackdown on crypto players it says are flouting its laws. To meet the SEC's investor protection bar, severalexchanges had proposed working with Coinbase, the largest U.S. crypto exchange, to police trading in the underlying bitcoin market. But the issuers scrapped that partnership this week in favor of an existing arrangement with the Chicago Mercantile Exchange, which was at the core of Grayscale's court victory. The SEC is currently suing Coinbase for allegedly breaching U.S. securities laws, which the company denies. Dennis Kelleher, CEO of investor advocacy think tank Better Markets, warned that bitcoin was still vulnerable to crypto fraudsters and said approving the ETFs was a "historic mistake." "The SEC’s action today has changed nothing about this worthless financial product: bitcoin and crypto still have no legitimate use," he said. https://www.reuters.com/technology/bitcoin-etf-hopefuls-still-expect-sec-approval-despite-social-media-hack-2024-01-10/

2024-01-10 10:47

Reuters poll graphic on U.S. Treasury yields forecast: BENGALURU, Jan 10 (Reuters) - U.S. Treasury yields will trade around current levels over the coming six months before falling later in the year, according to bond strategists polled by Reuters, suggesting markets were fully priced in for Federal Reserve interest rate cuts. Since peaking at 5.02% in October, the benchmark U.S. 10-year Treasury note yield fell over 120 basis points and finished 2023 roughly where it started. Bond bulls drove the yield, which moves inversely to prices, lower by front-loading pricing of about 150 bps of interest rate cuts this year following a perceived-dovish Fed pivot and slowing inflation. It has since recovered to about 4.00%, gaining over 20 bps from a late December-low of 3.78% as incoming economic data showed the world's largest economy was still growing at a healthy pace and didn't need immediate rate cuts. Interest rate futures are now pricing in about a two-thirds chance of the first rate cut in March, down from near-90% just two weeks ago. The Fed's own dot plot projections showed 75 bps of rate cuts this year. This recovery in yields is set to hold ground, with the yield on the 10-year note forecast to rise about 10 bps to 4.10% in three months, the Jan. 5-10 Reuters poll of 62 bond strategists found; a 15 bps downgrade from a December poll. "Our forecast is for yields to remain unchanged for the first three months; and while that may sound really boring, that's how bonds work," said Steven Major, global head of fixed income research at HSBC. "I feel very strongly the next big move in yields is downwards and will come in the second half of the year because markets need to see actual moves from the central bank rather than working on pure expectations," Major added, albeit making allowance for some interim volatility. The benchmark 10-year yield was expected to fall to 3.93% by end-June and then to 3.75% by end-year, the poll found. A smaller sample of the U.S. primary dealer banks had higher forecasts of 4.00% and 3.88%, respectively. "We have a bimodal outlook. One is a typical late-cycle recession and the other is rate cuts boosting productivity and leading to stronger economic growth," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "A naive midpoint of those two scenarios could see the 10-year yield rise to about 4.70% by the end of 2024," he added - the highest end-year forecast in the survey. The interest rate sensitive 2-year Treasury note yield , currently about 4.35%, was expected to hold steady in the coming three months, before falling to 4.00% by end-June and a further 50 bps to 3.50% by the end of the year. If realised, the negative spread between yields of 2-year and 10-year Treasury notes - usually a foreteller of impending recession - will completely lose its inversion and have a 25 bps positive gap by end-2024. "As an indicator that was not helpful in forecasting recession last year, it's likely to not be helpful this year either," said Torsten Slok, chief economist at Apollo Global Management. "The incoming supply of Treasuries will put considerable upward pressure on long rates for reasons that have nothing to do with whether we have a recession or not," he added, stating factors such as the U.S. budget deficit and the risk of a resurgence in inflation could keep yields elevated. https://www.reuters.com/markets/us/us-treasury-yields-flat-until-june-fall-second-half-2024-01-10/

2024-01-10 10:22

MUMBAI, Jan 10 (Reuters) - The Indian rupee recouped early losses to end higher for a sixth consecutive session on likely foreign inflows. The rupee settled at 83.0350 against the U.S. dollar, its highest closing level since Dec. 15, against its close of 83.1150 in the previous session. The local unit opened lower and hit an intraday low of 83.18 earlier in the day, before rising to an over three-week high of 82.98 in the session. This was due to dollar selling by a large UK-based bank, according to three traders. These were likely external commercial borrowing inflows, they said. "Dollar inflows have kept the rupee the top performer among Asian currencies," Dilip Parmar, a foreign exchange research analyst at HDFC Securities, said. "We will have to see if the move is sustainable given considering how the RBI (Reserve Bank of India) has absorbed such inflows in the past." Asian currencies were mostly lower tracking the dollar index's rise to 102.60. U.S. consumer inflation data is due on Thursday and economists polled by Reuters expect core CPI to rise 0.3% month-on-month in December. On an on-year basis, core CPI is expected to rise by 3.8%, slower than the 4% pace in November. A report that is in line with expectations would mean progress towards the Federal Reserve's 2% inflation target, making investors more confident that a series of rate cuts are on the way this year. The U.S. inflation data will indicate how well-placed the current interest rate expectations are. Investors see a high probability of rate cuts kicking off at the March meeting . Markets are currently pricing in a nearly 66% chance that the Fed could begin easing rates in March, the CME FedWatch Tool showed. https://www.reuters.com/markets/currencies/rupee-extends-rising-streak-into-sixth-day-dollar-inflows-2024-01-10/

2024-01-10 07:15

MUMBAI, Jan 10 (Reuters) - The Indian rupee declined on Wednesday, pressured by the weakness on Asian peers and the exit of short positions on the U.S. dollar. The rupee was at 83.1725 to the dollar at 10:22 a.m. IST, down from 83.1150 in the previous session. The rupee has not had a losing day since last Tuesday. Asian currencies were down between 0.1% and 0.4% and the dollar index inched up to 102.54. "While it would look like momentum is favourable (for the rupee), you have to take into account how dips (on USD/INR) to 83 have been jumped on," a FX trader at a private bank said. USD/INR managed to recover from the dip to near 83.05 on Monday and on Tuesday. "This probably changes the risk-reward on short (USD/INR) positions, more so when the U.S. inflation numbers are due," the trader added. U.S. consumer inflation data is due on Thursday and economists polled by Reuters expect core CPI to rise 0.3% month-on-month in December. On a on-year basis, core CPI is expected to rise by 3.8%, slower than the 4% pace in November. A report that is in line with expectations would mean more progress towards the Federal Reserve's 2% inflation target, making investors more confident that a series of rate cuts are on the way this year. Investors see a high probability of rate cuts kicking off at the March meeting . A few economists reckon that may be too optimistic. Thursday's data will indicate how well-placed the current interest rate futures expectations are, which holds implications for the dollar. "Interest rate futures and swaps are often the first derivative and the likes of the dollar.. follow in sympathy," Chris Weston, head research at Pepperstone, said in a note. https://www.reuters.com/markets/currencies/rupee-drops-weak-asian-cues-position-trimming-2024-01-10/

2024-01-10 06:55

SEC approves first U.S.-listed ETF to track bitcoin U.S. stocks end higher Oil prices fall more than 1% NEW YORK, Jan 10 (Reuters) - Global stock indexes rose and U.S. 10-year Treasury yields edged up on Wednesday as investors looked ahead to a U.S. consumer price report for possible clues on when the Federal Reserve could begin cutting interest rates. Late in the day, the U.S. Securities and Exchange Commission approved the first U.S-listed exchange traded funds (ETFs) to track bitcoin. Bitcoin has gained sharply in recent months on the expectation ETFs for the asset would be approved. Investors are gearing up for the December consumer price index report due on Thursday. It is expected to show that headline inflation rose 0.2% in the month and by 3.2% on an annual basis. (USCPI=ECI), (USCPNY=ECI) Investors are also anxious to see U.S. company quarterly results, which begin with reports from some of the big U.S. banks on Friday. "There's still speculation about when the Fed may lower rates. I take them for their word - higher for longer," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, adding that would depend on how fast inflation is coming down. "It will be interesting to see earnings and also outlooks in this changing environment," he said. The Dow Jones Industrial Average (.DJI) rose 170.57 points, or 0.45%, to 37,695.73, the S&P 500 (.SPX) gained 26.95 points, or 0.57%, to 4,783.45 and the Nasdaq Composite (.IXIC) added 111.94 points, or 0.75%, to 14,969.65. The pan-European STOXX 600 index (.STOXX) lost 0.18% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 0.37%. U.S. and European markets surged at the end of 2023 as inflation cooled more quickly than expected and central banks struck a softer tone, encouraging investors to bet on big rate cuts this year. In afternoon trading, the benchmark 10-year yield rose 1.9 bps to 4.034% . A U.S. 10-year note auction showed a high yield of 4.024%, modestly higher than the market's forecast of around 4.19%, suggesting investors demanded a slight premium. By late afternoon, the dollar index was down 0.14% at 102.36. Soft economic data this week in Japan may make it less likely that the Bank of Japan will raise rates out of negative territory this month. Oil prices fell after an unexpected jump in U.S. crude stockpiles. U.S. West Texas Intermediate crude futures fell 87 cents, or 1.2%, to settle at $71.37 a barrel. Brent crude oil futures fell 79 cents, or 1%, to settle at $76.80. Spot gold dropped 0.3% to $2,024.29 an ounce. https://www.reuters.com/markets/global-markets-wrapup-1-2024-01-10/

2024-01-10 06:53

GANDHINAGAR, India, Jan 10 (Reuters) - Indian conglomerate Adani Group will invest 2 trillion rupees ($24 billion) in five years in the green energy and renewable energy sectors in the western state of Gujarat, its chairman Gautam Adani said on Wednesday at an investment summit. ($1 = 83.1740 Indian rupees) https://www.reuters.com/world/india/indias-adani-invest-24-bln-gujarat-five-years-2024-01-10/