2023-11-30 15:17
Reuters poll graphic on the U.S. housing market housing poll data BENGALURU, Nov 30 (Reuters) - U.S. existing home sales are forecast to remain subdued next year and beyond as high mortgage rates force homeowners to stay put, according to a Reuters poll of analysts, who also expected house prices to edge higher. The rate on the popular 30-year fixed-rate mortgage hit a more than two-decade high just under 8% last month, leading to a 4.1% drop in U.S. existing home sales last month alone to the lowest annualized rate since 2010, 3.79 million units. The 30-year mortgage rate has since retreated a bit to levels last seen in late September, but is expected to average 6.5% throughout next year, according to the poll, not averaging below 6% until 2025. Home resales, which account for the bulk of U.S. housing transactions, were expected to average a little over 4 million units next year. That is a far cry from an average 6 million in 2021 during the pandemic housing boom and the 5.3 million average over the past quarter century. While interest rate cuts are on the way next year, they may not be enough to significantly alter the trend. The Federal Reserve will cut rates by 75 basis points by the end of 2024, with the first cut in the second quarter, a separate Reuters poll found. Despite those cuts, mortgage rates are likely to be too high to entice existing homeowners to put property up for sale, analysts said. "Existing home sales have been constrained by the lack of resale inventory available in the market," said Crystal Sunbury, senior real estate analyst at RSM, a U.S.-based consulting firm. "We may see more resale units come into the market, as mortgage rates ease. But resale inventory is not expected to climb substantially, as over 80% of current homeowners are estimated to have mortgages under 5% and the vast majority will not be willing to trade up their mortgage for a higher rate." Existing home sales were forecast to average 3.84 million annualized units this quarter, followed by 3.90 million, 4.03 million, 4.20 million and 4.38 million units over the next four quarters. Meanwhile, property developers are cranking up housing supply to take advantage of the demand-supply mismatch. Residential investment rebounded in the third quarter after contracting for nine straight quarters. An overwhelming 83% majority of analysts, 20 of 24, said supply of affordable homes over the coming two to three years will improve. But only five said the improvement would be enough to keep up with demand. Poll medians showed average house prices as measured by the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rising 2.7% this year and 1.8% in 2024. That was an upgrade from a September survey where prices were forecast to flatline in both years. Low single-digit price rises would represent a more stable outlook in the housing market, which in the pandemic years alone soared nearly 45%. But for most first-time buyers, the average home price is already prohibitively high, requiring a huge deposit before purchase. "The housing market continues to experience a tug of war between buyers who are priced out due to high mortgage rates and owners who are locked in to their existing mortgages," said Cristian deRitis, deputy chief economist at Moody's Analytics. "Limited supply of homes available for sale will continue to support prices in the short term." In the meantime, many young families who can't afford to put down a deposit or take out mortgages at these rates will have to continue renting, which has been extremely expensive in recent years. Rents are only now starting to decline more broadly. A slight majority of poll respondents, 13 of 22, said the proportion of home ownership to renters will increase somewhat or increase significantly over the coming five years. The remaining nine said it would decrease. (Other stories from the Reuters quarterly housing market polls) https://www.reuters.com/markets/us/us-existing-home-sales-stay-subdued-next-year-along-with-prices-2023-11-30/
2023-11-30 14:11
Nov 30 (Reuters) - Traders on Thursday maintained bets the Federal Reserve will hold interest rates steady for three more meetings before starting to cut interest rates, after a government report showed inflation edging lower. Futures contracts that settle to the Fed's policy rate reflected a better-than-even probability that the U.S. central bank will deliver its first reduction to the benchmark target at the May meeting, to a 5%-to-5.25% range from 5.25% to 5.50% currently. The personal consumption expenditures price index (PCE) increased 3.0% last month from a year earlier, the Commerce Department's Bureau of Economic Analysis reported. That was the smallest year-on-year gain since March 2021 and followed a 3.4% advance in September. The Fed targets 2% inflation. "The Fed is on hold, and (this report) gives them more comfort in staying on hold. What they’re doing is working," said Robert Pavlik, senior portfolio manager at Dakota Wealth. "The data is trending in the direction that the Fed wants to see." Rate futures contracts are pricing in a Fed policy rate of 4.18% by the end of 2024. https://www.reuters.com/markets/us/traders-bet-fed-will-hold-rates-steady-start-cuts-may-2023-11-30/
2023-11-30 11:55
OPEC+ announces no new group cut target for 2024 Instead members led by Saudi Arabia to make voluntary cuts Saudi to roll over 1 million bpd cut into Q1 Russia to cut 500,000 bpd OPEC+ invites Brazil to join LONDON/MOSCOW/DUBAI, Nov 30 (Reuters) - OPEC+ oil producers on Thursday agreed to voluntary output cuts totalling about 2.2 million barrels per day (bpd) for early next year led by Saudi Arabia rolling over its current voluntary cut. Benchmark global oil prices settled down around 2% , in part because the reductions were voluntary and because of investor expectation ahead of the meeting that additional supply cuts might be deeper. Saudi Arabia, Russia and other members of OPEC+, who pump more than 40% of the world's oil, met online on Thursday to discuss supply policy. "The market reaction implies disbelief in the full efficacy of the cuts," JP Morgan analyst Christyan Malek said. "However, setting a new framework for each member to deliver on its cut reflects the degree of trust and cohesion among the members; case in point, the fact Brazil is joining is testament to the strength in numbers for OPEC+." The group discussed 2024 output amid forecasts the market faces a potential surplus and as a 1 million barrel per day (bpd) cut by Saudi Arabia was set to end next month. OPEC+'s output of some 43 million bpd already reflects cuts of about 5 million bpd aimed at supporting prices and stabilising the market. The total curbs amount to 2.2 million bpd from eight producers, OPEC said in a statement after the meeting. Included in this figure is an extension of the Saudi and Russian voluntary cuts of 1.3 million bpd. The 900,000 bpd of additional cuts pledged on Thursday, includes 200,000 bpd of fuel export reductions from Russia, with the rest divided among six members. Russian Deputy Prime Minister Alexander Novak said Russia's voluntary cut would include crude and products. The UAE said it had agreed to cut output by 163,000 bpd while Iraq said it would cut an extra 220,000 bpd in the first quarter. Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan and Algeria were among producers who said cuts will be unwound gradually after the first quarter, market conditions permitting. OPEC+ is focused on lower output with prices down from near $98 in late September and concerns brewing over weaker economic growth in 2024 and expectations of a supply surplus. The International Energy Agency (IEA) this month forecast a slowdown in 2024 demand growth as "the last phase of the pandemic economic rebound dissipates and as advancing energy efficiency gains, expanding electric vehicle fleets and structural factors reassert themselves." OPEC+ also invited Brazil, a top 10 producer, to become a member of the group. The country's energy minister said it hoped to join in January. The OPEC+ meeting coincides with the opening of the United Nations' COP28 climate summit being hosted by OPEC member the United Arab Emirates. https://www.reuters.com/markets/commodities/opec-ministers-meet-discuss-additional-oil-output-cuts-2023-11-30/
2023-11-30 11:36
OSLO, Nov 30 (Reuters) - The ongoing outages at Finland's OL3 and Sweden's Ringhals 4 nuclear reactors were extended on Thursday, operators TVO and Vattenfall said in market messages on power bourse Nord Pool, pushing up electricity prices at a time of high demand. OL3 is now expected to restart at 1800 GMT on Thursday. The reactor, Europe's largest with a capacity of 1,600 megawatt (MW), suffered an unexpected "rapid shutdown" during testing on Wednesday, operator TVO has said. OL3 had originally been expected to be offline for eight hours, but the restart was since delayed several times. In Sweden, Vattenfall extended an outage at Ringhals 4 with a capacity of 1,130 MW by two full days to 2259 GMT on Saturday. The reactor had tripped on Wednesday morning due to a valve failure, with troubleshooting ongoing, according to the market message on Nord Pool. The Nordic region has been hit by unusually cold weather in late November, pushing up demand for heating and boosting power prices. https://www.reuters.com/business/energy/operators-extend-finnish-swedish-nuclear-reactor-outages-2023-11-30/
2023-11-30 11:34
SAO PAULO/LONDON, Nov 30 (Reuters) - McLaren Racing has agreed to purchase carbon credits from reforestation projects in Brazil's Amazon rainforest and CO2 removal initiatives in Britain and the U.S. as part of its bid to achieve net zero emissions by 2040, the team said on Thursday. McLaren competes in Formula One and the IndyCar Series, with emissions coming - in addition to motor racing itself - from activities such as air travel, with Formula One set to race 24 times in 22 different countries next year. One of the deals was to buy carbon removal credits from Brazilian startup Mombak, which reforests degraded land in the Amazon, while a second one involves Scottish firm UNDO, removing CO2 from the atmosphere through enhanced rock weathering. McLaren also said in a statement it was partnering with the Great Barrier Reef Foundation, an Australian non-profit that works to restore coral reefs. Australian Oscar Piastri drives for the team in Formula One. Britain-based McLaren aims to reduce its emissions by 90% by 2040. For the remaining 10%, it would implement initiatives such as carbon offsetting. It did not disclose how much it was investing in its new 'Climate Contribution Programme'. "A big part of that is making sure that we reduce emissions across all our operations and supply chain," the team's director of sustainability Kim Wilson said of the 2040 net zero goal. "But we know that's not enough. We also have to do something about the existing carbon in the earth's atmosphere." Mombak told Reuters that under their deal it would deliver McLaren removals from 2023 through 2025 at an average price of more than $50 per metric ton, a premium over the traditional carbon credit market. Carbon credits are tradable permits that allow the owner to emit certain amounts of greenhouse gases, with each credit permitting the emission of one ton of carbon dioxide. "Carbon credits above $50 are the big news," Mombak co-founder Peter Fernandez said in an interview. "That's a new level. In Brazil some people still think carbon credits are worth $5, $10, $15 - that's no longer true." Mombak, which buys degraded land from farmers and ranchers or partners with them to replant native species in the world's largest rainforest, is backed by investors such as Bain Capital and AXA (AXAF.PA). It recently raised a $100 million fund to build carbon removal projects in the Amazon, with money from Canada's CPPIB and the Rockefeller Foundation, and said it hopes the McLaren deal will help shape Brazil's nascent carbon removal industry. "This goes to show that the world is willing to pay more. It's not possible to carry out ecological restoration with just $20 per ton," Fernandez said. "It is with a price like this that a company like ours can scale the Amazon reforestation." Critics of carbon offset markets, including Greenpeace, say they allow emitters to continue to release greenhouse gases. https://www.reuters.com/sports/motor-sports/mclaren-buys-credits-brazil-reforestation-project-quest-net-zero-2023-11-30/
2023-11-30 11:34
LONDON, Nov 30 (Reuters) - Britain's largest railway workers' union, the RMT, on Thursday accepted a pay offer from train companies that will pause strikes over the Christmas period as further negotiations over future pay and working practices continue. The deal follows more than a year of industrial action across the transport network alongside strikes by nurses, teachers and other train workers demanding higher wages as inflation and mortgage rates surged. "Our members have spoken in huge numbers to accept this offer," RMT General Secretary Mick Lynch said in statement. Acceptance of the offer set out by Rail Delivery Group (RDG), which includes a backdated 2022 pay rise of 5% for staff and job security guarantees, still leaves a dispute over planned changes to working practices and negotiations over future pay. "This is welcome news for passengers and a significant step towards resolving industrial disputes on the railway," transport minister Mark Harper said, adding that it could also lead to long overdue reforms. The RDG is also still engaged in a separate dispute with the ASLEF train drivers' union who have scheduled a fresh round of strikes in December over pay and working conditions. "This welcome vote from RMT members will unlock a pay rise for our people, and means that fair agreements have now been reached with three out of the four unions involved in the recent industrial dispute," a RDG spokesperson said. The government has reached deals to settle industrial action with teaching unions and the medical union representing senior doctors in England in an effort to end strikes. A separate dispute over pay and conditions with junior doctors is still ongoing. Data from Britain's statistics office said in 2022 the United Kingdom recorded the highest number of working days lost to labour disputes for more than 30 years. https://www.reuters.com/world/uk/britains-rmt-union-votes-accept-new-pay-offer-2023-11-30/
