2023-12-20 14:17
https://www.reuters.com/markets/us/fed-hawks-doves-centrists-tracking-us-central-bankers-views-2024-01-23/
2023-12-20 14:16
WASHINGTON, Dec 20 (Reuters) - The U.S. current account deficit was the smallest in more than two years in the third quarter amid rising petroleum exports, government data showed on Wednesday. The Commerce Department's Bureau of Economic Analysis said that the current account deficit, which measures the flow of goods, services and investments into and out of the country, contracted $16.5 billion, or 7.6%, to $200.3 billion last quarter. That was the smallest since the second quarter of 2021. Economists polled by Reuters had forecast the current account deficit at $196.0 billion. The current account gap represented 2.9% of gross domestic product, the smallest share since the first quarter of 2021, and down from 3.2% in the second quarter. The deficit peaked at 6.3% of GDP in the fourth quarter of 2005. The United States is now a net exporter of crude oil and fuel. Though the deficit remains large, it has no impact on the dollar given its status as the reserve currency. Exports of goods increased $19.1 billion to $516.4 billion, driven by petroleum and related products. Exports of services rose $2.7 billion to $252.2 billion as an increase in personal travel partially offset a decline in technical, trade-related, and other business services. Imports of goods increased $4.6 billion to $777.4 billion, boosted by passenger cars, other parts and accessories. That partly offset a drop in imports of non-monetary gold. Imports of services fell $1.9 billion to $176.0 billion, reflecting a decline in sea freight transport. Primary income receipts increased $11.8 billion to $362.1 billion, while payments of primary income rose $14.0 billion to $332.1 billion. https://www.reuters.com/markets/us/us-current-account-deficit-narrows-third-quarter-petroleum-exports-2023-12-20/
2023-12-20 12:08
Dec 20 (Reuters) - The interest rate on the most common type of U.S. home mortgage dropped last week to 6.83%, its lowest since June, as the Federal Reserve signaled it is done raising borrowing costs and will turn to cutting them next year. The average contract rate on a 30-year fixed-rate mortgage fell 24 basis points in the week ended Dec. 15, the Mortgage Bankers Association said on Wednesday. The rate has not been below 7% since July 28, and as recently as late October had risen to nearly 8%, a two-decade high. The Fed held interest rates steady last week and Fed Chair Jerome Powell signaled that, given progress on inflation, the central bank was likely finished with the rate-hike campaign it began in March 2022 and could soon start debating rate cuts. The remarks set off a sharp decline in the yield on the 10-year Treasury note , used as a benchmark to set home loan costs. But the drop in the mortgage rate did not immediately translate to a run on homebuying or refinancing; indeed, refinance and purchase applications showed small declines last week, apart from an 18% surge in VA refinance applications, according to MBA chief economist Mike Fratantoni. https://www.reuters.com/markets/us/us-30-year-mortgage-rate-drops-683-its-lowest-since-june-2023-12-20/
2023-12-20 12:01
Dec 20 (Reuters) - Management consulting firm Aon (AON.N) said on Wednesday it will buy privately held NFP in a deal valued at about $13.4 billion to tap the fast-growing middle-market segment of insurance brokerage, wealth management and retirement plan advisory. Demand for insurance products has remained firm in an uncertain economy and the sector is considered recession-proof as many policies are often guaranteed by employers, while some are mandated by the government. The deal with funds linked to private equity owner Madison Dearborn Partners and HPS Investment Partners is expected to close in mid-2024 and will be funded with $7 billion in cash and $6.4 billion in Aon stock. The cash portion will be funded through a new debt raise of $5 billion in 2024 and the rest at the close of the deal while trying to keep the current credit rating, Aon CFO Christa Davies said. "The price does seem rich at 15 times expected adjusted EBITDA, which is a bit above our valuation for Aon. However, Aon does expect $60 million in cost synergies over time," Brett Horn, senior equity analyst at Morningstar, wrote in a note. "We had wondered what management might do after regulators blocked its attempt to acquire Willis Towers Watson. The answer appears to be to look for similar but somewhat smaller deals," Horn said. Aon and Willis Towers Watson called off a $30 billion merger in July 2021 that would have created the world's largest insurance broker amid anti-trust scrutiny. Aon shares were last down 6% in afternoon trading as the company expects to incur $400 million in one-time transaction and integration costs related to the deal. "Initially, the combined firm's adjusted operating margin could be lower than Aon's standalone margin. However, we expect to continue to drive adjusted operating margin expansion over the long term," Davies said. Founded in 1999, NFP is a property and casualty brokerage, which offers benefits consulting, wealth management and retirement plan consulting for clients. Its CEO Doug Hammond will continue to lead the business. Insurance brokers serve as a bridge between an insurer and its customers, helping clients find a policy that best suits their needs. NFP will generate an estimated $2.2 billion in annual revenue this year, Aon said in an investor presentation. It forecast a roughly 14% rise in total revenue in 2024 and 2025. UBS Investment Bank was the exclusive financial advisor to Aon on the transaction. Citi is advising it on the deal financing. https://www.reuters.com/business/aon-buy-insurance-broker-nfp-134-billion-deal-2023-12-20/
2023-12-20 11:31
HAMBURG, Dec 20 (Reuters) - A strong copper market with firm demand for copper products is expected to continue in 2024, the CEO of Aurubis AG (NAFG.DE), Europe's biggest copper producer, said on Wednesday. Demand is expected from moves towards renewable energy, Roland Harings said during a press conference about the company’s full year results. Aurubis on Wednesday confirmed a sharp 34% fall in annual earnings after a major metal theft, but remained upbeat for the new year. Despite the disruption caused by the theft, Aurubis “remains on the ambitious course” it planned with a range of investment projects, Harings said. Harings told Reuters after the press conference: "Because of the overall market environment, we are optimistic that 2024 will not be a bad year for us." Higher demand is expected for copper products including wire rod. The continuing change towards renewable energy around Europe and digitalisation is expected to drive demand in the new year, he said. A good supply of copper concentrate (ore) is expected because of new mining projects and mine expansion, he said. New mining projects are opening especially in South America and Aurubis is developing long-term cooperation with them, he said. Aurubis has the capability to refine complex ores and can achieve TC/RCs above the 2024 benchmark. The company is already supplied with concentrates at good TC/RCs well into the second quarter of its 2023/24 fiscal year. The company also expects a stable supply of old metal for recycling. Aurubis saw around 500 million euros wiped off its market value in September after announcing that criminals had stolen large volumes of its precious metal. The forecast range of operating earnings before taxes (EBT) for 2022/23 of 380 to 480 million euros reflects uncertainty about sulphuric acid and metals prices, not the impact of the theft, he said. https://www.reuters.com/markets/commodities/aurubis-ceo-says-he-expects-strong-copper-market-continue-2024-2023-12-20/
2023-12-20 11:18
A look at the day ahead in U.S. and global markets from Mike Dolan Wall Street is zooming into year-end holidays cracking new records as global disinflation tailwinds lifted bonds and stocks across the world, potentially tempting switches in 2024. As the S&P500 (.SPX) crept to within 1% of all-time highs on Tuesday and tracking its best quarter since 2020, the Nasdaq 100 (.NDX) - up more than 50% this year - clocked a new record and the vanguard of megacap tech giants (.NYFANG) has now doubled in 2023. With 2024 rate cut euphoria filling the pre-Christmas air, 10-year U.S. Treasury yields fell to their lowest since July at 3.8830% early on Wednesday - spurred in large part by a surge in British markets on a surprisingly sharp drop in UK inflation last month. Ten-year gilt yields plumbed their lowest since April at 3.51% and the FTSE100 (.FTSE) jumped 1% on news annual UK consumer price inflation dropped to 3.9% from October's 4.6% - below all forecasts and the Bank of England's expectation that CPI would be only just below 4.5% at the end of the year. Knocking sterling back in the process, UK money markets shifted to price the first BoE rate cut as soon as March and two quarter-point cuts by midyear. With U.S. traders eyeing a 20-year Treasury auction later in the day, the bond boom filtered around the globe - with 10-year German bund yields sinking below 2% for the first time since March. Italian equivalents plunged to their lowest of the year, with the premium over Germany shrinking to its narrowest since June. Even though some central banks continued to push back against what they see as excessive rate cut bets for next year, the demand for long duration bonds on the turn of the interest rate cycle generally was unabated. Chicago Federal Reserve boss Austan Goolsbee said markets had got "a little ahead of themselves" but inflation progress would dictate the pace of Fed easing from here. Bundesbank chief and hawkish European Central Bank policymaker Joachim Nagel said rates most likely had peaked but added: ""I would say to everyone who is speculating on an imminent interest rate cut: be careful" However, other Fed officials insisted policy plans should stay focussed and not get overly distracted with what was happening on markets. "One of the things I've learned is I don't control markets and so they're going to do what they're going to do," Richmond Fed President Thomas Barkin said on Tuesday. Even though MSCI's all-country stock index (.MIWD00000PUS) powered to its best levels since March last year, U.S. stock futures took a bit of a breather and stepped back from latest peaks early on Wednesday. Cooling the mood was a profit miss from global delivery firm FedEx (FDX.N), whose shares dropped almost 10% after the bell on Tuesday after it cut full-year revenue forecasts as its largest Express business saw demand from the U.S. Postal Service drop. U.S. consumer confidence readings for December will be watched closely later today, but housing market readouts this week have been upbeat. Gains against sterling aside, the dollar (.DXY) was mixed. Crude oil prices were a touch higher, but still negative year-on-year and U.S. naval force protection for Red Sea shipping helped ease jitters about threats to supply chains there. Overseas, the worrying funk in China's economy seemed to be spreading as Japan's exports fell last month for the first time in three months dragged down by China-bound chip shipments. But stocks and bonds in Tokyo continued to be buoyed by this week's decision by the Bank of Japan to stand pat on its super-easy monetary policy. Toshiba was delisted on Wednesday after 74 years on the Tokyo exchange, following a decade of upheaval and scandal that ushered in a buyout and an uncertain future. China's markets (.CSI300), as so often this year, underperformed yet again and lost another 1% on Tuesday to hit their lowest in almost five years. Freezing weather there added to chill. A Bank of America Asia fund manager survey showed more than 60% of investors would rather stick to a wait-and-watch approach or look for opportunities elsewhere than be exposed to China equities. "Investor interest towards risk assets in China is shockingly low," the report said. In politics, next year's U.S. election speculation hovered into view again after Colorado's top court ruled former President Donald Trump was disqualified from serving as president and cannot appear on the primary ballot because of his role in the 2021 attack on the U.S. Capitol by his supporters. Key developments that should provide more direction to U.S. markets later on Wednesday: -U.S. Dec consumer confidence, Nov existing home sales, Q3 current account -Chicago Federal Reserve President Austan Goolsbee; European Central Bank chief economist Philip Lane speaks; Bank of Canada meeting minutes. -U.S. treasury auctions 20-year bonds -European Union finance ministers hold teleconference to clinch deal on EU fiscal and debt rules -U.S. corporate earnings: Micron Technology, General Mills https://www.reuters.com/markets/us/global-markets-view-usa-2023-12-20/
