2023-11-14 14:53

FRANKFURT, Nov 14 (Reuters) - EU rules to protect the financial system from risks stemming from cryptocurrencies contain a loophole that allows banks to circumvent some safeguards and should be fixed urgently, the European Central Bank's chief supervisor Andrea Enria said on Tuesday. The cryptocurrency market is starting to bounce back a year after the collapse of exchange FTX and other big players in 2022 crushed prices, tarnished the industry and prompted a regulatory crackdown. Enria listed a number of challenges for European financial watchdogs as they prepare to tackle the crypto market using newly approved EU and global regulation set by the Basel Committee on Banking Supervision (BCBS). He warned the EU's framework placed banks' activity as a 'crypto-asset service provider' -- such as acting as a custodian for customer wallets, exchanging tokens or managing crypto portfolios -- outside of the ECB's purview as a banking supervisor. This prevents the ECB from having a full view of a bank's exposure to cryptocurrencies and from effectively applying safeguards, such as a limit on how heavily a lender can be exposed to a single client, Enria argued. "One aspect that concerns us at the moment is the possibility of circumventing the soon-to-be-applicable prudential regulatory framework," he said in the text of a speech delivered at a conference in Venice. "In fact, if crypto-asset service providers controlled by banks are not within the scope of their prudential consolidation, the BCBS standard and especially the exposure limit may become ineffective." He added crypto asset service providers should be added "as a matter of urgency" to the list of financial institutions that the ECB supervises under EU rules. In another warning, he said the EU Markets in Crypto-Asset Regulation's (MiCAR) provision that issuers of stablecoins keep 60% of reserves in bank deposits may have "have unintended consequences" for financial stability if that cash is withdrawn. He said banks should not rely "on volatile deposits, especially those of crypto-asset players" but the latter should also be forced to work with various banks when MiCAR is fully rolled out. MiCAR entered into force at the end of June and will take full effect by the end of next year. The Basel Committee's global standards on exposures to crypto assets are due to be transposed into EU law by Jan. 1, 2025. Enria's term as the chair of the ECB's Single Supervisory Board will run out at the end of this year, when he will be replaced by Claudia Buch, currently the Bundesbank's vice-president. https://www.reuters.com/business/finance/eu-loophole-lets-banks-dodge-ecbs-crypto-supervision-needs-fixing-enria-2023-11-14/

2023-11-14 11:59

LATEST DEVELOPMENTS: 'We're coming,' Biden says as adviser heads to the region White House says independent U.S. intelligence confirms Hamas military activity, hostages at Al-Shifa GAZA/ABOARD AIR FORCE ONE, Nov 14 (Reuters) - The White House said on Tuesday its independent intelligence supported Israel's claim that Hamas was using Gaza's hospitals, including its biggest, to hide command posts and hostages while a glimmer of progress emerged in hostage negotiations. President Joe Biden said he was in discussions daily with parties involved in talks to secure the release of hostages taken by Hamas in its cross-border rampage into Israel on Oct. 7. More than 235 people are thought to still be held by the Islamist group in Gaza. When asked by reporters at the White House what his message to family members of hostages was, he said: "Hang in there, we're coming." ABC News reported that progress had been made on a hostage deal. A breakthrough could come in the next 48 to 72 hours, it said, citing a senior Israeli political source. White House spokesman John Kirby told reporters on the presidential plane, Air Force One, that intelligence confirmed the militant Hamas group, which rules Gaza, used tunnels underneath Al-Shifa and other hospitals to conceal military operations and to hold hostages. Israel has made the same claims, which Hamas denies. "We have information that confirms that Hamas is using that particular hospital for a command and control node" and probably to store weapons, Kirby said. "That is a war crime." Five weeks after Israel swore to destroy Hamas in retaliation for militants' cross-border assault, the fate of Al-Shifa has become a focus of international alarm, including from Israel's closest ally, the United States. Israeli forces have waged fierce street battles against Hamas fighters over the past 10 days, advanced into the centre of Gaza City and surrounded Al-Shifa, the seaside enclave's biggest hospital. Kirby said that the U.S. intelligence came from a variety of methods but that he could not be specific about the evidence. Hamas said on Telegram it rejected U.S. claims about its use of hospitals and that they "give a green light to the Israeli occupation to commit further brutal massacres targeting hospitals." Omar Shakir, Israel and Palestine director for Human Rights Watch, said that even if Hamas was proven to be using hospitals to conduct military operations, international law required that effective warnings be given before attacks. This meant people there needed a safe place to go and a safe way to get there, Shakir said. "It's very alarming because you have to remember hospitals in Gaza are housing tens of thousands of displaced persons." AL-SHIFA THE FOCUS OF CONFLICT Hamas says 650 patients and 5,000 to 7,000 other civilians are trapped inside Al-Shifa hospital grounds, under constant fire from Israeli snipers and drones. Amid worsening shortages of fuel, water and supplies, it says 40 patients have died in recent days, including three premature babies whose incubators were knocked out. Palestinians trapped in the hospital were digging a mass grave on Tuesday to bury patients who died and no plan was in place to evacuate babies despite Israel announcing an offer to send portable incubators, Ashraf Al-Qidra, Gaza's health ministry spokesman, said. An Israeli officer who oversees coordination with Gaza told Reuters he had been in contact with Al-Shifa's hospital director and presented a plan to evacuate the babies through a safe corridor, possibly to Egypt. He said he was awaiting a response. Reached by telephone inside the hospital compound, Qidra said that so far no arrangements had been established to carry out any evacuation. "The occupation is still besieging the hospital and they are firing into the yards from time to time," he said. Qidra said there were about 100 bodies decomposing inside and no way to get them out. "We are planning to bury them today in a mass grave inside the Al-Shifa medical complex. It is going to be very dangerous as we don't have any cover or protection from the ICRC," he told Reuters, referring to the International Committee of the Red Cross/Crescent. Israel denies the hospital is under siege and says its forces allow exit routes for those inside. Medics and officials inside the hospital deny this and say those trying to leave come under fire. Reuters could not verify the situation. U.N. Secretary-General Antonio Guterres was deeply disturbed by the "dramatic loss of life" in the hospitals, his spokesman said. "In the name of humanity, the secretary-general calls for an immediate humanitarian ceasefire," the spokesman told reporters. Medical officials in Hamas-run Gaza say more than 11,000 people are confirmed dead from Israeli strikes, around 40% of them children, and countless others trapped under rubble. Around two-thirds of Gaza's 2.3 million people have been made homeless, unable to escape the territory where food, fuel, fresh water and medical supplies are running out. Israel says Hamas killed 1,200 people in the Oct. 7 rampage. The United States and Britain imposed a fresh round of sanctions on Hamas on Tuesday. BIDEN ADVISER HEADS TO MIDDLE EAST Shortly after Biden's remarks about the hostages, the White House said Biden's top Middle East adviser, Brett McGurk, was heading to the region for talks with officials in Israel, the West Bank, Qatar, Saudi Arabia and other nations. Efforts to win the hostages' release will be among the topics on his agenda. Hamas leader Ezzat El Rashq said on Telegram Israel was not serious about winning the hostages' freedom "but is stalling in order to gain more time to continue its aggression." The armed wing of Hamas said it was ready to free up to 70 women and children held in Gaza in exchange for a five-day ceasefire. Al-Qassam Brigade spokesman Abu Ubaida said Israel had asked for 100 to be freed. There was no immediate public response from Israeli Prime Minister Benjamin Netanyahu's office. Relatives of hostages set off from Tel Aviv on a days-long protest march to Jerusalem to plead for more government action. Yuval Haran, from Kibbutz Be'eri where Hamas fighters killed scores of civilians including his father, said he was marching out of desperation to free seven family members. "For 39 days we have been in infinite anxiety. We are living this pain each and every moment. And I cannot keep sitting down and waiting," he said. "They must be brought home now." In Washington, tens of thousands of demonstrators gathered on Tuesday for a "March for Israel" to show solidarity with Israel in its war with Hamas and condemn rising antisemitism. https://www.reuters.com/world/middle-east/biden-says-gaza-hospitals-must-be-protected-2023-11-14/

2023-11-14 11:52

Reuters poll graphic on U.S. 10-year Treasury yield forecasts: BENGALURU, Nov 14 (Reuters) - U.S. Treasury yields will fall in coming months, though not as sharply as forecast previously, according to bond strategists polled by Reuters, who said for a fourth month running in even greater numbers that the 10-year note yield had peaked. Those yield forecast upgrades came after news earlier this month of a 'blowout' third quarter for the U.S. economy and signs from Federal Reserve officials they will not be cutting the federal funds rate anytime soon. The benchmark 10-year Treasury note yield breached the 5% mark last month for the first time since July 2007, more than a full percentage point above its August low of 3.96%. Yields on 10-year notes have plunged since early October, in part on safe-haven buying on concerns the war Israel launched against Hamas after the Islamist Palestinian group's Oct. 7 rampage into southern Israel could escalate. Analysts and bond strategists in a Nov. 8-14 Reuters poll, mostly from sell-side firms, stuck to forecasts of declining yields, albeit less sharply than in polls conducted over the past three months. The 10-year note yield was forecast to fall 10 basis points to 4.52%, from 4.62% currently, in three months according to the median of 44 strategists, only a fraction of the near-40 basis points falls over a rolling three-month time period in October and September surveys. "I think 5% is an important psychological level that brings in buyers, and we could drift through that in response to perky inflation or strong labor market data," said Thomas Simons, senior economist at Jefferies. "However, I expect the data will take a turn for the worse by January, and more rate cuts will start to be priced in to the market, driving yields lower overall." The yield was expected to fall to 4.30% by end-April and to 4.00% a year from now, the poll found. Notably, roughly one-third of respondents expected the yield to tread higher than current levels by end-January, with several big banks on Wall Street changing their views to forecast elevated yields in the near-term. Yet, when asked whether the 10-year note yield had peaked in the current cycle, an overwhelming 94% majority of respondents, 30 of 32, said it had. Forecasters were proved incorrect within days of predicting the very same thing in the three previous monthly Reuters polls. "Why the bond market has been wrong a lot is because they thought the Fed would cut rates pretty aggressively. But, we need to see a hard landing for rates to fall significantly," said Mike Sanders, head of fixed income at Madison Investments. Although the timing of the first rate cut has been pushed to mid-2024 from March expected a few months ago, interest rate futures indicate almost 100 basis points of easing through December next year. The bigger risk to that outlook was for the first rate cut to come later than economists expect, a separate Reuters poll found. Asked what the main influence on U.S. bond yields would be over the coming six months, analysts were split between a deteriorating fiscal outlook and safe-haven trades. Other options included quantitative tightening, foreign divestment and the near-term supply of auctioned Treasury debt. The interest-rate sensitive 2-year Treasury note yield , currently at 5.04%, was expected to decline about 20 basis points by end-January, before falling to 4.00% in a year, according to the survey. If realized, this would mean a complete reversal of the inverted spread between yields of U.S. 2-year and 10-year Treasury notes - historically a reliable indicator of impending recession - by end-October 2024. https://www.reuters.com/markets/rates-bonds/us-treasury-yields-have-peaked-say-strategists-fourth-straight-month-2023-11-14/

2023-11-14 11:50

Boosts 2023 growth forecast to 2.4 mln bpd Lifts 2024 growth forecast to 930,000 bpd Oil supply could go into surplus in 2024 LONDON, Nov 14 (Reuters) - The International Energy Agency (IEA) on Tuesday raised its oil demand growth forecasts for this year and next despite slower economic growth in nearly all major economies, although its 2024 outlook remains much lower than that of producer group OPEC. The Paris-based IEA said the market could shift into surplus at the start of 2024 having been kept in a "significant deficit" through year-end by voluntary cuts from Saudi Arabia and Russia which last until the end of December. "For now, with demand still exceeding available supplies heading into the Northern Hemisphere winter, market balances will remain vulnerable to heightened economic and geopolitical risks – and further volatility ahead," the IEA said in a monthly report. Oil has weakened to around $82 a barrel for Brent crude from a 2023 high in September near $98. Concern about economic growth and demand has pressured prices, despite support from supply cuts by OPEC and its allies, and conflict in the Middle East. The IEA joins the Organization of the Petroleum Exporting Countries in raising its oil demand growth forecast for 2023. Demand in 2023 has been supported by resilient U.S. deliveries and record September demand from China, the IEA said. In 2023, the IEA expects world demand to rise by 2.4 million barrels per day (bpd), up from 2.3 million bpd seen previously and bringing its view closer to that of OPEC, which on Monday nudged up its forecast to 2.46 million bpd. SLOWDOWN IN VIEW For 2024, the IEA raised its oil demand growth forecast to 930,000 bpd from 880,000 bpd. Expectations are underpinned by hopes of interest rate cuts and the recent fall in crude prices, the IEA, the energy adviser to industrialised nations, said. This is still well below OPEC's forecast of 2.25 million bpd. The difference - 1.32 million bpd - is equivalent to roughly 1% of daily world oil use and translates into more than the daily production of an OPEC member such as Libya. OPEC and the IEA have clashed in recent years over issues such as the long-term oil demand outlook and the need for investment in new supplies. The IEA said the 2024 demand slowdown will arise 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." The 2024 outlook will be in focus at the next meeting of OPEC and its allies, known as OPEC+, on Nov. 26. The group's existing deal limits supply into 2024, although the extra Saudi and Russian voluntary cuts last until the end of December. https://www.reuters.com/markets/commodities/iea-raises-oil-demand-growth-forecasts-despite-economic-gloom-ahead-2023-11-14/

2023-11-14 11:40

Nov 14 (Reuters) - Home Depot (HD.N) beat quarterly profit estimates and posted a lower-than-expected decline in comparable sales on Tuesday, as the top U.S. home-improvement retailer tapped into a switch by customers to small-scale projects and repair work. U.S. consumers have put big renovations and discretionary home improvement projects on the back burner as they battle still high prices of food and essentials, lingering caution around the economy and higher interest rates. "Similar to the second quarter, we saw continued customer engagement with smaller projects, and experienced pressure in certain big-ticket, discretionary categories," CEO Ted Decker said, indicating still strong demand for essential maintenance work. Comparable sales fell 3.1% in the third quarter, while analysts on average had expected a 3.31% drop. Profit of $3.81 per share topped estimates of $3.76. Shares of the company rose 1% in premarket trading. Customer transactions fell 2.4% in the quarter ended Oct. 29, while average spending also dipped slightly. The company also tightened its annual sales forecast range to a decline between 3% and 4%, compared with its prior forecast for a 2% to 5% decline. Analysts on average are expecting a 2.72% drop, according to LSEG data. It now expects annual per-share profit to fall 9% to 11%, compared with a decline between 7% and 13% estimated previously. https://www.reuters.com/business/retail-consumer/home-depot-posts-smaller-than-expected-quarterly-sales-drop-2023-11-14/

2023-11-14 11:35

ISLAMABAD, Nov 14 (Reuters) - Saudi Arabia has shown interest in acquiring government stakes in Pakistan's Reko Diq gold and copper mine, an official of the South Asian nation said on Tuesday, adding that an international adviser was close to completing a valuation. Barrick Gold Corp (ABX.TO) owns a 50% stake in the mine, with the remaining 50% owned by the governments of Pakistan and the province of Balochistan. Barrick considers the mine one of the world's largest underdeveloped copper-gold areas. The government expects that the valuation to be completed before Dec. 25, Jahanzeb Khan, the prime minister's adviser on the Special Investment Facilitation Council (SIFC), told journalists. He did not identify the adviser. Pakistan has previously said Barrick would invest $10 billion in the project. Barrick in August said it was open to bringing in Saudi Arabia as one of its partners in the mine. Khan said that Islamabad will enter talks with Riyadh after the valuation is completed, and determine what its expectations are. The Saudi Arabian government did not immediately respond to a request for comment. Pakistan is currently in the midst of a prolonged economic crisis, and narrowly averted sovereign default earlier this year after a last-gasp $3 billion bailout from the International Monetary Fund (IMF). But the deal rests on the country's ability to bring in foreign direct investment to shore up its critically low foreign exchange reserves. Pakistan is banking on old allies in the Middle East, including Saudi Arabia, to lead the investment. Khan said that Pakistan was keen on having Saudi Arabia on board, but said Islamabad was "not in a rush" and did not want to have "distress sales" for any of its assets and would protect its national interests. https://www.reuters.com/markets/commodities/pakistan-drawing-saudi-interest-mine-stakes-adviser-says-2023-11-14/